LOCAL GOVERNMENT (RATE SUPPORT GRANT)

HC Deb 09 December 1968 vol 775 cc39-155

3.42 p.m.

The Minister of Housing and Local Government (Mr. Anthony Greenwood)

I beg to move, That the Rate Support Grant Order 1968, dated 27th November 1968, a copy of which was laid before this House on 3rd December, be approved. House of Commons Paper No. 24 explains the considerations leading to the provisions of the Order.

This is the second Rate Support Grant Order to be made under Section 2 of the Local Government Act, 1966. I hope that hon. Members will forgive me if I recall the general structure of the grant arrangements which were initiated under that Act. The Rate Support Grant Orders fix the Exchequer contribution to local authority revenue expenditure for the two forthcoming financial years. They are based upon figures of estimated expenditure adopted by the Minister following consultation with the local authority associations and upon the basis of estimates provided by the local authorities. To this estimated expenditure is then applied the percentage of grants to be adopted for the year in question, and the result is the aggregate of the Exchequer contribution. From this Exchequer contribution are deducted the estimated specific revenue grants for the period and the sum remaining is the rate support grant.

That grant, in turn, is divided into three elements—the domestic element, which goes to abate domestic rate levels; the resources element, which is a grant to authorities with below average rateable resources, and the needs element—much the largest of the three—which takes the place of the general grant under the Local Government Act, 1958. This is set out in paragraphs 1 to 3 of the Report.

The general economic background against which the decisions on the Order have been taken is the strategy set out in the White Paper of 16th January, Cmnd. 3515, and in the Budget speech, that is, to divert a higher proportion of national production for the benefit of the balance of payments and for the investment necessary to support the competitive strength of the economy.

The importance of local authority expenditure in this strategy is clear. Local authority capital and revenue expenditure combined represent well over a quarter of all public expenditure and over a seventh of the gross national product. Local authority revenue expenditure alone, with which rate support grant is concerned, amounts to well over a sixth of all public expenditure and just over a tenth of the gross national product. Moreover, these proportions are not static. Local authority expenditure has for some time been rising by 6 per cent. per annum or more in real terms, whereas the growth of the economy has been about 3 per cent. per annum. Over the past seven years when the gross national product has grown by 50 per cent., total local authority expenditure has grown by over 120 per cent. A gap of this size clearly cannot continue indefinitely.

It appears from the comments in some newspapers that there is a lot of misunderstanding about the phrase" real terms". Perhaps I may explain it. If in one year an authority employs 100 staff at an average wage of £1,000, the cost will be £100,000. If there is a wage increase of 3 per cent. in the next year the 100 staff will cost £103,000, but this is an increase in costs and not an increase in real terms. If, in the second year, however, the authority employs 103 staff with the higher wages this represents a 3 per cent. increase in real terms, but the cost will be £106,090—an increase in cash expenditure of over 6 per cent.

The House will recall that the White Paper, Cmnd. 3515, in paragraph 51, indicated that in the autumn of this year the Government would propose rate support grant on the basis of an increase in local government revenue expenditure not exceeding about 3 per cent. in real terms above the figure originally agreed for 1968–69. At the same time, local authorities were asked to make all possible economies in 1968–69, and to absorb price increases. To the extent that local authorities reduce their expenditure in real terms in 1968–69 below what was previously planned, the increase in 1969–70 over 1968–69 will be more than 3 per cent.

The Government, in January, indicated savings of £35 million which could be made this year, and local authorities should have found others. If the total savings in real terms in 1968–69 were about £40 million, then the increases in real terms between this financial year and the expenditure envisaged in 1969–70 will be nearer 4½ per cent. than 3 per cent.

For 1970–71 the Order provides for an increase of 5 per cent. Thus, the annual increases in real terms over the five years from 1965–66 to 1970–71 would be 6¾ per cent., 5¾ per cent., 4 per cent., 4½ per cent. and 5 per cent. On this basis the growth envisaged for 1969–70 and 1970–71 at 4½ per cent. and 5 per cent. should be a little below the growth in earlier years, but it is still substantial. Moreover, it must be seen in the context that public expenditure as a whole, which includes this growth, will rise by only 1 per cent. between 1968–69 and 1969–70.

In the debate exactly two weeks ago the Opposition were calling for further reductions in public expenditure. I shall wait with interest to hear whether they are now going to say that these figures of growth for local authorities are too high. If so, would they reduce the Government grant, thus creating further difficulties for councils, or would they impose a heavier burden on householders by reducing the subsidy for the domestic ratepayer? Characteristically, I suspect, the Opposition are blowing hot and cold at the same time.

It is an irresponsible way of dealing with a matter of such great importance to the general economy, to the support of local government and to the interests of the ratepayers in general. It certainly seems to make a nonsense of the speech of the Leader of the Opposition, at Preston on Saturday, When he appeared to be preaching sound financial administration from a Conservative Government.

During the negotiation on the rate support grant, it was put to me that the notice given to local authorities of the fact that the Government did not contemplate making an increase Order for 1967–68 was too short to permit them to take the measures necessary to reduce expenditure during that year sufficiently to off-set the loss of grant income.

I considered this point very carefully and with some sympathy, but, in present economic conditions, and bearing in mind the continuing need for a close watch on the movement of public expenditure, I came to the conclusion, which I have communicated to the local authority associations, that retrospection in this way would not be justifiable—

Mr. John M. Temple (City of Chester)

The right hon. Gentleman expresses his regret at not bringing in supplementary grant, but how, in terms of public expenditure, would it have made the slightest difference, since the money has already been spent?

Mr. Greenwood

It is really for the local authority associations to say how they would have dealt with it, but I imagine that it would have gone to replenish reserves which have been run down.

As to 1968–69 the January White Paper made clear that the local authorities were expected to absorb price increases. The local authorities have represented to me that the rise in prices with which they will be faced is likely, in their view, to add perhaps as much as £100 million to their expenditure this year.

While I do not necessarily accept this figure, I am bound to point out that the estimate for their expenditure on rate support grant services, used for fixing the level of rates for the present year, allows about £70 million above the previously agreed figure for rate support grant relevant expenditure for 1968–69. If we then allow for the savings in real terms on that figure, which I have already suggested ought to be at least £40 million, the rates already levied should cover cost increases of over £100 million. Even so, the average increase in the rates was 6d., or only 1d. increase for domestic ratepapers. In all the circumstances, the Government reaffirm their decision that no increase Order should be made for 1968–69.

There have been statements that it will be impossible for this or that authority to absorb recent and future cost increases within the rate support grant figures now proposed for 1969–70. Under the normal procedure, such increases for that year, to the extent that they arise after the middle of November, would fall to be dealt with by an increase order in due course.

I turn now to the detailed provisions of the Order before the House. Before determining the total Exchquer assistance to local authorities, I am required by the Act to consider three sets of factors. The first is the current level of prices, costs and remuneration, and the latest available information as to the rate of relevant expenditure. For this purpose relevant expenditure means all rate fund expenditure except contributions to housing revenue accounts and trading accounts.

Secondly, I must have regard to any possible fluctuation in the demand for services resulting from circumstances prevailing generally in England and Wales, and not under the control of local authorities. Thirdly, I must take into consideration the need for developing those services and the extent to which, having regard to general economic considerations, it is reasonable to develop them.

On the basis of returns collected from local authorities and of other estimates, made in terms of June, 1968 prices, the total forecast expenditure for 1969–70 was £3,057 million and for 1970–71 £3,234 million: for 1968–69 the estimate was £2,864 million. On a constant price basis, that is, in real terms, the forecast expenditure for 1969–70 and 1970–71 showed increases over 1967–68 of about 13.4 per cent. and 19.9 per cent. respectively; in other words, taking the period 1967–68 to 1970–71 as a whole, the forecasts envisaged increases of 6½ per cent. or more each year.

As I have already said, the Government's proposals are that, for 1969–70, there should be a real increase of about 4½ per cent., depending on the economies that are made in real terms this year; and for 1970–71, 5 per cent. The Government's purpose in the negotiations—and I am very grateful to the local authority associations and the Greater London Council for their helpful cooperation in the discussions—has been to ensure that the experience and judgment of the local authority associations and of the Government Departments has been combined to produce what I believe to be reliable forecasts of expenditure, service by service.

The local authorities did not, by any means, entirely agree with the views of Ministers on what the outcome in expen- diture terms of present policies would be. I have today received a letter from the Chairman of the Association of Municipal Corporations on this subject. The Association has said throughout that there was a strong case for increases, that is to say, beyond the amounts being finally proposed by the Government, of £15 million in each year for education and £15 million for highways and another £5 million for other services, and that, at the very least, there should be increases overall of about £23 million and £25 million in the two years. In other words, it was seeking overall rates of growth of about 5½ per cent. and 6 per cent. for the two years.

The main issues in the discussions related to the rate of growth of education expenditure and to the restricted level for highways expenditure. There are notes on these matters in the House of Commons Report where the Government set out the priorities which have guided them on these and the other services. The House will see that the Report indicates that the Government's general conclusion is that the broad pattern of expenditure is appropriate to the requirements of the circumstances and sufficient for the policies to be pursued.

To summarise very briefly Section B, which is the appropriate—

Mr. Eric Lubbock (Orpington)

The right hon. Gentleman referred to the fact that education is covered in the House of Commons Paper No. 24. Does he realise that there is no reference in the relevant paragraph to the reorganisation of secondary education and the elimination of the selective principle? Why is that?

Mr. Greenwood

That is a question of building, which is capital expenditure, and the rate support grant refers only to revenue expenditure.

Mr. Temple

But is the right hon. Gentleman aware, in regard to the loan charges, that they fall upon the rate support grants, and that they are jumping up at an astronomical rate?

Mr. Greenwood

I am sorry. Perhaps I oversimplified. This, of course, applies in other fields of expenditure as well. But if hon. Gentlemen will make their points on education during the debate, my right hon. Friend the Minister of State, Department of Education and Science, will deal with them when she replies.

I should like to summarise now the broad priorities which the Government have pursued in Section B of the Report—

Sir Edward Boyle (Birmingham, Handsworth)

I apologise for pursuing this, but we can hardly let it rest, because the right hon. Lady who is to reply to the debate said in a recent education debate that no authority, as she claimed, that had a sound reorganisation plan was being held up for lack of building work. Surely, that being so, the current expenditure consequential—not least loan charges, but a number of other items as well—should have been taken into account by the Government when fixing their contribution through the rate support grant.

Mr. Greenwood

We are concerned here only with the loan charges. I have no reason to believe that they are not covered by the arrangements that have been made.

To continue with the summary of what the Government have laid down, we emphasise that the expenditure envisaged allows in full for increases in the number of pupils in primary and secondary schools, and for the likely growth of further and higher education, and takes account of the expected increase in the number of teachers in primary and secondary schools. We provide for continuing expansion in the local health and welfare services, particularly in meeting the needs of the elderly and the physically or mentally handicapped.

Reasonable growth in the strength of the police forces, and necessary expansion of the fire services is provided for. Provision is also made for rising expenditure in the sphere of child care. So far as spending on highways is concerned, the level of expenditure reflects the sharp cuts requested by the Government in January. Allowance has been made for the growth of expenditure on essential sewerage and sewage disposal facilities, and for limited development of the refuse disposal service.

We stress in the Report the need to keep in check the total size of the work force. This will present no serious problems if we recognise the scope which exists for securing increased productivity in local government and take full advantage of it. Some very useful work has already been done in that direction.

For example, about 500 incentive bonus schemes based on approved work study techniques have been introduced in local government in the past two years. These incentive schemes can produce impressive results. Many of them result in a productivity gain of 60 per cent. or even more—I have heard of cases where it has exceeded 100 per cent. The resultant savings are, in effect, shared between the workers, who earn substantial bonuses, and the ratepayers, who benefit from reduced staff costs.

I have every hope that we shall now see a rapid expansion of properly worked out incentive bonus schemes. The two sides of the National Joint Council for Local Authorities' Services have recently issued a circular asking the local authorities to prepare plans for their introduction. The Local Authorities management Services and Computer Committee, set up by local authority associations to encourage the use of modern management techniques in local government, is I know, treating the extension of incentive bonus schemes among manual workers as a first priority. I hope that all local authorities will give warm support to these initiatives, because they offer opportunities for substantial savings in total staff costs and at the same time substantial bonuses for the workers concerned.

Let me stress the content of the Order. The aggregate expenditure to be allowed for at November, 1968 prices is £2,976 million in 1969–70, and £3,128 million in 1970–71.

Turning now to the grant, the Government are proposing that, following the percentages of 54 per cent. in 1967–68 and 55 per cent. in 1968–69, the Government's contribution for the two years of the forthcoming grant period should continue the progression and should be 56 per cent. in 1969–70 and 57 per cent. in 1970–71. Thus, the Government are not only allowing for a substantial growth in expenditure in real terms—they are also increasing the share of the expenditure that they will bear, and giving valuable protection to householders.

With these percentages of 56 per cent and 57 per cent. the aggregate Exchequer grants become. £1,666 million for 1969–70 and £1,783 million for 1970–71, or £130 million and £247 million respectively above the grants being paid this year. Not even the Opposition can turn increases of that magnitude into cuts, however hard the Conservative Central Office may try. The estimated specific grants are being taken as £138 million and £150 million respectively. The remaining £1,528 million and £1,633 million are devoted to the rate support grant.

For the domestic element, which goes to reduce the rate burden on householders, the Government are continuing the progression from 5d. in 1968–69, 10d. in this current year, to 1s. 3d. in 1969–70 and 1s. 8d. in 1970–71. The sums involved here are £73 million and £100 million. With increases in the level of local authority expenditure some increase in total rates is inevitable, but the Government are anxious to protect householders as much as possible.

Broadly speaking, during the present financial year two out of three councils were able to either reduce, or keep steady or increase their domestic rate by no more than 3d.; only one in three found it necessary to increase the domestic rate by more than that. That is remarkable evidence of the success of our policy of making the rating system fairer to householders.

Before the new grant system was introduced in 1967 rates had been rising about 10d. a year. Over the past two years they have risen on average 11d. in total and, because of the domestic element which was originally intended to halve the impact of rate rises on the domestic ratepayer, domestic rates have risen on average by only 1d. The increased domestic element now proposed for the next two years will substantially protect the householder against the burden of increased local authority expenditure.

The resources element is calculated to be the sum required to meet the amounts payable to authorities with rateable resources below the national average per head if local authorities incur expenditure equal in amount to the totals of relevant expenditure. The sums concerned are £225 million and £236 million, and are of very great importance to local authorities in less prosperous areas. The needs element, at £1,230 million and £1,297 million respectively for the two years, is the sum remaining.

We have taken the Order as an opportunity to consider whether any changes should be made at this time in the formula for the distribution of the needs element. As the Report indicates in paragraph 32, I have decided, with the agreement of the local authority associations, that on this occasion, and with due regard to the fact that if changes were made now further alterations could not be made for another four years, I should not be justified in proposing amendment.

However, one change has been made, though not in the formula itself. The relative values of the education units are being brought up to date with the latest available figures of costs, and regulations will shortly be presented to bring this into effect.

The Order thus allows for increases in real terms in local authority revenue expenditure of about 4½ per cent. and 5 per cent. and provides for Exchequer grant on these levels of expenditure at the increased percentages of 56 and 57. There is, therefore, no shadow of truth in the allegations in some newspapers—made, I hope, only through ignorance—that the Government are cutting either the expenditure or the grant.

The Opposition must make up their mind. Do they wish to see a steady development of local authority services, as rapid as is consistent with our economic progress? Or do they wish to see an expansion of local authority expenditure, regardless of its impact on the national economy or on the interests or the ratepayers? The blank cheque the Opposition are demanding is inconsistent with the niggardliness of their attitude to local authorities when they were the Government. It is also a cheque which, if they became the Government again, they would be unable to meet.

I believe that financial prudence and political honour alike require us to act as the Government are acting. While keeping public expenditure under careful control we are sanctioning an essential increase in local government spending over the next two years. As a Government, we are meeting a higher proportion of that higher spending; and we are giving householders a rate subsidy of 1s. 3d. in the £ next year and 1s. 8d. the following year.

This is a reasonable, just and far-sighted way of proceeding, and I commend the Order to the House.

4.10 p.m.

Mr. Peter Walker (Worcester)

The tone of the Minister's speech was, alas, typical of speeches made by Ministers under this Administration when introducing unpopular or difficult measures. At the time of devaluation the people were told that that step would not be hard on them. Whenever unpleasant Budgets have been introduced, Government spokesmen have gone out of their way to explain that tough economic measures would not have an adverse effect on the people.

The right hon. Gentleman's speech today was absolutely in that tradition. He said, in effect, "We will take the measures necessary in the interests of the economy, but they will not harm anybody; all the services will continue to be improved and local authorities will not have to put up the rates." In other words, the right hon. Gentleman said that this was not a hard measure which was needed to meet a difficult economic situation, but a generous grant to local authorities.

While that was the theme of the right hon. Gentleman's speech, the same theme has constantly run through speeches made by Ministers of the Government, and this has discredited this Administration. They are never willing to say, "The economic situation is bad and, therefore, many of the services which we cherish dearly must be cut. There will be difficulties for local authorities and it will be a tough year." Ministers of this Government never have the guts or courage to say that. They go out of their way to attempt to illustrate that their measures will have no adverse effects on the people.

I have never heard a more classic example of this than the Minister's speech today. The right hon. Gentleman knows, from the information available to him, that this Order will mean a deterioration of many local authority services. Indeed, he said exactly that in a circular which he sent to local authorities at the time of the publication of the January White Paper, which stated that the Government accepted that economies on the scale proposed involved a slower growth in many services, and in some cases a temporary lapse in standards. We have heard nothing today about a temporary lapse in standards or a failure to improve basic services. We have only heard about the generosity of the Order.

The right hon. Gentleman asked my hon. Friends and I what we would do. I assure him that if, in our judgment, the economic situation was very bad—for example, as bad as we were told it was a fortnight ago—then, obviously, we would have to be as tough as this and perhaps even tougher; but we would tell the country precisely what the position was and what we were doing. However, if the economic situation was as the Chancellor of the Exchequer said it was last Saturday, then we would probably be more generous. It is difficult to answer this sort of question when a Government like the present one are in power. Only last Sunday we were told in newspaper headlines that the Chancellor was optimistic about the whole economic situation.

Presuming that the economic situation is serious and that we are to have enormous adverse balance of payments this year, then the Government, who have got the economy into this condition, must take tough, hard measures and—however much they deplore doing things against their political beliefs and faiths—they must also make the position clear. But today the Minister failed to have the courage to explain the position. Instead, he tried to pretend that he was making a generous grant which would do no basic harm to either the services or the rates.

In fact, much harm will be done. The Order will mean a considerable deterioration of some services. It will also perhaps mean substantial increases in rates. Some cities have already estimated that they may, as a result of the Order, have to increase their rates by as much as 2s. or even 2s. 6d. in the £. This is bound to have a serious effect on education and the welfare services.

The whole tone of the White Paper explaining the Order gave the impression that no great harm would be done. Even the Minister's Press hand-out on the day when the White Paper was announced was headed: Rate relief in 1969–70 and 1970–71. The first paragraph told us: Exchequer rate relief for domestic ratepayers will be increased by 5d. to 1s. 3d. in the £ for 1969–70 and by a further 5d. to 1s. 8d. in the £ in 1970–71. The whole atmosphere created by the Press handout was that the Order would be good for domestic ratepayers. [HON. MEMBERS: "Hear, hear."] Hon. Gentlemen opposite cry "Hear, hear", yet they know, from the figures supplied to them by local authorities, that the grant to which they have agreed will mean either a severe cut in some basic services or an increase in the rates. They have not, however, had the courage to say which basic services they would prefer to see cut to maintain the rates at their present levels.

In the same way, the White Paper skated over all these difficulties. If important talks are going on—and we gather that they are going on with the world's economic leaders—then I guarantee that that White Paper would not be circulated at the talks to illustrate the sort of tough measures which the Government are taking to cure the ills of our economy. Instead, the White Paper was designed to pretend that nothing was being done to cut back on public expenditure. The Government have been completely and utterly two-faced on this subject.

Looking at the history of the rate support grant and the background to this matter, it is interesting to note the attitude of the Labour Administration from the time they came to power. At first, we had strong promises that the rates would be reduced. The main promise in the 1964 manifesto was that the cost of teachers' salaries would be transferred from the ratepayer to the taxpayer. This the Government have not done.

The next classic promise affecting this grant concerned the whole question of the cost of finance to local authorities. It was the Prime Minister who, speaking at a Parliamentary Press Gallery luncheon and commenting that local councils were being hampered by high interest rates, said: Since our general economic policy rejects the over-reliance on monetary weapons as the means of regulating the economy, interest rates will return to a very reasonable level. When he made that speech Bank Rate was 4 per cent. Today, it is nearly 7 per cent. and in the interim it has been higher.

After those promises—about interest rates being reduced and the cost of teachers' salaries being transferred from the ratepayer to the taxpayer—one would imagine that by now the burden on the ratepayer would be considerably less. Quite the opposite has occurred. During the first two years of office of the Labour Party rates went up by about 11 per cent. in each year. Then we had the National Plan, which promised a basic growth in all our social services and a considerable growth in expenditure on education.

There followed the rate support grant and, as the Minister said, this is the second Order affecting that grant. It is interesting to note that the first Order was introduced in exactly the same atmosphere as this. There was a political and economic crisis facing the Government. It is also interesting to note how, at that time, the Government appealed to local authorities to reduce expenditure. The Government explained that it was a temporary measure.

In December, 1966 the Joint Parliamentary Secretary to the Ministry of Housing and Local Government—speaking in a debate precisely like this one—said: But if the Government are doing their job with any kind of responsibility, they have to have regard to economic conditions, and if the right hon. and learned Member for Hexham (Mr. Rippon) does not know that we are in the middle of a desperate economic crisis, then everybody else does. He went on: It is not cured, but we have gone a very long way indeed on the road to curing it. The effect of the Government's policy on exports has been referred to as well. Exports last month were at an all-time high—higher than they had been in the previous month. The balance of payments situation has been steadily improving over the last few months. This is not the record of a Government who have faltered or failed to stand up to the economic crisis. It is the record of the Government who have tackled that crisis with determination—determination to do the job even at the risk of losing some popularity. Thus, local authorities were told—and told by the present Minister of Housing and Local Government, remember—how much he regretted the circumstances in which the Order was being introduced and the amounts involved in it.

Also in that debate, the Minister of Housing and Local Government said: I know that these savings will not be easily achieved. They will call for more than a strict attention to economy, necessary though that is. They are bound to mean some slowing down in the development of services; but that, in our judgment, is what the situation requires. I need hardly add that they do not imply any criticism of the local authorities."—[OFFICIAL REPORT, 20th December, 1966; Vol. 738, c. 1261–323.] Therefore, the Order made two years ago by the present Minister of Housing and Local Government was one that he considered tough and hard for local authorities to comply with, and one which meant a cutting down of services.

The fact is that that Order allowed for a growth rate of 6 per cent. a year, but today the right hon. Gentleman is asking for a growth rate next year of 3 per cent. As for that 4½ per cent. which he seems to have invented by a most remarkable juggling of figures—well, if it is not fictitious but is a 4½ per cent. rate, why was it not put in the White Paper? It is not even mentioned there. The right hon. Gentleman knows that a growth rate of 3 per cent. is the reality he referred to. Therefore, after two years of difficult conditions as described by the Minister, we have the Government saying, "We were very tough two years ago, but we shall be even tougher for the next period."

The Minister responsible must know how difficult it is for a local authority to be perpetually cutting. A local authority can do all sorts of things for a time. It can decide not to replace vehicles, or not to maintain buildings, or put aside other than immediate repairs. But as these conditions continue it has to replace those vehicles, it has to maintain those buildings, it has to do those repairs. So with the continuance of this terrible squeeze for a further period, local authorities are being faced with very real and immense problems.

On the original grant, local authorities wanted increases of 8.3 per cent. and 9.1 per cent. for each of the two years. That was reduced by the Government to about 6 per cent. That meant that in the original first Order the Minister reduced local authorities requirements by £105 million and £104 million for each of those two years. A pledge was then given that there would be increase Orders. If wages go up as a result of Government action, and other costs go up, and interest charges go up, local authorities have a perfect right to increase Orders.

Such an increase Order was introduced, appropriately enough, just after another economic crisis—the devaluation crisis in 1967. My hon. Friend the Member for Crosby (Mr. Graham Page) asked the Minister about the cost of devaluation and whether there would be an increase Order as a result. The Joint Parliamentary Secretary replied: The hon. Gentleman knows about Part I of the Act, and he knows that, if the grim forebodings which he and other hon. Members have given vent to about devaluation take effect, this matter can be lookd at again in a further Order."—[OFFICIAL REPORT, 14th December, 1967; Vol. 756, c. 755.] That was on 14th December.

In January, only a few weeks later, the Prime Minister announced to the House that, irrespective of what happened, there would be no increase Order for 1968–69. I must ask the Minister to give the local authorities an absolute guarantee that having been told there could be increase Orders we will not once again have the Prime Minister or the Chancellor of the Exchequer saying, "No increase Orders. You must duly meet all of this yourselves." We are now told about two difficult years ahead, when already the Government have announced a series of inflationary measures, and already under this system local authorities have believed that they could get increase Orders and were suddenly told that increase Orders were not available. We have had that broken promise.

But what must be upsetting the local authorities is that the whole atmosphere of proper negotiation has disappeared. In the White Paper in July the Government made it clear that there was to be a 3 per cent. increase for 1969–70. That was laid down before any negotiations started. I want to draw the attention of the Minister to the wording of his own White Paper. I do not, of course, accuse him of deliberately deceiving his readers, but I would point out that the atmosphere of the White Paper implies that the local authorities had agreed with him. I see that the right hon. Gentleman nods. He knows that, as I say, I do not accuse him of deceiving deliberately.

Paragraph 12 of the White Paper reads: The Government have discussed these matters, in the light of the local authority estimates, the price changes, and the development of services with the local authority associations and the Greater London Council. The paragraph continues: They have concluded … The use of the word "They" gives the impression, though I am sure that the right hon. Gentleman did not mean to give it, that the organisations mentioned had all agreed. As he told us, they did not agree with the figures.

In the past, under the general grant system, the estimates of local authorities were exceedingly accurate. An example of this is the fact that over the eight years of general grant preceding this present method of rate support, actual expenditure varied from estimated expenditure by as little as £7 million. The actual expenditure was £8,258 million and the estimated expenditure was £8,265 million. There is a great tradition among local authorities of very accurate estimates. In the view of local authorities, the Government's accepted figure for 1967–68 was about £41 million wrong compared with the actual figure and, as far as they can estimate for this year, the Government's figure is £71 million wrong. If the local authorities are right in their estimates and the Minister is wrong one sees the situation that arises.

If we take the base figure of £2,793, used by the Minister for his 3 per cent. increase, and add the £71 million which the local authorities consider should be added, we get £2,864 million. If we then regulate that for the adjustment of prices and add another £50 million, we get £2,914 million. The view of the local authorities is that the figure on last year's services which should have been subject to grant is £2,914 and £2,927 is what the Government offer for next year. So, if the local authorities are right, the Government are offering virtually no increase at all. As a result, there will be very considerable added burdens on the rates.

Hon. Members may have read the letter which appeared in the Daily Telegraph last week from the Chairman of the G.L.C. Finance Committee, in which he said: When the G.L.C.'s budget is introduced in February it will carry at least £5½ million extra expenditure imposed from Whitehall in higher Jenkins taxes, usurious rates of interest and artificially low Greenwood rents. That means nearly a nine per cent. increase on our previous budget before we even start to consider the cost of services some of which are growing fast in response to public demand. Whitehall now tells us we must keep within three per cent. This comes pretty hard from a Government whose chief trouble is that its net income is never sufficient to pay for its gross habits. Those figures from the G.L.C. can be reflected in many parts of the country.

Local authorities have been inundated these last two or three years with Departmental circulars asking local government to do things. I am pleased the Minister of State, Department of Education and Science, is here because she will know just how many circulars her Department has sent out—all of which demand considerable increases in costs. The hon. Member for Orpington (Mr. Lubbock) has already mentioned one circular on the whole comprehensive system which will mean very considerable increases in cost. There have been White Papers, and new duties have been placed on local authorities—administration on the Rent Acts, rent rebates, administration of the S.E.T., and all the mandatory extra costs as, for example, university grants, to which the Minister will doubtless refer later.

In this light, it is very wrong of the Minister to put in page 6 of his White Paper a series of paragraphs which give the impression that no real harm will take place. Let me refer, first, to education. Any person referring to paragraph 15 would gain the impression that all the basic things would remain untouched but that perhaps a few minor things might go out. But already some pretty fundamental things have gone wrong as compared with the Order of two years ago.

It is interesting to note that when the former Order was made my right hon. Friend made a point about the raising of the school-leaving age and was given a categorical assurance by the Minister, who said: My right hon. Friend said last week, I think, that there was no intention to defer raising the school-leaving age, which answers the right hon. and learned Member for Hexham. The Government have shifted from that in education priorities and that promise has not been kept.

The Minister, replying to that debate on the Rate Support Grant Order, actually argued point by point that the Government were keeping completely to the National Plan in expenditure on education. He said: In fact, under the Rate Support Grant Order the increase for 1966–67 to 1967–68 will be 5.8 per cent. and for the year 1967–68 to 1968–69 it will be 5.8 per cent. and for the year 1965–66 to 1966–67 it has been 6 per cent. We have thus kept up within the target set by the National Plan."—[OFFICIAL REPORT, 20th December, 1966; Vol. 738, c. 1325–6.] I hope that in replying tonight the Minister of State will tell us how far the Government are to keep to the target set by the National Plan.

I quote from a recently published education pamphlet, with a foreword by Sir William Alexander and written by Stuart Maclure, who is no supporter of the Conservative Party but writes as one genuinely interested in education. He ended this very important booklet by saying: Anyone must be anxious to avoid crying 'wolf. But Mr. Short has already shown his hand by hinting that, not only is there no crisis, but that any talk of a crisis is just making political capital. This line is made no easier to maintain when one of the first education committees threatens to sack all its 73 part-time teachers in order to cut its costs is Labour-controlled South Shields. This is not a party political issue at all. The facts are plain and untinged by party strife: 1969 and 1970 threaten to be worst years for education since 1931. All concerned with education, various chairmen of education committees I have spoken to at the weekend, are alarmed at the proposals in this Order.

On health and the welfare services the Government have published a report which gives an indication of the problems involved. They have passed a Bill which puts a statutory obligation on local authorities to provide proper health services. A report by the Office of Health Economics, entitled "Old Age", esti- mated that of old people living in private households 348,000 feel the need for a home help but are not getting one, 361,000 would like a hot meal from mobile services but are not getting one, 703,000 would like chiropody services but are not getting them, 220,000 have severe hearing difficulties and about 342,000 have sight difficulties which have not received attention.

The whole theme of the report is that if local authorities were able to provide proper services in this sphere there would be a considerable saving in the National Health Service. About 35 per cent. of the expenditure on the Health Service is for people over 65 years of age. Every local authority knows that unless it is substantially to increase its rates these services will be adversely affected.

I turn now to highways, a matter I have been concerned with in recent years in another capacity. Anyone with knowledge of road construction and road building realises that it is ridiculous to consider it a saving to cut down on maintenance of roads. It is a very short-lived saving and the costs are more later. In addition to costs caused through congestion there are those concerned with road safety. No section of the community is more hard hit than the motoring public, who have been paying taxes which have been doubled in the lifetime of this Government. Yet here severe cuts are taking place.

I put to the Minister a number of particular problems which I think he has failed to recognise by the manner in which he introduced the Order. First, there is the problem of an authority involved in a major city redevelopment. Such an authority is left with empty buildings from which it cannot draw rates and it has a high borrowing rate for money with which to pay both capital and interest charges. I heard only today from Newcastle of the great difficulties which that authority will be in as a result of the Government's proposals.

Many localities are involved in town expansion as part of the Minister's housing policy. I know in detail of some of the problems for these localities because there is one in my constituency. Droit-wich is taking Birmingham's overspill at a considerable rate year by year. Under present arrangements it has to meet the cost of providing a sewerage scheme.

Although there are grants from the Government and the county, such an authority has to start repaying immediately both capital and interest before the houses are built. There is a heavy burden on the rates in such localities.

Droitwich had to increase its individual rate by 1s. 3d. for this purpose alone last year. I think that there will be a further increase of about the same amount next year and probably the year after. This is an absurdity flowing from the Minister's housing policy. How can we encourage industry to go to such an area if the rates are to be much higher than elsewhere because of the unwillingness to capitalise on a large number of services and defer payment until the houses are built?

I urge the Government to answer a basic question. They know that by cutting down the rate of increase in the grant to this extent, by not having provided a proper increase Order last year, by the fact that local authorities have already spent £110 million more than was provided for in previous grants, they are putting an enormous burden on local authorities. I urge them to be honest with the country and to tell the people that there will be a need for an increase in rates or a cutting down of services. Let the Minister of State make clear which of the two she would prefer.

If local authorities in the interest of the economy are to keep the rates level and to cut back services, to comply with these financial requirements, let the right hon. Lady boldly say so, and let her say which services should be cut. If, on the other hand, the Government would prefer the rates to go up, perhaps to take money out of consumer purchasing, and the services to be maintained, let her make that clear to local authorities. In the whole tone of this White Paper the Government have shown that they have failed to have the courage to tell the country that, due to their failure to run the economy properly, local authorities throughout the country will have the worst year in 1969 that they have had for many a decade.

Mr. Greenwood

Before the hon. Gentleman sits down, will he answer two questions? I have listened to his speech with great interest and I welcome him to the Opposition Front Bench in his new capacity. Will he help by answering these questions? I am not sure whether he is telling the House that the Government have been too tough or not tough enough in holding back local government expenditure, and, secondly, whether he is saying that we have been too generous in our Exchequer policy or not generous enough.

Mr. Walker

On the first and the second question, if the right hon. Gentleman will tell me whether the Chancellor's speech, when he introduced £250 million extra taxation, was a real reflection of the state of the economy, or if the speech this last weekend which was headlined, "Outlook Brighter, says Roy Jenkins", is a correct view, I will answer those questions.

4.39 p.m.

Mr. Joe Ashton (Bassetlaw)

This is a debate not only about the economy of local authorities, but about the revenue to which they are entitled. A year ago the Government took action by allowing local authorities to levy rates on empty properties, but the response has been very poor; only something like 10 per cent. of local authorities have taken the trouble to do that.

There is a very good reason for this, the oldest reason of all. They do not receive any extra cash, and so they will not do the work. Some time ago I was deputy chairman of the finance committee of Sheffield City Council, and earlier this year I made inquiries about how many empty properties there were in the city—commercial and industrial, and domestic—and what revenue we could expect from them if we levied rates an them. The revenue would have been about £500,000 extra for a city the size of Sheffield, which has perhaps 1 per cent. of the rateable value of the country.

If a local authority levies rates on empty properties it finds that its rate deficiency grant is decreased by the same amount. That is a great disincentive. The answer that we get in all too many cases is that it would be difficult to collect the money, that there would be difficulties in tracing the owners, particularly of old property which had been empty for many years, and that even when the money is collected the rate deficiency grant goes down by the same amount.

This has a great influence on one aspect of social life in big cities—houses standing empty. Recently in London a group of people invaded a block of flats, some of which were standing empty, to prove their point that flats and houses were empty too long when many people have no adequate accommodation. They have a very good point.

More accommodation would be put on the market if local authorities imposed rates on empty accommodation, because that would encourage landlords to let or sell the property very much quicker. This would also provide a sizeable revenue for local authorities, and help alleviate some of the expenditure restrictions imposed on them.

Take the case of a city which has a large proportion of slums which are due for demolition in five or ten years' time. A landlord finds it virtually impossible to sell an empty house with only five years left because no one will give a mortgage on it. So the property is decontrolled. It will probably be pulled down in a few years' time, and the landlord will not get very much for pulling it down. Therefore, he is, naturally, after the highest rent that he can obtain for the property, and in many cases he is prepared to let the property stand empty for 12 months or so in order to get the highest possible return on his investment over the remaining years.

In all too many cases such property is using existing services to a large extent. It has to be patrolled by the local police to make sure that no one breaks in and causes damage, the toilets have to be connected to the sewers, and the roads and pavements outside it has to be maintained, but the local authority gets no return. Although it can levy some charge on the property, it will then find its grant from the Government cut down by an equal amount, and nothing will have been done to free the property for the market.

The same thing applies to derelict properties, houses and factories, of which the North of England abounds. They stay empty for years, becoming a blot on the landscape. New industry is deterred from going to the area because of the state of the property. In many cases the property would be demolished if the owners had to pay rates, and by de- molishing it they would free more land for industrial use, make the place look better and do a great deal for the "Clean up the North" campaign, in which many industries in the North have been asked to participate.

Difficulties would arise from levying rates on empty property. Many collieries are in small local authority areas. My constituency, for instance, has four local authorities. The closure of a colliery such as Firbeck Colliery would mean very great disadvantages to the Worksop Rural District Council if there were no rate deficiency grant to recompense it. This aspect would have to be taken into account. Where an industry closes down and the local authority does not levy rates on the empty property, there is a need to attract new industry or to prevent too big a burden falling on a nationalised industry or another industry and causing loss. There will have to be some recompense from the Ministry.

We must give local authorities some incentives to help themselves more. We must give them more freedom. I know that a Royal Commission is considering local government, and I do not want to anticipate its report, but local authorities must be given more local freedom to raise revenue by virtue of local advertising taxes or other income-raising methods. I hope that the Minister will examine this matter not simply from the revenue or financial point of view, but from the social point of view, the point of view of freeing houses and flats which are now kept off the market and helping people who are in social need.

4.45 p.m.

Mr. Julian Ridsdale (Harwich)

I thought that the Minister's speech was very much of a smokescreen to try to deceive the country about the enormous burden the Government are putting on local authorities. I am glad that my hon. Friend the Member for Worcester (Mr. Peter Walker) put to the Minister squarely and honestly the question, "Will the Minister sympathise with the enormous burden which he is putting on local authorities at the present moment?".

The Minister said that sometimes hon. Members on this side of the House—I have done it many times—call for cuts in Government expenditure generally but not in particular. I will not go into the broad general plan of this because this is not an economic debate, but in reply to the right hon. Gentleman I would tell him that if he will read any of the speeches that I have made on these points he will find that I have made specific proposals for cuts in Government expenditure, cuts which will not fall on education, particularly the primary schools, or on the welfare of the elderly, which will be the result of the policy that we heard the Minister enunciate.

On 16th January this year the Prime Minister told us that the rate support grant would not be increased to take account of increased costs, as had happened in previous years. He said that the Government would expect local authorities to absorb increases in costs which they cannot absorb by making savings elsewhere. This means that, although local government expenditure for grant purposes each year for the last 10 years has been allowed to increase at an average of 6 per cent., in real terms for 1969–70 the rate of increase will be halved to 3 per cent.—although I note that the Minister used the figure 4½ per cent.—and for 1970–71 it will be 5 per cent., again lower than the 6 per cent. allowed for in the past.

The dilemma which therefore faces local authorities as a result is that they are faced with either cutting the standard for services or increasing the rates, and most probably they will both increase the rates and cut back on services. Apart from the latest cut-back in the rate support grant, local authorities have had a steady increase in costs as a direct result of Government policy. Penal interest rates have been added to the cost of borrowing on their capital programme. What a bitter march it has been from the day in 1963 when the Prime Minister, who was then the Leader of the Opposition, referred to the high interest rates which were hampering local authorities. At that time the interest rate was 4 per cent. and it is now 7 per cent. and likely—who knows?—with the mismanagement of the economy to be 8 or 9 per cent. shortly.

There is also S.E.T., which has added to the cost of housing and other services, not to mention, in addition to the 3 per cent. cut in the rate support grant, the higher postal charges, the higher electricity charges, the higher postal charges, the higher National Insurance contributions and higher taxation.

There have been all these additions to local authority costs, and the poor ratepayers of London and Harwich, to mention no others, have seen their councils' plans to bring council rents in line with fair rents for private tenants deliberately upset by the Government. In London, this will add £4 million to the costs borne by ratepayers, and there will be a proportionate increase in the burden on the ratepayers of Harwich. I see that the chairman of the Greater London Council's finance committee estimates that all these costs will bring an increase of 9 per cent. above last year, and that is before one starts to consider the rising costs of services.

Another large county has estimated that to maintain existing services would call for an extra 6½ to 7 per cent. in real terms, and, according to the Observer of 18th November, there can be no prospect of holding the increase to 3½ per cent. in that county without cutting back on the number of teachers in the schools.

Mr. Lubbock

I am sorry not to have intervened at the appropriate point when the hon. Gentleman was discussing rents, but this is an important matter and I should like to raise it now. Is it the official policy of the Conservative Party to allow local authorities to increase rents to as high a level as they wish, and, in particular, did the Conservative Party nationally support the Greater London Council in the vast increases which it was attempting to impose on its tenants?

Mr. Ridsdale

I am not the spokesman for my party.

Mr. Lubbock

But the hon. Gentleman should know what the policy is.

Mr. Ridsdale

I have been asked for my view and I shall give it. I have said that local authorities should apply to council rents the fair rent policy which is being applied to private tenants.

At the point where I was interrupted by the hon. Member for Orpington (Mr. Lubbock), I was explaining how, as a result of the Government's present rate support grant policy and their limit of 3 per cent., local authorities face severe cuts, cuts particularly in the education service which will hit more than any others the primary schools. This is what concerns me most. The tragedy of the present limited rate support grant is that it necessarily entails cuts in education where they hurt most, in the nursery and primary schools. The effect will be particularly harsh in North-East Essex, where we have already had to face a 77 per cent. cut in the school building programme.

This is not all. At the present level of grant, there will have to be cuts in welfare services for the elderly. In North-East Essex we have a high proportion of elderly people on small fixed incomes. Far from bringing any prospect of our seeing the recommendations of the See-bohm Report carried out, the Minister's ruling will, alas, continue to involve cuts in the home help service and the postponement of many badly needed forms.

How guilty the Labour Government must feel at their failure to expand production which makes local authorities face either harsh cuts in the social services or large increases in rates—or, perhaps, both.

That is what will happen. If the local authorities have to raise rates, there will be an additional burden on the domestic ratepayers, and particularly on some of those who are retired and living on small fixed incomes, in spite of what might seem the generous Government help of 1s. 3d. in the £ towards the domestic rate burden. Some people will meet the burden by taking money which would have otherwise have gone to savings. In addition, a heavy burden will fall on industrial and commercial ratepayers, thus adding to the costs of production at a critical time for our economy when we are fighting to expand exports.

Is there an alternative to the Government's rate support grant policy? As I say, in North-East Essex we face harsh cuts in education, particularly in the primary schools, and an extra burden on the elderly through either rising rates or reduced services. It seems wrong that at the same time places like Liverpool, Manchester, Bradford and Brighton will receive respectively through the rate support grant £18½ million, £15.9 million, £7 million and £3.3 million if they are able to afford local radio stations out of the rates. As for Liverpool, it produces every so often a glossy magazine even glossier than the Tatler or the Queen.

I am not at all sure that help through the rate support grant should go to those areas and to those people who really need it. What always concerns me in a debate like this, which many of my hon. Friends attend in order to speak because we know the difficulties which people face in our areas, is that the Government make no proper effort to set the right priorities in the social services. Yet until those priorities are right, if cuts in Government spending have to be made—I accept that they have to be at this time—they will not fall where they should. Cuts in Government spending should not fall, as they do at present, on nursery and primary schools and on the care of the elderly, many of whom are having a difficult enough time as it is.

This, therefore, is my simple message to the Government. Hands off the primary schools. Hands off the care of the elderly. Let us have a realistic review of all aspects of Government spending. Let us have priorities for action so that we may stop the terrible drift whereby Government and local authority spending is now 48 per cent. of the gross national product.

Above all, as anyone knows who deals with the social services, both locally and nationally, we must create wealth, and there must, therefore, be saving and investment to create that wealth. This is why I am so disappointed that the Minister has not been more honest with the House about the cuts which will come as a result of the present level of rate support grant.

4.57 p.m.

Mr. Ted Leadbitter (The Hartlepools)

I must at the outset comment on the attitude displayed by the hon. Member for Worcester (Mr. Peter Walker). It is not sufficient, when my right hon. Friend asks questions of major importance on public expenditure which the House is entitled to have answered, merely to say, "I shall not answer unless you answer two other questions"—questions which are irrelevant to this debate.

Mr. Peter Walker

Irrelevant?

Mr. Leadbitter

Yes, certainly. The country is entitled to know what the attitude of the Conservative Party is. The Opposition are taking part in a debate today on the question of public expenditure, how that expenditure shall be distributed, how its total shall be calculated and what the priority purposes should be. The Opposition may not be inclined to declare themselves, but in a debate proceeding from those premises they ought to make clear what priorities in public expenditure they would pursue and how or where they would go for expansion or contraction. It is no good politicians mouthing generalisations in the House, saying that there will be serious cuts here or there, using the psychology of fear, and hoping that an intelligent electorate will come to conclusions which they want them to come to.

Mr, Ridsdale

We have done that time and again in our speeches in economic debates.

Mr. Leadbitter

Just as I say. The hon. Gentleman and his right hon. and hon. Friends have done it time and time again. They want the luxury of saying "Cut down public expenditure" in a climate of national crisis, but they do not want the challege of saying where. My right hon. Friend says honestly that the purpose of the Order is to reduce the rate of growth. However hon. Members opposite might look at the matter, the Order makes an increase, but it is not the rate of increase that some of us would have liked. It is a control of the rate of growth. When my right hon. Friend is willing to say that, it is wrong for the Opposition to indulge in purely negative criticism.

I have here a pamphlet issued by the Political Centre of the Conservative Party which helps me to answer the question for them. On the abolition of grants it says: Government grants to local authorities have always been a contentious matter. The more Whitehall contributes to the cost of local services, the more control will be exercised by Government Departments. The experience of local authorities when the new rate support grant was settled is a telling example of this. Therefore, we must ask a question which is a corollary of the major ones I have put. Does increasing the expenditure of local authorities in the form of a grant take away the independence of councils?

What is the purpose of the argument of the hon. Member for Worcester? If he says that we should have increased the grant, he is saying that he is against the declared policy of his party, he is saying it in spite of this policy that increasing grants is a contentious matter involving control from Whitehall, which I take it he disapproves of. What is the purpose of his contribution this afternoon?

Mr. Peter Walker

Would the hon. Gentleman now read what is inside the booklet as to whether it is official Conservative policy?

Mr. Leadbitter

I am quoting from a pamphlet issued by the Conservative Central Office, and I am only prepared—

Mr. Walker

The hon. Gentleman is quoting it as if it is official Conservative Party Policy when he knows full well that inside the publication, as in all C.P.C. publications, it states that it is intended to arouse political discussion and is not the official Conservative Party policy.

Mr. Leadbitter

It is not for me to declare what is the official Conservative Party policy.

I shall now quote the final paragraph dealing with Government grants, which whether the hon. Gentleman likes it or not represents considerable thought in the Conservative Party. It says: The day-to-day decisions of elected councillors are still tied far too tightly by detailed financial control of this kind from officials in Whitehall. The abolition of most grants and all current loan sanction procedures would immeasurably increase the freedom of local councils in Britain. The hon. Gentleman cannot have his cake and eat it. Until now he has in effect said that the Government have not made grants which will sustain the improving conditions of local government services. I am saying that in addition to his contribution today there is a considerable Conservative opinion, whether official policy or not, which was published by the Central Office of the Conservative Party, stating clearly that the grants should be abolished.

Mr. Walker

This is almost the most dishonourable speech I have heard in the House. The hon. Gentleman was misquoting completely. Will he now say what the pamphlet states should be put in its place?

Mr. Leadbitter

I shall merely repeat what is said in the pamphlet. The hon. Gentleman must not pursue the idea that we are taking part in a T.V. interview in the House. I will not be subjected to a David Frost tactic. I shall quote again the words that came from the office of the Conservative Party: The abolition of most grants and all current loan sanction procedures would immeasurabley increase the freedom of local councils … I merely quote that as a matter of fact. It us up to hon. Members whether they like it or not.

The hon. Member for Worcester referred to the relief assistance for many hundreds of people throughout the country. He conveniently forgot to refer to the present rate relief, which brings considerable financial easement to large numbers of poor people whose incomes cannot be raised. We should be glad in present circumstances, when we are talking about increasing local government costs, that old people, married couples with an income of about £10 10s. a week and single people with incomes of under £10 a week are given considerable rate relief. I was told in answer to a Question that in the Northern Region such relief was benefiting many thousands of people by about £12 a head per annum. That is a considerable saving for people in the low income groups. Moreover, they receive the benefit of the 5d. a year addition which has been made as a contribution by grant to local authorities to assist the rates. Increasing the Government grant is helping the rates to the extent of 1s. 3d. in the pound for 1969 and 1s. 8d. in the pound for 1970.

Since it is reasonable that everybody in the country cannot be rich and the philosophy of any Government must be to seek to achieve a situation where nobody is poor, people on low incomes will welcome a grant from the Government of 1s. 3d. in the pound to assist with their rates, and they will also welcome 1s. 8d. in 1970.

It was convenient for the hon. Gentleman to produce a letter from the Daily Telegraph suggesting that rates would soar in comparison with the past few years. That is not the case, but it is quite usual for the Daily Telegraph to fly such kites before the estimates of local authorities have been determined about events which do not occur. I think that rate increases up and down the country will be far more moderate than the hon. Gentleman implied. His whole object was not to get down to details and facts but to create fear by making blind, sweeping, irrelevant statements. If it is true that the rate increases will be more moderate, is not a 1s. 3d. in the pound grant a considerable contribution to easing the position of many people living in the developing urban areas and conurbations, where increases in local government costs are possibly more marked?

I need not make a judgment on this, because the past year has shown that those who have received assistance as a result of the present Government's measures have been grateful. The improvement is vast compared to the rate relief introduced by the party opposite when they were in power. We are able to talk in terms of thousands who have benefited from our policy. When right hon. Members opposite were in office they could talk in terms only of hundreds who had benefited from their policy, and only meagrely at that.

It is all very well pursuing political argument in the House. We are all prone to do it. But we are entitled to ask some questions if the country is to get benefit from our debates. The local authorities are the largest spenders in the country. Is it right, therefore, that the Government should have requested them to modify their programmes in the light of the national crisis? Ont would have thought that such a request would have the fullest support on both sides of the House and that there would be no political argument about it.

We all have prestige projects which we would like to see carried out in our own constituencies. It want to see new baths, recreation centres and youth clubs and civic centres in my constituency. I believe that my townspeople deserve them. No doubt every hon. Member thinks that his constituents deserve them. But, as serious politicians, when we face the question of whether it is right for my right hon. Friend to ask for moderation in the rate of growth of expenditure—and we are not here talking of cuts—we must also ask whether we accept that the rate of growth of public expenditure is of vital importance to the economic health of the country. The answer is that we do.

Having said that, it is also appropriate to ask whether it is right that the Government should seek to take upon themselves a reasonable share of the percentage of the total expenditure in order that local authorities, within the limits laid down, can get on with their jobs. Again the answer is, "Yes". My right hon. Friend mentioned that the share for 1969 will be 56 per cent. and for 1970 57 per cent., an increase on the figures of 54 per cent. and 55 per cent., respectively, recorded in the two previous years.

Therefore, the divisions in the House on this subject do not appear to be so large after all. We agree that some control is reasonable and that the Government should exercise a proper control. The only area over which we find disagreement is in the question, "How much?" Perhaps the hon. Member for Worcester will brief one of his colleagues to give us certain answers. Would the Opposition give 58 per cent. in 1970 instead of 57 per cent.? Would they give 57 per cent. next year instead of 56 per cent.? We are entitled to know because what we are playing with is the taxpayers' money. The hon. Gentleman knows very well—

Mr. Peter Walker

rose —

Mr. Leadbitter

When I come to a comma I will give way. The hon. Gentleman knows very well that we are arguing about the amount of support grant, about the needs element. Therefore, he has to say whether he feels that it is too much or too little.

Mr. Walker

I hold my judgment on the state of the economy, but perhaps the hon. Gentleman will tell us whether he thinks the economy is going very well, well, pretty well, badly, or is in a very bad state indeed.

Mr. Leadbitter

It would be going a damned sight better if there were less sabotage from the benches opposite. The hon. Gentleman has invited comment from me on this. Time will show that the talk of this last weekend will do the Tory Party no good. In this country in which I believe—and I will not impugn many hon. Members opposite because I think they also believe in it—we are building more houses, schools and hospitals and are providing better health services at an improved rate and the social wage has increased during the past four years.

I stopped here deliberately today not so much to confirm what large sections of our people already know but to take the opportunity to say to the Leader of the Opposition and his right hon. and hon. Friends that the kind of speeches they propounded last weekend will find a different reaction in the long term from what they think. If they have the sense to see it, they will realise that in the long run such speeches will boomerang upon them. It is political sense that the Opposition should outline what is right in the country as well as attack what they think is wrong.

I remember that when I was leader of the Labour Party in Hartlepool, the right hon. Member for St. Marylebone (Mr. Hogg), then Lord Hailsham, arrived in the area wearing his cloth cap. He wanted the number of new houses in the Northern Region increased from 18,000 to 25,000. I am not getting out of order, Mr. Deputy Speaker, because we are talking about money. The right hon. and learned Gentleman wanted us to build more houses. But he did not give us the money to do it. Although housing revenue has nothing to do with the support grant in the sense in which I am discussing it, the Government have given large subsidies to local authorities to build the houses which the right hon. and learned Member for St. Marylebone could not get.

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. The hon. Gentleman must relate his remarks to the Order before the House, which is not to do with housing.

Mr. Leadbitter

I respect your Ruling, Mr. Deputy Speaker, and in such a brief speech—[HON. MEMBERS: "Oh."]—I have not spoken as long as the hon. Member for Worcester did. Right hon. Members opposite are not entitled to talk about limitation of speeches. It is time right hon. Members on the Front Bench opposite listened more to the back benches. To have one point out of order is not asking too much in a brief speech if the hon. Member feels sorely about it.

Mr. Peter Walker

Silly little man.

Mr. Leadbitter

The hon. Gentleman has made his usual remark, but I shall not descend to his level. There is nothing more temporary than the Front Bench opposite. They are all budding leaders of the Opposition. There is a great contest on the Opposition Front Bench. I will not come down to the hon. Gentleman's level and repeat his remark.

I will, however, repeat that the Leader of the Opposition, the hon. Member for Worcester and others should address themselves to the questions put by my right hon. Friend. Have we done too much? Have we been too generous? Have we been too hard? Finally, I ask them, "Will you state clearly and distinctly what the levels of grant would be if you had the power to implement them in the circumstances in which this country is placed? To what extent do you support the Leader of the Opposition who said the other day that he would make cuts in public expenditure?"

Hon. Members must answer these questions, for the country must know the answers. If they are dissatisfied with the Order, it is not sufficient for them to say that they dislike it, or that it is harsh, or that it will create despondency in the town halls. The town halls, the people in the urban and rural areas and in the conurbations will ask the obvious question—"If that is your opinion, what would you do?". That is the challenge for today.

5.21 p.m.

Mr. Oscar Murton (Poole)

The hon. Member for The Hartlepools (Mr. Leadbitter) has issued many challenges and asked many rhetorical questions. Apparently he is the only Member of Parliament and possibly the only ratepayer in the country who does not realise that over the last three or four years rates have gone steadily upwards. I was surprised, too, by the very self-satisfied approach of the Minister to this serious problem.

Inevitably the debate is tied up with nothing more or less than the mismanagement of the national economy by the Government. In recent weeks, we have had a constant flow of maritime metaphors. We have been "blown off course"; it has been "steady as she goes ". although I for one never noticed it; and latterly we have had "a touch on the tiller". No doubt all this is particularly suited to us as a great maritime nation, but it is a singular travesty that our national affairs at this time should be in the hands of the most landlubberly crew of a Cabinet and Government which it has ever been this country's misfortune to have.

The Government are guilty of treating local authorities in the most disgraceful manner in the means which they have employed to bring down the growth of revenue expenditure. Only two years ago, at short notice the Government made an arbitrary cut of £47 million in the estimates of local authorities when they were fixing the rate support grants for the years 1967–68 and 1968–69. They chose "miscellaneous services", but they did not specify how the reductions were to be made. Moreover, it was perfectly obvious that the Government had set themselves that figure before ever discussing it with local authority representatives.

When after a ruthless examination of the local authorities it dawned on the Minister that it was impossible to pinpoint sufficient specific economies which could be made, he had to lop off an arbitrary sum to reduce the total to the figure which the Government had already laid down as being as much as they were prepared to allow, and hence the arbitrary cut of £47 million, and we all know the result. Local authorities, left with no room for manœuvre, many having already embarked on projects which could not be halted, had no assistance for increases in costs and no option but to make considerably higher rate demands. It is utterly wrong that rates should be treated by the Government as a substitute for taxes.

The domestic element of the rate support grant may have saved householders and I am thankful for that, but there has been no mention of the grievous effect which a constant rise in rates has upon industry and commerce, an effect which is frequently overlooked. It is not only householders, but industry and commerce too who suffer rates—shopkeepers and the industry upon whom we rely for exports have had to bear the brunt of the Government's mismanagement.

The pressure on local authorities continues. As well as deciding that local authorities must absorb increased costs in 1968 and 1969 without further grant aid, the Minister has decided—I believe that it has been decided for him—that in 1969 and 1970 the grant increase will be restricted to 3 per cent. in real terms. It is an interesting fact that the Association of Municipal Corporations points out that net actual expenditure in 1967–68 and the best available estimates for 1968–69 clearly show that local authority expenditure has not conformed to the figures assumed and used by the Government. The consequence is that the percentage of grant aid has been less than the 54 per cent. and 55 per cent. in the two years 1967–68 and 1968–69 respectively. In other words, what should have been a burden falling on taxes has fallen upon rates. Moreover, it is feared that similarly the 56 per cent. and 57 per cent. of Exchequer aid proposed for 1969–70 and 1970–71 will represent a smaller proportion of local authority expenditure.

I have seen in the Press—and of course I always believe the Press; in any event, I do on this occasion—that discussions between the Minister and the local authority representatives ended in complete disagreement. I can well believe it. The Minister's Report states that local authority revenue expenditure has been growing at an annual rate of 6 per cent. or more in real terms. The magnitude of cutting back to 3 per cent. is best illustrated by the figures for a developing area with a rising population. The built-in impetus which a rising population brings has effects too numerous to mention here. The County of Dorset has had an annual growth rate of nearer 9 per cent. than 6 per cent., while the Borough of Poole, my constituency, which is a rapidly expanding town, has had a growth rate of approximately 12½ per cent. over the last few years. The problem is not unique to the county of Dorset or the borough of Poole. All expanding counties, cities and towns are similarly affected, and all are in a highly vulnerable position when faced with arbitrary decisions such as that which the Government have taken.

The Government appear to have overlooked—and I suggest that they have avoided—the financial factors which local authorities suffer severely but which are entirely outside their control. These include penal interest rates and major pay awards. The National Joint Council for Administrative, Professional, Technical and Clerical Staffs has an award now imminent which is not catered for in the Government's forecast and there is an even larger award due in education. For some councils pegged council rents will lead to an imbalance in the housing revenue accounts and that can only mean that they must be balanced by a subvention on the ratepayer.

There are expanding essential services. For example, in Dorset the school building programme is almost wholly committed to providing additional accommodation for the growing child population and that means that Dorset's budget this coming year will be £10 million, which means that it has risen by 6.3 per cent. I ask hon. Members to think of the loan charges involved in catering for this rising school population which must be accommodated and taught, and it is in the primary schools where the problem arises.

Other recent increases which have not been budgeted for are increases in the petrol tax, in Purchase Tax, in National Insurance, postage and telephones.

There is one other very important matter which has not been discussed today. Very shortly, we are to be faced with the decimalisation of the currency, which will mean either the replacement or alteration of machinery throughout our local government services. It will cost a considerable sum of money, which will have to be borne by the local authorities themselves.

Our local authorities have no financial scope or leeway to do anything about implementing the provisions of the spate of legislation which has been showered upon them from above. We have had the Town and Country Planning Act, the Caravan Sites Act, the Countryside Act and the Trade Descriptions Act, to name but a few. On top of all that, the building regulations require a 33⅓ per cent. increase in the size of the inspectorate in local authorities.

I realise that, in some cases, local authorities have discretion about whether to implement the provisions of some of this recent legislation. In other cases, it is obligatory, and, in this connection, it should not be overlooked that there is what might be called a pull devil, pull baker attitude within Government Departments, with some of them urging local authorities to take action to implement parts of certain Acts, while the Treasury and the Minister of Housing and Local Government try to slam on the brakes, urging them not to take action.

Serious difficulties are being created. I know of a district council which has attempted to implement the Measure introduced by the hon. Member for Orpington (Mr. Lubbock) relating to caravan sites. A compulsory purchase order has been placed on a piece of land to accommodate gipsies within the spirit of that Act. Meanwhile, the county council concerned has had to strike the item out of its estimates. We have reached the silly state of affairs where the district council is doing what it feels it should do and where the county council agrees but is unable to implement what the district council wishes and has the right to do.

Meanwhile, the Minister is taking a further swipe at minor highways, buildings, and town and country planning procedures. We have had two years' neglect on our minor highways and buildings already. If we have a further two years' neglect on the maintenance of highways and buildings, the local authorities will lay up for themselves an enormous liability for repairs when it becomes possible to deal with these matters once again.

As regards the town and country planning administration, I recognise that it bulks very large in the administrative side of local authorities, but it would be foolish to impose rigorous cuts in that direction. I know from my postbag how vitally important is thoroughly efficient, intelligent, humane and considerate administration of the general planning regulations. Hardly a post goes by that I do not receive a number of letters on the subject. In a rapidly expanding area such as that which I have the honour to represent, inevitably there will be complaints about loss of amenities, the changing character of certain areas, uneasiness about the rate and standard of development and anxiety about the reported routes of new trunk roads. These are all matters which come within town and country planning, and I would deplore any diminution in the efficiency of town planning departments. It is inevitable that they should grow, in view of the great problems put upon them. It would be utter folly for this Government to undo this very important work, the achievements of which they have contributed to in a recent Act of Parliament.

My hon. Friend the Member for Harwich (Mr. Ridsdale) referred to home helps and old people's homes. Both are matters of prime importance. In Poole, we have much above the national average of over-65s. We need an extra old people's home. We cannot get it because of the cut back. That sort of difficulty is by no means confined to my constituency, because I know that many hon. Members have the same problem.

There is one other point which is germane to the argument today although it is not directly related to it. It is the disastrous act of the Minister's immediate predecessor. He made a number of mistakes of fair magnitude when he was Minister of Housing, but by far the greatest was to postpone the quinquennial revaluation for rating purposes which should have taken place this year. It has not happened, and it will cause great hardship in the future when it is introduced. It is possible that the Government are taking the cue from that play a few years ago called "Waiting for Godot". In this case, they are waiting not for Godot but for the Royal Commission to report, hoping that they may help the Government out of this awkward problem of the quinquennial revaluation. If the recommendations are not such that it can be avoided, I can only suggest that the Minister should realise that a dying Labour Government will bequeath this unpleasant task to a new Conservative Administration. It will be awkward for us when the time comes, but it has to be faced.

I want to conclude with a few brief remarks about the rate support grant as a whole. When the Government moved from specific grants to a block grant system certain principles were laid down. In the Local Government Act, 1966, it appeared that they would work out very well. In the event, I suggest that the way in which the Government are handling the rate support grant is such that they are not implementing what they promised to do.

The grant legislation provides for local authorities to put forward estimates of expenditure, to be discussed and agreed with the Government, which would form the basis of the overall grant level. Although there always has been, naturally, some pressure from both sides to look after their respective interests, up to a year or so ago, the final outcome always had been a broad agreement between both sides. However, recently, the block grant system has been manipulated, and it is clear that it places local authorities in a highly vulnerable position. I suggest that this needs serious consideration. The original intention of the block grant system was that local authorities would receive broadly the same total amount of grant as previously but would have greater freedom in deciding the levels of individual services. As we all know, this is not working out because no increase Orders are being allowed. That is the whole crux of the matter. If increase Orders are not allowed for unforeseen rises in costs the whole system falls to the ground.

The Government cannot hope indefinitely to have it both ways. Either they must state exactly where services are to be reduced and take clear responsibility for the reductions, or they must be prepared to fix the rate support grant total at a realistic level. It is understood that the local authority associations are taking up some aspects of the problem, but, at the moment, local authorities are still subjected to various forms of pressure from Government Departments to improve specific services at the same time as they are exhorted in general terms to practise the most ruthless economy.

We know that economy is necessary. It is wrong for hon. Gentlemen opposite to say that we are urging that these restrictions should be lifted. It is not the fault of the Opposition that the country's economy has got into such a parlous state, and it is certainly not the fault of the local authorities. We have to make the best of it, and the best way of doing that is to have a change of Government.

Meanwhile, it is hoped that the Government will use their common sense and make an effort to help local authorities in the difficult tasks that they have to perform. If they do not, ultimately the ratepayer will suffer.

5.40 p.m.

Mr. Alfred Morris (Manchester, Wythenshawe)

I shall not follow the hon. Member for Poole (Mr. Murton). His speech was very well written, and well argued and I shall read it with considerable interest in the OFFICIAL REPORT. It may not excite very much debate, but I shall read it very carefully tomorrow.

This has been a remarkable debate. My hon. Friend the Member for The Hartlepools (Mr. Leadbitter) added his usual touch of colour by describing the hon. Member for Worcester (Mr. Peter Walker) as a kind of poor man's David Frost. I thought that the hon. Gentleman was fighting well below his weight. It may be that he was over-excited or that he is still adjusting himself to the problems of housing and local government, but I feel that even he will agree that this was one of his more light-weight performances.

The hon. Member for Worcester took us to the conference at Basle and the recent discussions of the Group of Ten in Bonn. He waved the Order and said that it was not the sort of document that my right hon. Friends would want to show to international bankers. May I remind the House that Sir Leslie O'Brien, addressing the Society of County Treasurers on 28th November, referred to the subject covered by the Order. He dealt at length in his speech with the increase in local public expenditure. The Sun, of 29th November, reports: The Governor of the Bank of England, Sir Leslie O'Brien, last night attacked the 'hectic' increase in spending by local authorities. He told the Society of County Treasurers at a London dinner that their £5.000 million expenditure last year was double the 1960 figure. There has been a great deal of comment about the increasing proportion of total public expenditure spent by local authorities. Thus the hon. Member for Worcester need not say that the proposals of my right hon. Friend have not been brought to the attention of bankers or anyone else outside this House. The banking community has been studying the increase in public expenditure by local authorities as carefully as it has been examining increases in other forms of public expenditure.

Now there are three main propositions to be put forward in this debate. First, that the Rate Support Grant Order, 1968, allows for a higher level of expenditure by local authorities; secondly, that it increases the proportion of local government expenditure that is met by the Government; and thirdly, that it gives increased help to domestic ratepayers by providing an extra 5d. in the £ next year and a further 5d. in the £ in the year 1970–71. I should like to know whether any right hon. or hon. Gentleman opposite wishes to contest any of those three propositions. There has been a good deal of debating talk today but I believe that each of these three propositions is both extremely important and incontrovertible.

Notwithstanding what the Opposition may say about protecting local government services, what really annoys them is that public expenditure by local authorities has been increasing, is increasing, and will, because of the steps taken by my right hon. Friend, continue to increase.

Sir Edward Boyle (Birmingham, Handsworth)

Surely the test which we must bring to the White Paper today is not whether public expenditure has been increasing, but whether it has been increasing at the proper rate relative to the responsibilities of local authorities and the increased numbers for whom they have to provide.

Mr. Morris

The right hon. Gentleman is always extremely fair. I agree that we cannot simply compare expenditure one year with another and have any meaningful idea of whether it has been increasing at the proper rate. That is another question. But I am certain that the right hon. Gentleman will recall that the Leader of the Opposition, in the speech that he made on 25th November in this House, emphasised the need to cut down public expenditure in a large number of spheres.

Hon. Members opposite have referred to housing revenue accounts. I am sure that any enlightened local authority would have been deeply disquieted by what the right hon. Member for Bexley (Mr. Heath) said about slashing housing subsidies. I represent part of a city—I am glad to see my hon. Friend the Member for Manchester, Gorton (Mr. Marks) who represents another part of the city—where any slashing of housing subsidies will mean a tremendous headache for every member of the local authority's housing committee. I do not wish to go too deeply into that matter, but I hope that the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) will at least agree that anyone who listened to his right hon. Friend on 25th November must have felt that he showed a great deal of animus in everything he said about housing subsidies. Many experienced people, including many in Manchester who have grown grey in the service of local government, are very much afraid that a Conservative Government would slash local government expenditure just as harshly as they would slash public expenditure in the other spheres mentioned by the Leader of the Opposition.

I referred earlier to the speech made by the hon. Member for Worcester and one still does not know whether he wanted local authorities to have more money or less. But presumbaly the only reason for his saying that this Order might usefully be shown by the Government to the Group of Ten or to intertional bankers was to indicate that in his view, there is too much public expenditure by local authorities.

Commenting on the proposal to increase domestic de-rating in the Daily Express of 4th December the hon. Member for Worcester is quoted as accusing … Mr. Greenwood last night of failing to disclose that the figure approved for the current year 'has proved to be inadequate by more than £40 million'. It may be that the right hon. Member for Birmingham, Handsworth, will explain that comment of his hon. Friend. I will, if he wishes, pass the quotation to him.

Many people have found it very difficult to follow the hon. Member for Worcester on this point. As I said, I do not think that he has been fighting at his proper weight in this debate and it may be that he is still adjusting himself to a new subject. But he has made speeches which certainly call for a great deal of explanation. For, contrary to the impression he gave some of us today, the Daily Express seemed to indicate that he felt the provision for public expenditure by local authorities was too low.

Why do not right hon. and hon. Gentlemen opposite come clean and say whether they want more expenditure than is provided for in this Order, or less?

I believe that in the right hon. Gentleman the Member for Handsworth, we now have on the Front Bench opposite the most honourable spokesman of the Conservative Party, who will wind up the debate for the Opposition. He is held in high regard by both sides of the House as one of the most honourable spokesmen of his party and I hope the right hon. Gentleman will address himself to the three propositions which I have made. I know that he will also address himself to the questions put by my right hon. Friend. For I hope the message will go out from the House today that what we are doing is at least an attempt to help local government, but in extremely difficult circumstances.

The hon. Member for the City of Chester (Mr. Temple), who is sitting on the second of those "shadowy" benches, is taking an increased interest in the debate.

Mr. Temple

I have been here all the time.

Mr. Morris

The hon. Gentleman looked unconvinced when his hon. Friend the Member for Worcester opened the debate. Nor does he seem to be as convinced now as he ought to be, so perhaps I can tell him something about some of the benefits to my constituency of what the Government has done to help domestic ratepayers. In the year 1967–68 the County Borough of Manchester received £220,995 in domestic rate relief. This year, 1968–69, it will receive £451.614. This is a very big help, and is welcomed throughout the City of Manchester as an earnest of the Government's intention to do everything they can to help domestic ratepayers.

I am sorry that the hon. Member for Worcester has left the Chamber. Perhaps I can give the relevant figures for the City which he represents. He might have had the relevance—someone has just said "decency"—to mention what the Government have done to help the domestic ratepayers of Worcester. Worcester is a small place compared with Manchester, but in 1967–68 it received Government support of £29,051. In 1968–69 it will receive £59,351, and the Order provides for an even greater amount of support in 1969–70 and 1970–71. The right hon. Member for Handsworth, when he winds up, will perhaps help me to discover how Birmingham compares with Manchester by giving the House the figure for the extra help given by the Government to Birmingham's domestic ratepayers.

Ratepayers in many parts of the country are extremely anxious about what would happen to domestic derating, and many other recent benefits, if by some mischance the party opposite became the Government. I do not think that we need to try to guess what the result would be. We need only recall what was done in 1964. It was then that the Conservative Government brought in the Rating (Interim Relief) Act. The City of Manchester, whose ratepayers are now receiving very considerable help by way of individual rate rebates, received only a few thousand £s from that Act. We were told that that Measure would help the landladies of Bournemouth, Brighton and Eastbourne. But it was certainly of no value to the general body of ratepayers in Manchester. In fact, one ratepayer there has calculated that it was worth less to Manchester than one potato crisp per ratepayer.

We are anxious to support my right hon. Friend, not only because he has introduced domestic derating, not only because he has introduced individual rate rebates, not only because he has introduced greatly increased housing subsidies and done so much in other ways to help ratepayers, but because we feel that the party opposite would dedicate itself to reducing local public expenditure. We know it is vital for local services to improve, that this means increased public expenditure, and we are afraid of what will happen should the party opposite return to power.

I wish that we were not talking about this subject at all. I am on record as speaking against the rating system as such.

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. We are not discussing the rating system as such but the Order before the House.

Mr. Morris

I naturally accept your Ruling, Mr. Deputy Speaker. All I am saying is that it is unfortunate that in the 20th century we still have to retain the rating system at all.

There are some other points to which I had hoped to refer. I should like, certainly the large local authorities, to use some of their resources to do what the House has done, which is to protect people from the effects of maladministration. Hon. Members on both sides have from time to time said that there ought to be municipal or regional ombudsmen, and I hope that this proposal will be given close attention by local authorities.

There is also the need for local consumer advisory services at the town halls. But I conclude by hoping that we shall get away from party debating points in discussing local public expenditure. By all means let us take into account what is said by people like Sir Leslie O'Brien about the figures referred to in the Order, but let us also recognise that the House owes a debt of gratitude to my right hon. Friend the Minister of Housing and Local Government for the enormous protection he has given against those who would slash the expenditure of our local authorities.

5.59 p.m.

Mr. John M. Temple (City of Chester)

There seems to me one thing common to the speeches of right hon. and hon. Gentlemen opposite, and that is a desire to know what Conservative policy is on local government finance. I can only attribute that to the fact that right hon. and hon. Gentlemen opposite read The Times leader today, which foreshadows a change of Government in the fairly near future. It is right that the Minister should question my hon. Friend, because the country rightly wants to know exactly where the Conservative Party stands on local government finance.

I would not criticise the Government for exercising restraint in public expenditure. I am a member of the "old boy's club" and of the "union" that studies local government finance. It was only two years ago that the hon. Member for Widnes (Mr. MacColl), who is one of the oldest boys in the club, welcomed his right hon. Friend the present Minister of Housing and Local Government to the club. It is significant that the super-expert—the hon. Member for Widnes—is not here. I do not know whether he has been dropped from the team! It is also significant that the hon. Member for Hayes and Harlington (Mr. Skeffington) was not here at the beginning of the debate. He has arrived now, but I do not think that he will wind up the debate. People who wind up these debates seem to be dismissed afterwards, so that we have a change of batting on the Government side. I am not surprised, because I find local government finance—especially as undertaken by the present Government—one of the most abstruse matters that I have ever had to deal with.

A few years ago the Government of the day—and this habit was taken up by the Labour Government—were accustomed to use the computer belonging to the Cheshire County Council to work out the rate support grant and the general grant. Since the Labour Government took over—it is significant that the Ministry has bought its own computer to make these calculations, so that Ministers can talk to the computer and the computer can talk back in the language that Ministers want to hear. Perhaps that is why we have never had a more confusing Explanatory Memorandum to a Rate Support Grant Order than the one we have before us now.

I regard this Order as an exercise in "cookery" that has never been seen before. I call it an exercise in cookery, although I do not wish it to be thought of as insulting Mrs. Beeton, nor am T using the word as having any connection with cordon bleu. But these figures have been cooked so much that they are entirely unrecognisable.

I challenge the Minister to explain how he made 3 per cent. into 4½ per cent. My hon. Friend asked him this question and he did not answer. Throughout the Prime Minister's statement and the statement in the Explanatory Memorandum, the figure of 3 per cent. has been constantly referred to. It seems to me that even 3 per cent. is an over-estimate of what local authorities are going to get in real terms.

I have already referred to the fantastically good leader in The Times today, entitled "The Danger to Britain". One phrase in it caught my attention. It said: Patience is not a virtue when picnicking on Vesuvius". In my opinion "complacency" should be substituted for "patience". The Minister's manner is always pleasant, but today he was far too complacent when putting before the House gigantic figures of an almost incomprehensible nature. I regard him as being culpably complacent not only about the state of local government finance but the state of our national finances.

The leader in The Times went on to say that: People are confused and alarmed and sad. I am not surprised that they are confused. I am confused about this Order and I have had the opportunity of discussing it today with two of the greatest experts on local government finance. I put some questions to them and found that they were confused by some of the terminology used in the Explanatory Memorandum, because at various stages it describes things in real terms, current terms and all sorts of other terms, but never in terms comprehensible to the man in the street. This Explanatory Memorandum is the biggest piece of phoney calculation since the Prime Minister's statement that the £ in the pocket would be worth exactly the same after devaluation as before.

Mr. Alfred Morris

I do not know whether the point raised by the hon. Member is relevant, but if we were to cut housing subsidies, slash food support costs and do all the things—

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. I have already told the hon. Member that that is not within the purview of the debate.

Mr. Temple

I always try to keep in order in a debate of this nature. Mr. Deputy Speaker. I did claim to be an "old boy" in these matters.

The Prime Minister pulled the figure of 3 per cent. out of the air. It had no relevance to local government services. That is my quarrel with the Government. If they had gone through the expenditure service by service and item by item, and decided to make certain cuts in certain places or to cut out certain services altogether in order to arrive at the figure of 3 per cent. that would have been quite all right. But the figure was really an exercise in walking backwards. The Prime Minister is constantly walking backwards from the real figures. He dreamed up a figure of £2,000 million for defence expenditure and then decided that that figure was the ideal one. [HON. MEMBERS: "Order".] I am not out of order. Mr. Deputy Speaker will call me to order. I shall take my instructions from him and not from hon. Members opposite.

I also claim that these figures ought to bear some resemblance to the figures in the National Plan. Have hon. Members opposite forgotten that the former Deputy Prime Minister drew up the National Plan?

Mr. Deputy Speaker

Order. The hon. Member must relate his remarks to the Order. We are not discussing the National Plan.

Mr. Temple

I agree, Mr. Deputy Speaker, but in the National Plan were laid down clearly the figures for local government expenditure for some years. That is what the Order is meant to implement. The local authority associations have been denied by the Prime Minister an increase Order for the current year's expenditure. That is an extraordinary decision of the right hon. Gentleman. I do not believe that the Minister took part in the debates on the Local Government Act, 1966, but they have no doubt been drawn to his attention, and he will know that it is customary for increase Orders to be made to meet special situations.

According to the Association of Municipal Corporations and the County Councils Association, local authorities estimate that during the current year—1968–69—expenditure figures are now running approximately £70 million ahead of current estimates. There is from now until April to run, so it would hardly be wrong to estimate that at the end of the current year expenditure will have run at a rate of £100 million a year in excess of Departmental estimates.

There is to be no increase Order, so local authorities are to be denied about £50 million in grants which they would undoubtedly have been given under a Conservative Government. I ask hon. Members opposite whether, when a Conservative Government were in office, increase Orders were not brought before the House to deal with a situation like the present and challenge them to say that I am wrong.

Mr. Leadbitter

The hon. Gentleman has made his calculations of a possible £30 million increase on top of the £70 million, making a total of £100 million, and has accused the Government of creating a loss of about £50 million to local authorities. Is that the amount that the Tories would have given local authorities?

Mr. Temple

I need not answer that question, because what I asked was, could any hon. Member opposite tell me a year in which, in a similar situation, the Conservative Government did not bring in an increase Order. The answer is "No". No one can challenge me—

Mr. Kenneth Marks (Manchester, Gorton)

What grounds has the hon. Member for saying that this would have happened this year under a Conservative Government?

Mr. Temple

It is not necessary to pursue that point, because no one can deny the truth of what I am saying.

The Times said that people were "extremely confused". I would ask hon. Members who have not done so to study this Explanatory Memorandum closely. Appendix A gives the explanation of these figures and refers to November, 1967, prices, June, 1968, prices and November, 1968, prices, and in January the Prime Minister referred to "current prices". It is remarkable that the Minister referred to real terms and I would hardly have thought that he would have the temerity to do so, because the amazing thing is that, in one year, four different levels of prices have been referred to at four different times.

I suggest to the Government that, in a time of inflation like the present, there should be a proper index of local authority constant prices related to a base year, so that one could see exactly what is happening with regard to prices. When I read all this, I thought that there might be a reference to "seasonally adjusted" prices, which would be a new term or art, or possibly to prices "adjusted to normal weather conditions". Of course, it is never normal weather with the present Government, but this type of reference does appear with regard to agricultural support prices. This reference to different price bases at different periods of the year in different circumstances is alarmingly confusing, and explains why there is such a paucity of hon. Members in the House. These figures are amazingly confusing.

I want now to refer again to the Prime Minister's statement about an increase Order. The chief local authority associations are extremely exercised in their minds about this denial by the Prime Minister of an increase Order. It was again pulling something out of the air, which was extremely irresponsible, since the whole basis of the block grant, which was adopted by the present Government, is that increases in prices, according to paragraph 6 of the White Paper, would be taken into account if those increases, or decreases, were material. Are the local authorities to be assured that the Prime Minister will not do this again? If not, they will be in a very difficult position. How are they to estimate the size and quality of services they will supply if there is a possibility that, if there are increased costs beyond their control, they will get no recompense from the Government?

I turn now to the proportion of Exchequer assistance to local authorities. I expected the Minister to refer to what I call the 55–56–57–58 formula. In other words, he was trying to "kid" the country that this Government were being more and more generous to local authorities. Of course, it needs a very close examination to see that the present Minister is really pulling a very fast one on anyone who reads his speech. In fact, I know from my calculations that 55–56 will be 54–55 and that the 57–58 will not be the percentages the relevant expenditure in the years 1969–70 and 1970–71, it just will not happen.

Those figures are seriously challenged by the local authority associations and myself. The fallacy rests in the base year. The Minister has adopted an entirely false base. He has adopted the estimates for 1967–68 and has "raised" them to 1968 November prices, but what he has failed to do is recognise that the relevant expenditure was far higher in the base year. Why has he not taken the actual figures in 1967–68? In an intervention, I said that 1967–68 expenditure, whether rate borne or grant borne, was public expenditure. Whatever one says about it, it has gone over the dam now, it is public expenditure and it is certainly quantifiable. Therefore, we could have taken the correct figures for the base year. In those circumstances, his 55–56–57–58 prognostications are entirely vitiated.

I would ask the Minister of State to explain that in great detail, because I believe that the Government are misleading the country on this point—

Mr. Lubbock

If the hon. Member is still referring to Appendix A, that starts with the relevant expenditure for 1968–69 and then shows how, by adding 3 per cent. to 1969–70 and 5 per cent. to 1970–71, it comes to the totals given earlier in the White Paper. I cannot find the 1967–68 figures which the hon. Member says have been used as the base date for these calculations.

Mr. Temple

I can assure the hon. Member that the base figures are for 1967–68 and that what I am saying is entirely borne out by the local authority associations. I would not say that unless I had been into it extraordinarily carefully. As the wrong base has been taken, local authorities are overspending the estimates. We should take note of this, because local authorities have to overspend or else they must cut down on their services substantially.

There are two services which are being cut down substantially. My right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) will refer extensively to one, education, so I will be brief on that point, but I will make a more substantial reference to the other service, which is highways.

Appendix B sets out the broad patterns of forecasts of expenditure, by services. I warn the House, however, that, under the block grant system, there is no saying that the relativities within Appendix B will be adhered to by local authorities all over the country. In addition, the whole beauty of the general grant is that it is a non-specific grant given to local authorities to spend in any way they wish. Therefore, although the Minister may think that a certain proportion of the grant will be spent on specific services in specific areas, he may well be proved entirely wrong, because the cuts which he has estimated, particularly on high- ways, may not be possible, so cuts may have to be made in other spheres.

I am afraid that many local authorities which are Conservative-controlled at present—I am thankful that an enormous number are—will be faced with a very crucial dilemma. They will have the responsibility of making cuts, of cutting back to something near the estimates which they have been given, or, rather, had forced upon them, and they will receive a great deal of opprobrium from the public because they are doing the cutting. The Minister should come clean and tell the country that he is the man who is cutting down on local government expenditure. I would have no quarrel with him if he explained exactly what he is doing. What he is doing is dressing up decreases as increases. This is what the Conservative Party blame him for.

I now pass to highways. In paragraph 21, the Minister tries to come clean. He makes it clear that there will be sharp cuts and goes on: … the Government's view is that no serious risk is involved". and the important words are: in continuing to impose severe restriction … "In continuing to impose severe restriction." That will surely mean an extension of existing policy. I am afraid that matters go very much further and deeper than that. The Minister has gone much further than the Prime Minister. The Prime Minister in his speech on 16th January, 1968, said that there were to be cuts in highway expenditure for 1969–70. He did not say anything about 1970–71. The Minister has gone beyond this and imposed cuts in highway expenditure for 1970–71. It is the extension of these cuts to which I draw attention.

I have had a very interesting paper sent to me by the Treasurer of the Somerset County Council. He was one of the chief negotiators on behalf of the County Councils Association. I raised one point about loan expenditure when the Minister was speaking. I quote now from figures which were put before the joint negotiators by the Ministry of Transport, so the Minister cannot complain that I am using figures from local authorities. These I believe, are all at November, 1968, prices. The actual expenditure on highways for 1967–68, in November, 1968, terms, is said to be £190 million, whereas the figure postulated for 1970–71 is £191 million—almost identical.

Within that particular figure there is a loan charge in 1967–68 of £24 million, but the loan charge by 1970–71 has gone up to £36 million. In 1970–71, there will be £10 million less in real terms, available for highways than there was three years before. If that is not a cut-back I should like to know what is. I hope that the Minister of State will re-emphasise her determination to exercise that cut back so that local authorities, in cutting back, may let the public know exactly where the responsibility lies. Perhaps the public will remember that they have never paid more in motor taxation than they are paying now, and have never got less value for it.

I want to mention a figure given to me about the impact of this cut in expenditure. It has been estimated in certain circles that there will be a cutback of 15 per cent. The Treasurer to the Somerset County Council says that the cut-back will be nearer 21 per cent. than 15 per cent. by 1970–71. I re-emphasise the extreme severity of the cuts being imposed by this Government. I do not complain about that, what I do complain about is that these figures have been drawn out of the air, and have no particular relevance to the actual needs of these services.

I want to draw attention to the effect on the countryside. I live in the countryside. I know the traffic on country roads and realise that impact that these cuts will have. I know that the Minister of Agriculture is trying hard for a big expansion in agricultural output. If that succeeds and more and more heavy traffic is put onto roads of lesser importance—the roads which are to bear the biggest cuts in the Minister's proposals—how will the Minister of Agriculture react? I wonder whether he has even thought about it? I wonder whether the Minister of Housing and Local Government knows the amount of traffic using roads of lesser importance? This is just another example of this Government being entirely out of touch with the realities of the situation in the countryside.

I know, as The Times leader says today, that this country is in an abominable mess. But when a country is in such a mess, why experiment with education or in other ways? I would like to have seen the Minister of State for Education and Science, the right hon. Lady the Member for Cannock (Miss Jennie Lee), here. The hon. Lady is encouraging the Greater London Council to build more museums and more art galleries. She has given tremendous encouragement to my own City of Chester to build a civic theatre. Is this a very good type of expenditure to encourage at present, when there is this tremendous shortage of money for public expenditure of a vital nature?

I came in today towards the end of Question Time, when British Standard Time was being discussed. Recently I picked up a cutting from the Liverpool Echo which gave the cost of this for the ratepayers of the City of Chester. The amazing thing is that the ratepayers there would have to pay £3,000 in order to adjust the time switches to the new British Standard Time or nearly £1,000 per annum for full lighting—they wisely opted for the latter. This is an example of the complete confusion existing in the Government at present. The prime Minister, answering a Question last week, is reported in The Times of December 6th as saying that there would be an early re-assessment of this matter. In other words, he indicated that the local authorities, although many had this obligation of changing their time switches, may well have further costs imposed of changing them back if a reassessment is made and the system changed.

Mr. J. T. Price (West Houghton)

rose —

Mr. Temple

Mr. Speaker's eye is on me. I am sorry, I cannot give way.

Mr. Price With great respect—

Mr. Speaker

Order. If the hon. Gentleman does not give way—

Mr. Temple

All right, if you wish.

Mr. Speaker

The hon. Gentleman has given way.

Mr. Price

I am much obliged to the hon. Gentleman for giving way. He has raised a matter which was the subject of discussion at Question Time—British Standard Time. The mood of the House then was that, if a mistake had been made, it will be considered. If he is to hurl this, together with his other missiles, at the Government, the British Standard Time Act was adopted by—

Mr. Speaker

Order.

Mr. Lubbock

On a point of order.

Mr. Speaker

I think that I can anticipate the hon. Member for Orpington (Mr. Lubbock). We cannot discuss British Summer Time or British Standard Time in this debate. All the hon. Gentleman can do is refer to the cost of it.

Mr. Price

Joint responsibility.

Mr. Temple

That is exactly what I was doing. As Mr. Deputy-Speaker saved me from irrelevancies from the other side of the House earlier, you have saved me now from this irrelevancy.

I am certain that what the Government should have done was to have gone through all the services extremely carefully, and decided which were essential and which were less essential. Art galleries and museums are hardly essential, when we are in the middle of the greatest financial crisis this country has ever faced. The Government should have imposed cuts in specific areas and made it quite clear they were imposing them. I said that the significant thing was that we had been asked what is Conservative Party policy. This Government are very near the end of the road, and that is why they are interested in Conservative policy for local government finance.

6.28 p.m.

Mr. Kenneth Marks (Manchester, Gorton)

I have not been a Member of this House for as long as the hon. Member for City of Chester (Mr. Temple). Unlike him I do not intend to join in the abuse and innuendo with which he supported his speech, and which seems to be the stock part of most speeches from the benches opposite. May I preface my remarks by saying how much I regret that the Government have not been able to do a great deal more for local government and all its services this year.

I know from experience that there are a great many things that people in local government wanted to do, and that there are many extra things which they will not be able to do. This is a matter of great regret. I also realise that, during the past few years, the Government have helped local authorities—and I speak as one who was a member of a local authority before entering the House—a tremendous amount. Grants from the Government in 1963–64 to the administrative County of Lancashire in which I live totalled £42 million. This year the figure was £69 million and next year it will be something like £74 million.

This is a vast increase, and I suspect that it is this kind of increase which so worried the Leader of the Opposition in his speech last Monday. If I look at my smaller urban districts, I see that the one in which I live, Denton, received £69,000 in 1963–64 and £162,000 last year. These are vast increases in Government help, far greater than any price increases and far greater than the cost of any of the new tasks which have been placed on local Government. There has been real and genuine help.

I am reminded, when listening to hon. Gentlemen opposite, that these are not the first restrictions to be placed on local government spending. Within my experience of these matters I recall the names of Horsbrugh, Eccles, Thorneycroft and Selwyn Lloyd. None of those names brings joy to anyone who is interested in the progress of local government. They demanded real cuts, not restrictions in growth.

Since coming to this House I have been puzzled by the diversity of opinion between the Conservative Party in Parliament and Conservatives in local government. I am now becoming used to these somersaults. In local government I always found that Conservative councillors throughout the year would demand that more money be spent on this, that and the other—a park in one ward and a library in another; but not often libraries—and then, at the end of the year, when a vast rate increase would be required to accede to their claims, they would demand a rate reduction.

It was difficult for me to explain to Conservative councillors the meaning of a working balance. They could not grasp that that money was available for an emergency or to help the treasurer over the initial months of the year, but was not a sum which would be raided each year. At that time I was teaching backward children in school. I found it easier to explain these matters to them than to local Conservative councillors. At least the children could accept that if every item in a sum was enlarged, the total came to more than it was originally. I could never get my local council colleagues to accept that.

The same thing has happened in my first year in Parliament. Day after day at Question Time—and I have gone out of my way to be present at a great many of them—I have heard demands for increased expenditure on virtually everything in every constituency. At the same time, the Front Bench opposite has been demanding cuts in public expenditure. There is obviously now a great difference of opinion between Conservative thinking in Parliament and in the country. Whereas the Leader of the Opposition is demanding huge cuts in public expenditure, local Conservative councillors, for the first time in my experience, are saying, "We want to spend more but they will not let us." This is sheer hypocrisy.

A month before I came to this House—that was before devaluation and before the restrictions imposed by the present Government—I was asked as a local headmaster to attend a meeting to be addressed by the Chief Education Officer of the City of Manchester. He wanted our opinion about how he could achieve what the newly-elected Conservative Council was demanding, which was a 2½ per cent. cut in the expenditure of council departments not in the following year but in the current year. In other words, they wanted to do it in six months, and that included making severe cuts in the education system of that City. Some of the nastiest bits of welfare cuts I have come across took place last year in Manchester, and that was long before these restrictions were being demanded by the Government.

When hon. Gentlemen opposite talk about the opprobrium which will descend on Conservative-controlled councils, they should remind us that they have made cuts where they should not have been made and have raided the balances of their rate funds to achieve the cuts which they have promised. It is, therefore, hypocritical of Conservative councillors to talk of wanting to carry out great measures when their party in Parliament is calling for drastic cuts.

The hon. Member for the City of Chester talked about essential and inessential services. I believe that we should spend more on education and other aspects of local government and less on some private forms of expenditure that now take place. This is the great difference between the parties. Hon. Gentlemen opposite will have an opportunity of explaining in their constituencies in the next few months how much they feel about expenditure on education. The basis of the negotiations for the rate support grant was that education spending would go up by 3¾ per cent. in real terms. But that was only a guideline. The Government cannot force local councils to increase their spending on education. I hope that all hon. Members will do their best to see that councils spend the maximum on education and not cut it below what the Government have recommended in that guideline.

6.36 p.m.

Mr. Eric Lubbock (Orpington)

As the hon. Member for Manchester, Gorton (Mr. Marks) said, there is an element of inconsistency, not only between what is said by Conservatives in this House and Conservative councillors, but between what is said by Conservative hon. Members from one debate to another. It would be helpful if, when winding-up the debate, the Conservative spokesman would clarify Tory policy on this matter. Do the Tories wish to increase expenditure by local authorities? If so, in what respects, and would they increase the grant under this Order? If they would not increase local authority expenditure, where would they have made the cuts which must be made in this sector?

It is meaningless to talk about overall figures when one is not clear about the base date calculation. This particularly applies to statistical arguments of the type used by the hon. Member for the City of Chester (Mr. Temple). Although the hon. Gentleman is knowledgeable on these matters and has discussed them with the local authority associations, it does not particularly help the House to arrive at a sensible conclusion if one is speaking all the time of generalities and not of the precise services which are being financed by this money.

I have in mind the remarks of the hon. Member for the City of Chester about education. It would be interesting to discover whether local education authorities are able to sustain all the tasks which parents and teachers would like them to undertake with expenditure at about its present level, or whether, as a result of the grant having been fixed at a level which is only 3 per cent. larger in real terms than it was last year, some of their plans will have to be deferred.

This matter is of particular interest to me because we had what I thought was a very good scheme for the elimination of selective secondary education in my borough. It was known as the Wellbourne Plan because it was devised by Mr. Well-bourne who was the Chief Education Officer of the London Borough of Bromley. The Conservative Council decided that the implementation of that scheme had to be deferred because, we were told, sufficient money was not available from the Government to implement it.

There is confusion among parents and teachers in my constituency—this confusion extends to the L.E.A.—about who is right in this matter. I would be grateful if the Minister would deal with this issue in detail because it is a problem which affects not only my L.E.A. but which has been encountered in many other parts of the country where Conservative-controlled authorities are trying to shift all the blame on to the central Government for the slowing-down in the elimination of selection procedures at the age of 11.

There is always the suspicion that Conservative councils are trying to put off the introduction of these new schemes until, as they hope, the Labour Government are swept out and a right-wing Conservative Government are in power so that the mechanism of selection at age 11, which most of us now deplore, may be reintroduced. Alternatively, schemes which are generally considered by L.E.A.s to be reasonable for implementation are being delayed so that the tripartite system may return. I refer to the system under which technical schools, secondary moderns and grammar schools compete with each other, often leading to inequities among children who are placed in one or other of the schools at 11 and are classified at that age for the rest of their school lives.

This is such an important matter, not just for 1969–70 but for the future of our children that I trust that the Minister will answer this point in considerable detail when she replies to the debate. I hope that this will not be treated as a purely party matter. Let us get at the figures related to this item, and not have so much argument on general principle and on how the rate support grants are calculated.

It is rather a long time since the then Minister of Housing and Local Government, who is now Secretary of State for Social Services, spoke of rating policies as being … interim devices designed to shore up this ancient monument which should not have been allowed to survive from the reign of Elizabeth I into that of Elizabeth II but which must now be prevented from collapsing altogether until we have had time to organise a planned operation for first demolishing rates and then replacing the system with a new local tax, fair, intelligible and capable of being administered reasonably efficiently—three conditions on which rates lamentably fail."—[OFFICIAL REPORT, 6th December, 1965; Vol 722, c. 39.] That speech was made at the end of 1965, and yet here we are, at the end of 1968, still taking steps to shore up the system as far ahead as 1971, and perhaps still further, because it will take time to consider the report of the Royal Commission on Local Government and design new methods of financing local government expenditure.

The problem seems somehow to have lost that sense of urgency which the right hon. Gentleman felt when he was at the Ministry of Housing and Local Government. I do not know whether or not that is fair criticism, but however much one approves things like the 5d. a year increase which we are giving to domestic ratepayers, these stopgap measures cannot be allowed to continue indefinitely. At one time there was a fear that the extra 5d. would end in 1969, but we are very glad to hear that that is not to be the case but that we are going to 1s. 3d. and, I think to 1s. 8d. in 1970–71, as has been mentioned in the White Paper.

But where do we draw the line? The hon. Member for the City of Chester thinks that after an election it might be convenient for the incoming Government, perhaps, to say that the amount was large enough, and to keep it at the then level. He is probably right in believing that whether a Conservative Government or a Labour Government take over this is what will happen if we have not by then reformed the system of financing local government expenditure, and that for the years after the end of period mentioned in the White Paper the domestic ratepayer will find himself paying an increasing share of the burden.

The hon. Member for Poole (Mr. Murton) referred to the Caravan Sites Act. This Measure was welcomed by the Government and by hon. Members on this side, but Part II, which provides for the establishment of sites for gipsies by local authorities in England and Wales, has not yet been brought into operation because an Order is necessary. The Minister has not yet made an Order, in spite of considerable pressure brought to bear on him in the House, and in discussions and correspondence with local authorities and the Gipsy Council strongly urging him to introduce Part II without delay.

When I wrote to the Joint Parliamentary Secretary at the end of September, he replied—

Mr. Speaker

Order. With respect, we cannot discuss in detail the need to implement Part II of the Caravan Sites Act now. If it is not in the Rate Support Grant Order it is not in.

Mr. Lubbock

I think that you will understand the relevance of this to the Order we are discussing, Mr. Speaker, when I have given the following quotation from the Joint Parliament Secretary's answer to my letter: I can only repeat that we are at present reluctant to impose a fresh statutory burden on local authorities but that we shall bring Part II of the Act into operation as soon as conditions permit. The Minister is there making a purely financial argument against the introduction of Part II. He is arguing only on the additional money burden on local authorities if they are made to construct these sites and not allowed to continue on a voluntary basis—

Mr. Temple

I am grateful to the hon. Member for giving way. I appreciate the great importance of the sites. Can he tell me whether expenditure under this head would rank as relevant expenditure for grant?

Mr. Lubbock

Yes. That was made quite clear by the Minister in Committee.

The hon. Member will therefore agree that what I say is relevant. Yet when the Minister issued a circular after the Caravan Sites Act was passed he said that applications for loan sanctions made to him by local authorities would be sympathetically entertained. I do not know that I have the exact phraseology, but that was the gist, and I welcomed the fact that he could go as far.

My point is that as a result of failure to implement Part II, local authorities are incurring very substantial expenditure on moving gipsies from unauthorised sites, on prosecuting them before the courts under the Highways Act, 1959, and other provisions, and in some cases on appointing full-time staff to do nothing but harass gipsies and force them to move from place to place. As long as implementation is only a voluntary basis, none of the local authorities wants to be the first.

I give as an example a local authority in the Midlands which, writing to the hon. Member who represents the constituency, stated: The Council realise that eviction does not solve the problem and last year they agreed to provide a properly equipped site on an experimental basis provided other local authorities in the area would do the same. Some Councils did not agree with this prolicy and not unnaturally the Borough decided they were not prepared to act in isolation. This has been the problem all the way through, as I am sure the Joint Parliamentary Secretary knows as well as I do. No local authority wants to take the initiative, lest it should have to take an unfair share of the rate burden. The Gipsy Council has calculated that the whole amount of spending by authorities on the purposes I have mentioned is about £100,000 a month, which is far more than it would cost to start establishing sites. Nor would this expenditure fall entirely within 1969–70, or even 1970–71—the years covered by the Order. It will take councils some time to find suitable sites, to make plans for their equipment, to hear any objections that may be submitted under the Act. To go through all the statutory procedures may, in some cases, take three or four years. Therefore, were the Minister to accept my argument, local authorities would not be asked to do this all at once.

Rent increases are of tremendous importance. As will have been apparent from my earlier intervention, I think that the Government were right in accepting the recommendation of the National Board for Prices and Incomes and limiting the average increase in rents to 7s. 6d., with a maximum on any one dwelling—

Mr. Speaker

Order. The broad question of housing policy is outside the Order we are discussing.

Mr. Lubbock

I know, Mr. Speaker, but the point that has been made when Mr. Deputy Speaker was in the Chair was that the Government should not have restricted the increase because to the extent that they have done so the money has had to come from the ratepayers. That point was made by the hon. Member for Worcester (Mr. Peter Walker) and by one of his colleagues as well. This is a financial aspect from the point of view of local ratepayers.

An increase of even 10s. can be quite a substantial burden for some local authority tenants at a time when they are facing large increases for gas, electricity, solid fuel, and fares to work. It was, therefore, quite right, after taking all these factors into consideration, that the National Board for Prices and Incomes should make the recommendation, and it was right that the Minister should agree with it. Certain local authorities, however, get round the restrictions by increasing the charges which they make for other things. If the rent for a dwelling itself can be increased by only 7s. 6d. a week, such an authority will charge 3s. extra for the coal shed, or 1s. 6d. more for the pram shed and so get round the spirit of the restrictions which have been imposed. The Minister should look carefully at what is being done by Greater London Council, and maybe other Conservative-controlled authorities.

Mr. Peter Walker

I am grateful to the hon. Member for giving way—

Mr. Speaker

Order. It would be helpful if the hon. Member for Worcester (Mr. Peter Walker) addressed the Chair.

Mr. Walker

Will the hon. Member for Orpington (Mr. Lubbock) tell the House whether he believes that if rents are not at economic levels the ratepayer should bear the deficit, not that there should be an increase in rents?

Mr. Lubbock

I believe that ultimately rents have to be brought to a level at which they would be no charge on the rate fund. Where the existing level of rents falls short of that ideal we should not bring them up all at once to the target but should approach it gradually over a number of years so that the tenant of Greater London Council, or whoever he may be, does not suddenly find himself so much worse off.

Mr. Arthur Jones (Northants, South)

Is it not a fact that the rent policy of the Greater London Council phases necessary increases in rents over three years?

Mr. Lubbock

I referred to the intention before the reference was made to the Prices and Incomes Board. Those rents would have equated to the fair rent under the Act of 1965—

Mr. Speaker

I hope that we might return from Greater London Council to the rate support grant we are discussing.

Mr. Lubbock

Yes, Mr. Speaker, but perhaps I might say that the increases were as large as 39s. 6d.

I think the Government should encourage local authorities to get on with family planning services. This is a voluntary scheme and some local authorities have not been very quick to use the powers given them under the Act, but we should take account of savings which could be made in other directions as a result of a reduction in the birthrate. Generally local authorities would find this a very good investment. I am looking at it only from a financial point of view and in the circumstances of this debate I can talk only about the amount of money involved, not the social benefits which such a policy would provide. The family planning service could be an enormous benefit and investment for the country. It is a great pity that the provision of this service was not made mandatory.

I would hesitate to do anything which would jeopardise the increase in these services because of the difficulties which we at present face. Always when we have a financial crisis of this kind and when we are talking of matters such as the Basle discussion—as we were when you were not in the Chair, Mr. Speaker—we tend to take short-term measures to put things right. That is the wrong approach. We have to make economies in local government planning as part of general policy, but to cut down on essential services such as those I have mentioned, particularly education, for the sake of some short-term pleasure which it may give to the gnomes of Zurich, or even the gnomes of London, would be a grave and colossal mistake.

I hope that the Minister has not gone too far and I call on the right hon. Lady when she replies to the debate to justify the figures which have been given.

6.55 p.m.

Mr. J. T. Price (Westhoughton)

Mr. Speaker. I wish to set your mind at rest by saying that I have no intention of making a long intervention. I listened with close attention to the vigorous speech made by the hon. Member for City of Chester (Mr. Temple) who unfortunately has now left the Chamber. It is not discourtesy on my part to refer to some of the things he said because he has the same opportunity as any of us to remain in the Chamber after taking part in the debate.

The hon. Member is well informed on matters of local government finance. It was not only a vigorous, but in some ways a swashbuckling and irresponsible speech that he made. I am well acquainted with the asperities of politics and I know that at times like this people are willing to make the maximum degree of party capital out of a situation when it appears justified by events but I am a little dismayed by the spectacle of senior hon. Members who at least know the rules and the atmosphere in which we operate and the general kind of toleration which exists between us that they should take an occasion like this to talk with two voices.

Every time I come into this House—and I am a pretty regular attender and try to behave myself as well as nature allows—I hear a constant attack from hon. Members opposite on the Front and the rear benches denouncing the Government for reckless public expenditure, for over-spending the Budget and overspending in every direction. I am being fair; this is the general tenor of the criticism which is launched at us. Then as soon as hon. Members opposite take part in a debate such as this when the Minister has brought forward a rational plan to meet the situation they denounce him for denying to local authorities constant expansion in fields which it is not possible to expand in the present financial situation.

I hesitate to use such a strong word as hypocrisy but this is political gamesmanship of the basest kind. The hon. Member for Worcester (Mr. Peter Walker) has his usual sweet smile but although hon. Members opposite sustain this kind of claptrap in these debates it would be better suited to a meeting of Tory women in the country than in this House. They talk with two voices. They denounce the Government for being reckless spendthrifts yet they denounce the Government for putting a little brake on the machine at a time when it needs to be put on.

Without getting myself out of order I wish to look at the situation over local government finance. There is a very complicated formula for calculating the block grant. The hon. Member for City of Chester did well to say that these were very complicated matters and that it was difficult to make them comprehensible to the man in the street. The formula for calculating the block grant is almost as complex as that for calculating the cost of living index. We would not spread any enlightenment in the debate by going into that and it would take a long time. But in putting these proposals before the House the Minister has linked with them advice to local authorities to be a little more generous to education because our forward-looking education system requires a great deal to be done, and there are also other thing which may not be so essential.

The hon. Member for Crosby (Mr. Graham Page), also a great authority on these matters, who has often entertained us and sometimes, I say with respect, bored us by going too closely into them, knows perfectly well that these are permissive powers for local authorities and that a forward-looking local authority can place emphasis where is is most needed—in this case, on education—if there is a tightening up of Government purse strings.

I say in all sincerity to the Minister, who has a very difficult wicket tonight it may be, that I am all in favour of the Government tightening up on public expenditure even if I have to go into the country and explain why the Government are doing it. Our country cannot continue indefinitely living beyond its means. That is something that I have never been afraid of saying in the country or the House. Therefore, I plead with hon. Gentlemen opposite who think that this is a proper occasion to fire a few spent bullets at the Government on this subject to be a little consistent. If the Government show that they are willing to put a brake on, even on local authority finance, they should be supported and not opposed.

Hon. Gentlemen opposite, particularly the hon. Member for Crosby, know perfectly well that, with our present local government set-up, if no additional expenditure were involved in new projects, there would be a built-in escalator of about 8 per cent. per year increase in the normal rate of growth of Government expenditure. Hon. Members like my hon. Friends the Members for Manchester, Wythenshawe (Mr. Alfred Morris) and Manchester, Gorton (Mr. Marks)—who has great experience of local government—know perfectly well from their practical experience of life and not from any theoretical reading of books that this situation faces any Government, whether they bear a Labour or Conservative label.

There is one thing that I regretted during the years when the Labour Party was in opposition. During the 13 years when I sat on the other side of the House there were colleagues of mine, many of them gone now, who would make all kinds of irresponsible speeches because they had not the responsibility of government, and some of them have lived to regret them. I believe that if a person sits in this House he has a constitutional duty to be as responsible in Opposition as in the Government, because we are all working for our dear country and so ought to be honest about it. But I will not labour that point.

In 1957 I was a member of the Standing Committee which considered the Rating and Valuation Bill for several months. The debates were led by the noble Lord who was then Mr. Henry Brooke, the then Minister of Housing and Local Government. That Bill completely changed the valuation basis on which rates were levied. It revalued the basis on which we carried out the archaic system of levying rates, which I have often condemned, and do not regret having done so. I said on a number of occasions in those debates that the effect of the Measure that the Conservative Government were introducing would be to increase the rateable values of domestic houses by about 300 per cent. I was told by the then Minister that I was a wild alarmist and grossly exaggerating the situation. But it was as a result of what took place in that Committee that even the Tory Government had to build into the Act a provision, after a lapse of four years, to give some rate relief to those who were being most hard hit by the new basis of assessment.

The Measure has had a spectacular effect on the rates. The rateable value went up 300 per cent., as I had forecast—more than that in some authorities, but the average was 300 per cent.—and the rates poundage came down in some authorities. But, with the new basis of rating 300 per cent. higher than under the old system, the rate poundage crept up year after year until it is now reaching the same level as in those earlier days.

Mr. W. A. Wilkins (Bristol, South)

Higher in some cases.

Mr. Price

Yes, higher in some cases. This is what has been going on. The public have short memories and the House contains a great many hon. Members who have no experience of what happened at that time, have not lived with the situation and are able to make irresponsible speeches of the type that we sometimes hear. This is a natural growth of public expenditure because of a number of factors.

Public authorities receive a block grant weighted for many factors, including special needs. Authorities with great housing needs perhaps receive far more generous treatment than those with less urgent housing need. The present Government, with all their faults—I have not been uncritical of the Government, and am not standing here in a white sheet; I have often said things critical of the Government that I support—have done more to assist with the re-housing of our people in the last four years than has been done at any time in our history.

[Interruption.] If the hon. Member for Crosby wants to deny or challenge what I am saying, I shall willingly give way to him.

Mr. Graham Page (Crosby)

I should be glad to do so, but I am sure that Mr. Speaker would call me to order if I went into the figures here and now.

Mr. Price

I do not know. Mr. Speaker is very reasonable as a rule. I was giving the hon. Member an opportunity, since his face seemed to indicate dissent from what I was saying—it was the usual courtesy—

Mr. Speaker

Order. The hon. Member for Westhoughton (Mr. J. T. Price) must not tempt the hon. Member for Crosby (Mr. Graham Page) to get out of order.

Mr. Price

That was very wrong of me, Mr. Speaker, but hon. Members opposite often tempt me—I like to be fair-minded about these things—by saying things with which I disagree strongly, and I often resist temptation because there can be no virtue except in the presence of temptation.

I wonder how many hon. Members realise how uneven the application of even the block grants is between larger authorities and smaller authorities. I represent a number of small townships in Lancashire spread over a vast area of the countryside surrounding the old Wigan coal basin. Recently my right hon. Friend, for reasons which he will probably be able to sustain in the debate, has placed restrictions not only in the way indicated tonight because of the national position, but on the facilities available to small local authorities for providing housing loans to ratepayers who need them. No building society, for example, is interested in granting a housing loan on a very old house. Many local authorities like those that I represent are not getting any grant for this purpose and are being seriously embarrassed by my right hon. Friend's decision.

But, having made that one critical reference—in view of my previous remarks, I think I am justified in doing that, because I am supporting the Government up to the hilt—I hope that the House will understand that many of the issues with which we are dealing tonight are not strictly party issues at all. It would greatly assist us both here and in the country in getting the public to support whatever Government are in power in the job of bringing this old country out of debt if we recognise that it may have to be done at the expense of some treasured forward moves. I am all in favour of getting the country out of debt first, and I shall continue to be so.

7.10 p.m.

Mr. R. Bonner Pink (Portsmouth, South)

I am sure that the hon. Member for Westhoughton (Mr. J. T. Price) will forgive me if I do not follow him too closely, though I shall come back later on to one or two of the points which he made.

Having studied the Minister's Report and the Order carefully and having listened attentively to the debate, I have come reluctantly to the conclusion that neither the Minister nor a good many hon. Members opposite understand how local authorities manage their finances or what they are being asked to do under the Order. The crux of the matter is to be found in the Report. The estimates from 1967–68 to 1970–71 showed an expansion of 6 per cent. each year, and now the expansion is to be halved, to 3 per cent. How are local authorities to do it? Are standards to be reduced? The Minister said that representations had already been made by local authorities about the difficulty of keeping within the limit which he has set, but he has not explained how they should do it, except by such expedients as incentive bonus schemes. Efficient authorities already have such schemes. How can they halve the rate of expansion overnight? This is what they are asked to do, and it is quite unrealistic.

The most important items of expansion are items of capital expenditure. On the whole, only small projects come out of revenue. Most projects are financed out of capital, and they are phased over three to five years. For example, when an old people's home is first projected, the expenses and loan charges are low, being confined almost entirely to the purchase of the site. They rise quickly when building starts, and they jump quickly again on completion for furnishing, and at the same time the running expenses come in.

A new old people's home is to be opened in Portsmouth next year. What do we do about it? Do we stop it? Do we bear the loan charges and cost of deterioration and disappoint the old people? Obviously, we must go ahead and open it. There is a further example in Portsmouth. A new drainage system is being put in. That system is essential if we are to go on building houses, for without it we can do little more. The system was started three or four years ago, and it is to be finished next year or the year after. Again, what do we do about it? Do we stop it and compensate the contractors? We must have the houses, so we must carry on. I could cite many other examples.

Last September, the finance and general purposes committee of the Portsmouth City Council carried out an exercise to estimate expenditure next year. Taking into account all the wage increases and other rising costs then known, and assuming that capital expenditure authorised would continue but no new capital expenditure would be started after 1st April, the calculations showed a rise of 5.6 per cent.

I cannot reconcile the figures given by the Minister today with what, I understand, he has told local authorities, namely, that he would allow a 3 per cent. expansion, while telling them also to make some provision for inflation, which he puts at no less than 3.6 per cent. per annum. It seemed reasonable to the Portsmouth City Council to add that figure of 6.6 per cent. to the previous figure I have mentioned of 5.6 per cent., making a total increase for next year of 12.2 per cent. I hasten to add, perhaps to forestall the Minister, that, obviously, some of the figures in the 5.6 per cent. and the 3.6 per cent. would be the same. However, we know also from experience of the past few years that the figure for inflation may well be too low. So the Portsmouth City Council has suggested in its calculations a figure of 12 per cent.

If the Corporation allows expenditure to rise by 12 per cent., a large part of that increase will not attract rate support grant, and the cost to the rates is estimated to be equivalent to a rate increase of no less than 1s. 2d. in the pound. Thus, in considering the estimates for next year, the council will have many difficult decisions to make. I know from personal experience the difficulty of cutting back normal increases, but to cut a further 1s. 2d. will be nearly impossible. It seems that room for manoeuvre in cutting is extremely limited. Perhaps it will fall on parks, open spaces and other amenities, road repairs, maintenance of schools and public buildings.

I draw to the Minister's attention the unfairness in operation of the education supplement and the resources element. These affect Portsmouth and, I am sure, many other towns and cities. Our difficulties in both stem from the same factors—rebuilding and redevelopment due to war damage, and slum clearance, to a lower density and higher standards, and tightly drawn boundaries. These problems were recognised as far back as 1944 when the city bought a large estate outside its boundaries. Portsmouth has built 20,000 houses since the war, 10,000 within its boundaries and 10,000 outside. The dockyard and the navy together form the biggest employer, and it seemed reasonable to move younger people outside the city and keep the older ones near their work, their friends and their environment. This has meant that dormitory areas with young families are outside the boundaries, with the result that we suffer under the education supplement arrangement.

Due to the rebuilding of the city shopping centres and houses to modern standards, thus reducing the population, the rateable value per head has risen, but, while dockyard wages remain low, the resources formula shows that Portsmouth is getting richer—which is a complete fallacy. The education supplement figures also show how badly we are hit. Portsmouth, with 28,600 children, attracted £385,000 in grant last year, whereas Southampton, with 35,800 children, attracted £1,489,000, or, £1,100,000 more for only 7,000 children. I am sure, Mr. Speaker, that if I suggested that Southampton's figure should be reduced, you would rule me out of order. I am suggesting only that Portsmouth's figure be increased.

Mr. Speaker

Order. Mr. Speaker is impartial. He cannot defend even his own constituency in debate.

Mr. Pink

I am pleased to know that the adjustments next year will mean an extra £40,000 or thereabouts for Portsmouth, equal to about a 1d. rate. I presume that Southampton also will have more, so, probably, the differential will be maintained.

I ask the Minister to have a reappraisal of the amount which he is proposing in the light of what I have said, the figures which I have given and the difficulties which I have outlined, difficulties which will affect all local authorities. T hope that he will be able to help cities such as Portsmouth, perhaps by adjusting the grant formula, perhaps by introducing a supplemental balancing grant, perhaps by considering the question of boundaries.

There seems no doubt whatever that rates will go up next year. The Lord Mayor of Portsmouth has already forecast an increase for Portsmouth of up to 2s. The Government must bear responsibility for a large proportion of the increases which come next year.

7.20 p.m.

Mr. Arthur Jones (Northants, South)

I want to turn from the two main themes in the debate—the question of the amount of finance available for local government services and the standard of services—to an issue which I believe to be of great significance: the apparent deliberate policy of the Government to shift expenditure from the Exchequer on to local rates. This is one of the great difficulties that local authorities will face.

There are two points in support of my contention: local authorities are receiving no recoupment of excess expenditure for the current year, and there has been no increased grant Order for the period November, 1967, to March next year.

Paragraph 4 (a) of the Report says that the Minister is required to take account of the current levels of prices, costs and remuneration, any future variation in that level which can be foreseen … ". The great difficulty which the Government have faced over recent years is that many of the increases have been quite unpredictable because of the Government's past and present performance. This flows from the collapse of their economic policies. The admission of a tremendous amount of the increased expenditure is contained in Appendix A of the Minister's Report, which shows that between June and November this year the cost of local government services rose by no less than £472 million. That is an average of about £10 million a month which local authorities have had to make good from their own resources or have had to meet with economies in their services. We earlier discussed the effect of the implementation of comprehensive education, and the fact that there has been nothing to meet the added loan charges and higher expenses that flow from it.

Mr. Brian MacArthur wrote in The Times of 5th December: Some claim that there will be a decline in educational standards for the first time for more than 20 years. Over the past 10 years, they point out, the average annual increase in spending on education has been 9 per cent. This has been cut to less than 4 per cent. That is evidence of a cut in the education service. This week's Time Education Supplement, referring to the matter we are discussing under the heading "A very bad year", says that the Order … spells out the Government's continuing assumption, which has been echoed frequently in Mr. Short's speeches, that the main-stream of education will not suffer. How soon, one wonders, will they have to eat their words? That is independent evidence of an immediate cut in the standard of education and the prospect of substantial cuts in the future.

The Minister has refused to accept local authority estimates. This must lead to cuts in standards below the present minimum, or a substantial increase in rates.

I know that the question of council house rents is outside the Order, but the Government's proposals and their holding back of the level of local authority rents are having a substantial effect on the whole question of the rate levy for this and subsequent years. Some rate increases could have been offset by allowing council house rents to rise, but under Section 10 of the Prices and Incomes Act, 1968, the Government reduced the rent increases of no fewer than 52 authorities, affecting well over 500,000 houses, and rejected the rent increases of 59 local authorities, involving over 300,000 houses.

The G.L.C. estimates that as a result ratepayers in its area will have to pay an extra £4 million that would otherwise have been paid by council tenants. I shall not go into the question of rent or rate rebate schemes for tenants, because that would be outside the subject matter of our discussion. But all subsidised tenants are benefiting at the cost of the ratepayer under those Government arrangements, which is contrary to paragraph 3 of Circular 46/67. I had the Minister's assurance on 3rd December that that was still the Government's policy.

What are the inconsistencies we face under the financial policies that will flow from the Order? The Government are allowing crisis and panic measures to increase local government costs whilst they are making local authorities economise, very often in the departments which are increasing their services. This is a clear indication of the shift in expenditure from the Exchequer to the ratepayer, who will no doubt have to pay substantially increased rates next year and in subsequent years. The keeping down of council house rents has taken revenue from the local authorities.

That is the situation that local government and the ratepayer face. It could jeopardise the structure and standard of local government services. These circumstances stem directly from excessive expenditure in other sections of the economy and the total failure of the Government's economic policies. The Government must face reality. The growth of expenditure allowed is not adequate to avoid cuts in services. They will regret not being honest with the country in setting out their purposes in the proposals before us.

7.28 p.m.

Mr. James Allason (Hemel Hempstead)

I congratulate the Minister on his skill in introducing the Order so quickly, there being just three working days between his Report being issued and our debate. That makes it very difficult for hon. Members to find out just how the Order will affect their constituencies.

Apart from that, I can find little on which to congratulate the Minister. We are granting no less than 5 per cent. of the gross national product, yet few hon. Members are in a position to take part in the debate. We are discussing very nearly 10 per cent. of the expenditure of the gross national product in a background of great anxiety that there may be substantial rate rises. They have been forecast by some of my hon. Friends.

Some people cannot afford substantial rate increases, even remembering the domestic element in the rate support grant, which cushions them to some extent. Equally, there is desperate anxiety that services should be preserved. This is where we need a firm line from the Government. I recognise their dilemma. They need to restrict their spending. This is because we have an expanding population but not an expanding national income. What should the Government do? Should they increase taxation and rates in order to maintain services or should they order cuts? I accuse the Government of failing to face the situation.

I do not believe that the Government were honest in the White Paper. They would have been honest if there had been a "backs to the wall" feeling about it. They should have said, "We are in a financial jam and everyone must make sacrifies. Ten per cent. of the national income is being taken this way and it must be reduced". Had the Government said that, I believe that there would have been tremendous response from the country.

Instead, the White Paper suggests that everything is splendid, that there will be no substantial cuts anywhere and that no one need worry. What do the Government mean? If there are not to be cuts, it means that the rates have to go up. The Government have said this. Paragraph 15 of the White Paper, dealing with education, says: The expenditure envisaged in education allows in full for the expected increases in the numbers of pupils in primary and secondary schools … It takes account of … the expected increase in the number of teachers in primary and secondary schools, which should make possible some improvement in staffing standards. It sounds splendid and suggests that everything will go well.

Perhaps the right hon. Lady will tell us the national position, but in Herefordshire the number of children entering primary and secondary schools next year will increase by 3 per cent. That does not automatically mean an increase of 3 per cent. in expenditure. The increase in expenditure will be substantially more because it is much more expensive to provide a new place than to maintain an old one. The standards are higher and debt charges are much higher. I suggest that a 3 per cent. increase in the number of children probably means a 6 per cent. increase in expenditure in order simply to stand still.

Then there are teachers' salaries. An increase is due there which, I am told, will represent about 1 per cent. of the total education bill in Herefordshire. In addition, there is the improvement of staffing standards, mentioned in the White Paper. I imagine that this means full employment of all teachers available, including part-time teachers. If it does not mean that, I hope that the right hon. Lady will tell us what it does mean. This again means an increase on the education bill of about half of 1 per cent.

All this means that an increase of about 7½ per cent. is required for Herefordshire's education bill in merely to cope with the growing number of children and with modest improvements in staffing ratios. However, instead of 7½ per cent., it is to get only 3.4 per cent. I do not understand what is intended in education. Do the Government intend that there shall be cuts elsewhere in order to keep up the standards of education, or do they really believe that the average national increase of 3¾ per cent. will be enough to meet the difficulties?

Herefordshire is generally saved by the bell over rates and next year we shall have a windfall through the increase in the needs element which has been effected by the Minister at the expense of the resources element. This will benefit Herefordshire so that, for that one year, we are hoping that we will not have to have substantial rate increases. But that is only for one year. For the following year, there must be a considerable rate increase.

I turn now to roads. One point not yet brought out is that, while it is intended to cut road maintenance for a further two years, this will add up to a total of four years. Is it feasible? Is it not perhaps a false economy, particularly in urban areas, where roads receive a heavy pounding and where, if there is failure to maintain over a period of four years, they will probably have to be remade at much greater expense?

The hon. Member for Orpington (Mr. Lubbock) mentioned the Caravan Sites Act and said that he had been told that Section 2 will not be introduced as hoped because the Government are worried about the expenditure involved. Is that expenditure included in the forecast for 1969–70? If it has not been included, do the Government intend to introduce a supplementary order in to meet a proportion of the considerable expenditure which will fall on the local authorities when the Act comes into operation? I do not believe that the Government intend to put off the operation of the Act indefinitely.

The right hon. Gentleman said that it was possible to revise the distribution formula for the needs element but said that he had not yet done so and did not wish to do so because, if he did, it would not be possible to do it for another four years. Nevertheless, as he pointed out, he has made changes in the education formula. When he considers the distribution formula, I urge him to consider the element of expanding population. I have raised this matter time and again, and I wish the Government would realise that an area with an expanding population needs extra help from the Government, because expenditure has to be put into the infrastructure whereas the rateable value increase which will ultimately come from that expanding population does not accrue in time. There is thus considerable expenditure in the early years with an expanding population. The Government have never accepted this. Indeed, the Conservative Government were equally remiss about it. But, in the light of the experience of expanding populations that we now have, it is time the Government took account of this factor.

The demand for local government services, without cuts, is rising by about 6 per cent. per year. There is a clear need for a statement of Government policy. In the light of the economic crisis, what do they want? Do they want to maintain services, which involves an expansion of expenditure, in which case, as they have not increased the rate support grant by the necessary 6 per cent., rates must rise? Do they wish the total volume of local authority expenditure provided by both rates and rate support grant to rise by 6 per cent. a year, or to be contained by 3 per cent. a year? I cannot discover this from the White Paper and we are entitled to this information.

It is for the Government, not the Opposition, to say which services should continue to expand and in which there should be cuts. If there are to be cuts, the Government must provide a White Paper which says what the cuts are to be, and the country will face them. At present the White Paper is utterly flabby and worthless.

7.42 p.m.

Mr. Richard Hornby (Tonbridge)

I was about to say that I was sorry that hon. Members opposite seemed to have lost their zest for the debate, but as I rose to speak I noticed signs of reviving activity on the benches opposite.

Having listened to the debate, I am not altogether surprised by the lack of enthusiasm of hon. Members opposite, because the theme of the debate has been the transparent gap, as is shown in the White Paper and in the speeches of policy proceeding the debate, between commitments made by the Government and demanded of local authorities and the resources made available to meet them. It is very much in this context the argument about defence of a year or two ago when the hon. Member for Woolwich, East (Mr. Mayhew) resigned his post as a Defence Minister saying that the Government could not have it both ways, that they must either accept a reduction of commitments, or expand our resources, that we had to make a choice and could not be expected to be believed if we blurred that distinction. The distinction which he honourably exposed, much to the benefit of the examination of our policies in that respect, remains blurred in local authority expenditure. I hope that, partly as a result of the debate, in the weeks ahead we shall be able to bring this distinction out into the open, because until we do, local authorities, ratepayers and taxpayers will not know how they stand.

If there is a gap between what the Government provide and the demands which they expect local authorities to fulfil, it is perfectly reasonable to say that there is another way to fill it, namely, through the rates. The question which then arises is whether it is the intention of the Government that the ratepayer should provide an increased proportion of the costs of various services. Hitherto, that has not been their policy and when on one or two occasions there has been a slight increase in the emphasis placed on rates as opposed to taxes, it has been hotly contested by hon. Gentlemen opposite.

Circumstances sometimes change and there is no reason why policies should not change from time to time to meet changes in circumstances, but there is at least an obligation to announce the change of heart and the reason for it. If the Government intend that rates should bear a larger share of local authority expenditure, let them say so. Otherwise, one must conclude that the intention is that the full cost of local authority expenditure should, with the active connivance of the Chancellor of the Exchequer, be pegged at its present level.

If that is the intention and it is not intended that rates should rise to plug the gap, we have to consider the consequences of pegging local authority expenditure. I should like to examine some of the consequences for one local authority maintained service, namely, education. This is an important subject, because it accounts for a substantial proportion of the total of local authority expenditure.

It has been said by a number of hon. members, and it is certainly true of Kent, that the approximate cost of standing still in standards is between 6 and 7 per cent. annual increase in expenditure. The reasons are not peculiar to Kent, although they are very pronounced there. They are the reasons of rising population, the problems of coping with a backlog of old buildings, which in Kent is a very heavy backlog simply because we have had to build new simply to put roofs over the heads of children in the new communities which are constantly growing. Added to that, there are additional costs of preparation for secondary reorganisation and the cost—and we are all glad of this—of the high proportion of children staying on at school. That is what the education bill has to bear if our standards are to be maintained.

When against that background one is faced with a responsibility imposed by the Government of keeping the total budget increase to 3 per cent., it becomes difficult to meet the cost of merely maintaining standards. It is difficult because the areas in which one can move at all are severely limited without major and even disastrous changes in policy. In particular, 70 per cent. of the education budget is accounted for by salaries, wages and loan charges. In other words, that cannot be cut without a positive decision to cut back the supply of teachers at a time when classrooms are already over full.

It is on the record that Ministers do not want the teaching force to be cut back, and one is therefore left with a difficult problem of making major savings in the relatively narrow area in which one can operate. It is not easy for an authority like Kent driven to face this predicament. What it has to do must be brought out into the open. In other respects, too, neither side of the House has anything to gain by clouding the implications of the figures before us.

For instance, Kent is having to postpone vast parts of its school maintenance bill. This is not something which can be done for long without incurring additional costs, for this is only pushing away the problem and not solving it, and it should be recognised that this is what is happening. More disturbing are the obvious long-term effects in Kent and other parts of the country where there is a drive to revive interest in part-time careers, particularly among married women, who are wanted to return to teaching. This drive will be thwarted in this situation. This is serious because, as the numbers in the schools grow, we shall need this reservoir of skilled teaching power and without it we shall have a grave economic as well as social loss. That is one of the consequences of these figures. The third consequence will be the effect on equipment for our schools and, perhaps more important, training courses for teachers. If problems are to be coped with and results produced, improvements in both those directions are vital.

Beyond that, a major decision has to be taken about further education and adult education courses. I have received a great many letters complaining about the sharp increases in charges for these courses in the county. In present circumstances, faced with the problems of schools in Kent, I think that the authority was right to make this unpopular and difficult decision, although I have no doubt about the great value of the work being done in these adult education classes and the importance of providing educational facilities for leisuretime occupations, especially for the old and the retired.

We have to face up to the problems of priorities. Unless, from time to time, someone is prepared to make an unpopular decision and say "No" to items of expenditure, perpetually one encourages inflation and extravagance, so contributing to getting the country into the pretty pass that it is in at present. For that reason, though I would have liked these increases in adult education charges to have come more gradually and feel that they should have started earlier, I support the Kent Education Authority in what it has done.

I see the Minister nodding. Apparently, he approves. In that case, I hope that he will have a conversation with his hon. Friend the Under-Secretary of State for Education and Science who, as I understand it, when asked about adult education classes in Kent, is reported as having said that the prices part of the prices and incomes policy applied to the local education authorities and that the situation in Kent was under investigation. It is difficult to understand whether the hon. Gentleman supports the Government or is intent on undermining the policy to bring expenditure under control.

Mr. Greenwood

I was nodding to indicate my interest in the hon. Gentleman's argument and to show that I was following it.

Mr. Hornby

I hope that the right hon. Gentleman will investigate the remarks of his hon. Friend and let us know the result.

If we are to bring local education authority budgets within the limits of Government-imposed financial policy, it seems extraordinary that the present moment should have been chosen by the teaching profession and local education authorities, with the approval of the Department of Education and Science, to remove teachers' responsibilities for the supervision of school meals, as a result of which local authorities are having to find the additional cost of supervisory services. One knows the argument, and it has been a long battle. However, it is odd that that sort of priority should have been adopted at the present time.

I have no doubt that some local authorities must be looking very hard at their statutory commitments in the realm of higher education, especially when one considers recent events in some of our universities, for reasons not to be discussed in this debate.

If the Government want respect for their authority and for the policies which they are asking local authorities to carry out, let them openly admit the consequences which must follow. Frankly, I do not believe the truth of what is said in the paragraph headed "Education" in the Report. It says that these figures take … account of the increase in loan charges as a result of the growth of the educational building programmes, and of the expected increase in the number of teachers in primary and secondary schools, which should make possible some improvement in staffing standards". It goes on: There will however be room for only a limited improvement in other standards. Rather than a limited improvement, I think that there will be a deterioration in the standards of public services no less than in the standards of private life in the months that lie ahead. If the Government would lead the way and admit that, at least we should be on the way towards recovery. Unless they do that, there is no hope.

7.55 p.m.

Mr. R. W. Brown (Shoreditch and Finsbury)

I want to follow the hon. Member for Tonbridge (Mr. Hornby) to a slight extent. I have listened with astonishment to the arguments advanced by right hon. and hon. Gentlemen opposite. One would have thought that life in local government expenditure began in 1968. However, as the hon. Member for Portsmouth, South (Mr. Pink) said, I do now know very much about it. That is quite true. I have had only 20 years on a borough council, and I am sure he has much greater experience. But, in those twenty years, I have been chairman of committees concerned with housing, health and finance, and I have been Leader of the Council. Certainly it did not start in 1968 for me.

If I may take 1957 as a classic example, I can remember vividly the personal rows that I had with the then Minister of Housing. In the course of them, the arguments that I advanced were precisely those of right hon. and hon. Gentlemen opposite today. He assured me that I had to get my affairs in order and had to take into account the broader issues. We were in financial difficulties, and, if the Government allowed my council to go on doing this and that, quite clearly other authorities would want to do them. I was told that the Government wanted to take a hand in matters and that, after all, Governments must govern. I asked what we should do. I told the Government that if they wanted us to cut back the service, they should say so and be honest about it. The Minister never answered my question then, and I have no doubt that my right hon. Friend will not answer it today.

What has prompted me to join in this debate is the hyprocrisy which I have heard from right hon. and hon. Gentlemen opposite, and I am reminded that I saw the then Minister again in 1962. At that time, it was the right hon. Member for Leeds, North-East (Sir K. Joseph). I am sorry that he is not with us at the moment, because this is the first time that I have been provoked into taking action about what he said then.

I saw the Minister and his Parliamentary Secretary. The Parliamentary Secretary said, "I do not understand, Mr. Brown, why your authority is in this financial difficulty." So I drew a graph to show why we had done all our building during his time in office. He then said, "Now I understand." But I got nothing. As Leader of the Council and Chairman of the Finance Committee I had to face up to my responsibilities.

In 1962, three weeks before a municipal election—when no one in his right mind would have done it but because I felt I had to be honest, I put on a 4s. in the £ increase in rates. I felt that the services should not be cut and I hoped that I had the courage of my convictions on behalf of the people I served to provide the services that they ought to have. But the Government of the day did nothing. On the contrary, they deliberately forced me into that situation. Therefore, it does not lie in the mouths of hon. Gentlemen opposite to talk about what this Government are doing. There has been this steady deterioration over the years.

I come to 1963—a black day in the annals of local government in London—after four or five years of arguing with the Minister to tell us how much it would cost to: he rates in London for his proposals. I was one of those who petitioned the Queen to ask her to intervene, because the Government of the day would not stand up and tell us how much the burden would be in London. I forecast at least a 5s. increase in rates over three years, and I was not far wrong. That was a direct result of the action of the Government of the day. Therefore, when we talk about which Government forced what on to the rates, the previous Conservative Administration just about takes the biscuit.

One hon. Gentleman opposite spoke of the G.L.C. and its £4 million. That sounds a great deal of money. The hon. Gentleman suggested that the whole of that £4 million ought to come from the 270,000 tenants of G.L.C. property. A sum of £4 million represents about a 1½ d. rate in London. The average private heriditament is rated at about £180 to £200, which would mean 200 times 1½ d., but the hon. Gentleman suggested we should cast this not over the 8 million population, but over the 600,000 tenants of the G.L.C. He did not tell the House this, and this is what people are getting cynical about. He deliberately twisted these figures to suit his case. So the G.L.C. has behaved scandalously in what it has done.

My right hon. Friend was right. He had the courage to tell local government authorities to face up to their responsibilities in the nation as a whole, and that they cannot be permitted to do what the G.L.C. and other authorities are prepared to do.

I come now to my second point which concerns the local authority associations. There is not a genuine local authority association left. They are an adjunct of the Conservative Party Central Office. I have said this to my own association, of which I am honorary Treasurer. We are now seeing a new move. The A.M.C. is a classical example. During the years that I served on the A.M.C. we always permitted the Conservatives to have a place. The Chairman, Sir Francis Hill, was constantly against the views of my Party, but we deliberately permitted him to stay there because we believed in democracy. But not the A.M.C. today. It has removed my colleagues, and shame upon it. I shall never again regard it as being representative of local government. I hope that my right hon. Friend will bear in mind when it is petitioning him that it no longer represents local government and the good things in local government. We have always wanted—

Mr. Temple

The hon. Gentleman is usually quite fair, but he has been extravagant and discourteous to the Association of Municipal Corporations. I am a vice-president. A number of hon. Gentlemen opposite are also vice-presidents. All vice-presidents do their best to speak impartially for the Association. The criticisms being levelled against the Association by the hon. Gentleman are quite outrageous.

Mr. Brown

I take the hon. Gentleman's point. But will he explain why my colleagues were removed from its committees?

Mr. Temple

Yes.

Mr. Brown

Will he explain why it was not done on a free vote? Whipping was going on for it to be done. Did we do that before the change took place? I suggest that we did not.

Mr. Temple

I did not hear the voice of a single vice-president of the Association of Municipal Corporations speaking for the Association on the other side of the House today. I regard this as reprehensible. I believe they all had the same brief that I had and they could have spoken for the Association.

Mr. Deputy Speaker (Mr. Sydney Irving)

Order. I think that I should bring the House back to the Order.

Mr. Brown

I will be happy to pursue that argument. I am not a vice-president. I was a member by the authority of my authority. I took my authority out of the A.M.C. because I was disgusted with it in 1962. Today merely re-emphasises my view. When briefs from the A.M.C. are being read I suggest that they ought to be looked at in the context of what the A.M.C. represents today.

I want to talk about this sudden move on the rate support grant. Those who decided to try out the Conservative Administration's ideas are screaming for more Government money. During the years when they were not in control of local authorities I received more than my fair share of advice—some from hon. Gentlemen in this House, but more so from their friends outside—telling me to get my affairs in good order. I was told that I was profligate in my expenditure and I had to cut back on this and that. I was told that it was desirable and that I had to make up my mind whether we could afford it.

I remember in 1963 that we had a coal cart on Peckham Rye showing how the Conservative Government had cut back the education grant. The Minister turned the argument round and said that it was not a cut back but a step back from advancement; they were just making sure that we did not go too far ahead. He produced a mass of arguments showing why it was not a cut back. It was the same sort of manoeuvre that my right hon. Friend is performing today. He was saying that we should not advance so fast. But that is not what hon. Gentlemen have been adducing tonight. They have implied that my right hon. Friend has in some way departed from the current practice of local government and that apparently up to 1964 local governments were getting more money to do what they wished. This is patently not true.

Mr. Temple

rose —

Mr. Brown

I want to make my point. We were being deliberately cut back, year in, year out.

Mr. Temple

rose —

Mr. Brown

If I has the opportunity of going out of order I could illustrate in items not far from here how my authority deliberately did things to which the Minister had said no—

Mr. Temple

Will the hon Gentleman give way?

Mr. Brown

In a moment. The hon. Gentleman must reflect on these things, because simply making a party point is not very clever.

I have listened to hon. Gentlemen opposite talking about this Government's attitude of local government. When the amount of Exchequer grant per house built was reduced to zero it put us in a very difficult position. We were already building at a rate which we believed was far below what we ought to be doing. But it finally went up to £24—this enormous sum—which still left us in great difficulty. Today that £24 is £175. To hear hon Gentlemen opposite trying to argue that my right hon. Friend has failed to carry out the responsibilities of the Government in respect of the amount of money he is providing for local government is nonsense.

Mr. Temple

I do not think the hon. Gentleman has been present in the Chamber all day. I do not think he heard his right hon. Friend's speech, nor did he hear mine. Was the hon. Gentleman present when the Prime Minister's denial of a supplementary Grant Order for 1968–69 was referred to?

Mr. Brown

It is all clever stuff to talk about my not being here. I was outside the Chamber, dealing with students. They have problems, and I was dealing with them. I was meeting students from my constituency. I can be charged with dereliction of duty. It can be said that I should have told them to go away, and come into the Chamber to hear the debate, but I decided to see my students instead.

All I am trying to get hon. Gentlemen opposite to understand is that to argue that the Government has failed in some respects to deal with local government in a manner which is customary is nonsense. I have patently shown that the Conservative Government treated this matter with scant respect, and that those who were charged with this duty then were saying all the various things which hon. Gentlemen opposite have been saying this afternoon. Hon. Gentlemen were just not interested then, and therefore it does not lie in their mouths to charge my right hon. Friend with having provided insufficient money.

My right hon. Friend knows the problems of my constituency. I have discussed these matters with him on a number of occasions. Mine is a difficult area, and has many problems. I have said that people in my area should get a better proportion of the money than they are getting today out of the rate support grant.

The hon. Member for the City of Chester knows that the London boroughs, through the Conservative Central Office, have got together and decided that the parks and open spaces in London shall be transferred back to the boroughs—[Interruption.] We are talking about the expenditure which will bring in the rate support grant, and therefore I am talking about the money which has to be expended by local authorities. When local authorities are faced with this transfer of the parks, my borough will have to pay about £400,000 extra, not for an improved service, not because we shall be providing the ratepayers with something more than they have now, but merely for the privilege of planting their own grass instead of having it planted by the G.L.C. That is the only advantage which they will get, and I am not sure that people in London want that privilege.

We are also shifting the burden from the taxpayer to the ratepayer. Let us look at what is happening in London. The City of Westminster pays £900,000 as part of its precept for the parks and open spaces. When the transfer takes place, it will pay half that amount. The rest of the money will be found by Hackney, Islington, and places like that, where people will feel the burden very much more.

I have tried to illustrate that hon. Gentlemen opposite have failed to make their case that my right hon. Friend is in a way cheating the local authorities. Hon. Gentlemen opposite have failed abysmally. What is more, they have shown that whilst they were in control they deliberately set out on this road of transferring the burden from the taxpayer to the ratepayer, and I think that history will judge them extremely harshly.

8.14 p.m.

Sir Edward Boyle (Birmingham, Hands-worth)

If the hon. Member for Shore-ditch and Finsbury (Mr. R. W. Brown) really thinks that the education service, relative to its needs, did as badly in 1963 and 1964 as it will do in 1969 and 1970, I must disabuse him of that idea, because it simply is not so. Perhaps I might quote one figure. In October, 1963, when we were celebrating National Education Week, I announced the school-building programmes for 1965–66 and 1966–67. [Laughter.] I do not know why hon. Gentlemen opposite should laugh. One of the chief requests made to me as Minister was to give longer notice of the school-building programme, and that was very much welcomed by authorities, compared with the short notice which they have been given lately. We had the full figures from the right hon. Gentleman in a Parliamentary Answer at the end of October. The improvement element in those two years in the programme I announced at the end of 1963 was just about £30 million in each year, which was greatly in excess of what it has been at any time since.

Mr. Marks

Would not the right hon. Gentleman agree that that figure was also greatly in excess of the figure for the previous years, and was not that the year of a General Election?

Sir E. Boyle

The hon. Gentleman is perfectly correct in saying that the figure was higher than that for the previous year, which, speaking from memory, was £18 million, itself larger than the recent figure. The hon. Gentleman should not be too critical about this, because, as he will recall, Manchester got quite a number of primary school improvement projects of a kind it has not often had since.

I should like to take up the challenge issued to me earlier in the debate by the Minister, and also by the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris). Throughout this year, on a number of occasions, both inside the House and outside, I have expressed the view that the Government's cuts on education have proved not only educationally damaging, but disproportionate in relation to the economy measures as a whole. In a speech in January of this year I said: The Government should aim to protect those forms of investment expenditure which encourage growth and efficiency while cutting down on those which absorb scarce resources to no good purpose, and on indiscriminate subsidies to consumption. That remains my view.

In the February debate, in addition to points which my right hon. Friend the Leader of the Opposition has made more recently, I said that I believed that public opinion would have accepted them and then a further charge in school meals for those who could afford it. I also made the point, and I repeat it now, that it would have been reasonable in the current quinquennium to have asked the universities to accept a staff-student ratio not of one to seven but of one to eight, which would itself have saved about £10 million to £15 million a year. Therefore, when arguing for priorities and defending the education service, I have always tried to suggest alternative methods which it seemed to me would have saved more money more wisely.

I do not want to repeat what I have often said in the House about the importance of the education service, but I remind Hon. Members that we have recently had the Brookings Report, that influential economic study of Britain, which said, among other things, that the British Government were not spending enough on education.

I should like to take up the point made by my hon. Friend the Member for Ton-bridge (Mr. Hornby) in his excellent speech, and say something about what I regard, as he does, as the serious gap which is growing up between the educational commitments which we all make and the resources which are being made available to the service. One thing that no Government can do is to expect local authorities to carry out national policies without allocating resources necessary to carry out those policies, and the Government are doing precisely that. It is because of the dangerous gap which is growing up between commitments and resources that we are particularly critical of the Government in this debate.

There is a certain irony in the present position, because the problems have been caused in considerable measure by the success of policies which the Conservative Government initiated. The right hon. Gentleman uttered some rather incautious words this afternoon about the niggardliness of Tory Governments. Perhaps he will ascertain the view of the President of the Association of Education Committees, Alderman Broughton of the West Riding, who, in his presidential address this year, said that even after revising the amounts to take account of rising prices the impressive fact was that spending on education had doubled in the ten years between 1955 and 1965. There had been an average annual increase of 9 per cent. in those years.

What were the policies that we initiated and which have been carried on by successive Ministers? I want to mention three in particular. In doing so I shall quote from the admirable publication, "Learning Beyond Our Means" by Mr. Stuart Maclure which has come from the Association of Education Committees. Mr. Maclure says: Perhaps the one true priority which stands out most clearly—because it has been adopted by both political parties, and because Sir Edward Boyle, Mr. Quintin Hogg, Mr. Anthony Crosland, Mr. Patrick Gordon Walker and Mr. Edward Short have actively and expensively pursued it—is the over-riding need to improve the teacher-pupil ratio and eliminate over-size classes. Over the past 10 years the massive expansion of the colleges of education—from 25,900 places in 1957 to 84,900 in 1967—has been geared to this priority, Not only has it cost millions of pounds to expand the colleges … but it also has entailed rising recurrent staff costs in the schools. That policy has rightly been pursued during the last ten years. It is sometimes said that primary schools have always been the Cinderella of the service. There is a sense in which that is true, but it must be remembered that the benefit that they have had through the large sums spent on teacher training in this country has been very notable.

Secondly, there has been the expansion in technical and higher education. I believe that this has not only been very important to the nation but also an immense advantage to thousands of young people over the years. I should have thought there would be general agreement among hon. Members about the importance of the expansion of technical education that the noble Lord, Lord Eccles initiated in the late 1950s.

Thirdly, there has also been the widening of opportunities in secondary schools. On this point I was interested to see an article in The Times on Saturday by Brian Macarthur, who pointed out that: At the start of 1968, there were 114,000 senior sixth form students, who comprised nearly 17 per cent. of their total age group … In 1977, on the present Ministry projections, there will be nearly 180,000 senior sixth form students … while in 1980, there will be 210,500 which is 26 per cent. of the age group.

This expansion of opportunity in secondary schools—in particular the growth of the sixth forms—is a movement which will gather pace as we come into the 1970s. If we were to seek to reverse this pressure towards secondary opportunity it would surely require Draconian legislation—which Parliament would rightly not accept—and a rapid retreat from the ideals of the 1944 Education Act.

Earlier this year, my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) said that we can have an expansion of school education without needing a corresponding expansion of higher and further education. I have said this before on one occasion, but I repeat it: it reminds me of what a senior civil servant once said to me, namely, how curious it is that a highly intelligent Minister sometimes likes to contemplate a model which suggests that water might one day run uphill. There is not the slightest chance of this trend being reversed.

Those are three major commitments which Ministers in successive Governments have made, and they all date from the middle 1950s. In addition, more recently we have been placing other responsibilities upon local authorities. There has been the Plowden policy, of extra money for educational priority areas, which adds to the burden of recurrent expenditure. There has been the urban programme, which we were debating only a week ago. There have been the consquences of the Industrial Training Act, which many hon. Members greatly underrate. No less than 40 per cent. of this expenditure falls on local authorities.

Last but not least, as was pointed out by the hon. Member for Orpington (Mr. Lubbock)—who seems to have left the Chamber—there have been the consequences of the move towards secondary reorganisation. It is absurd to say that that is only a matter of the building programme, and does not affect the recurrent expenditure of local authorities. The whole point is to widen opportunities, particularly for the broad middle band of ability.

The hon. Member is not now here, and I am sorry, because I regret the fact that he took the opportunity to make a completely unjustified attack on my party in Bromley, and its intentions with regard to the reorganisation scheme, or the Welbourne plan. I know the present Chairman of the Education Committee and have had a lot of dealings with him in this matter. The slur cast on my party's intentions in the borough of Bromley was unjustified and I regret it should have been made.

Those are some of the commitments that we place upon local authorities today and I am sure that my hon. Friend the Member for Tonbridge was right to lay so much stress on the gap between these commitments and the resources that we are now making available.

I now turn to paragraph 15 of the Order. I agree with two points made by my hon. Friend the Member for the City of Chester (Mr. Temple), who is so experienced in these matters. He was right to point out that the financial basis of the Order is unsound because the base is a false one. I have no brief from the Association of Municipal Corporations, but I have a note from the County Councils Association which points out that it is now clear that local authorities overall have incurred increased expenditure of about £40 million for 1967–68 so that the whole basis of the calculations in this White Paper is suspect.

I also agree with my hon. Friend when he points out that there is no guarantee that the relativities listed in Appendix E will be adhered to. The rate support grant is not the bringing together of a series of earmarked grants. In answer to a Question of mine on 5th December, when I asked: … can the right hon. Gentleman say how he can be sure of the 3¾ per cent. figure in view of the responsibility given to local authorities under the rate support grant procedure? The Secretary of State rightly answered: "I cannot be sure of it."—[OFFICIAL REPORT, 5th December, 1968; Vol. 774, c. 1810.]

Let us be clear: there can be no guarantee on this matter.

I would now like to consider the rather meagre paragraph 15 sentence by sentence. It seems to be a rather sad outcome of the brave words in 1964 about "investment in human capital" being "pitifully inadequate". The first sentence says: The expenditure envisaged in education allows in full for the expected increases in the numbers of pupils in primary and secondary schools and for the likely growth of further and higher education. It is particularly on the latter half of that sentence that I should like to ask some questions.

It is, of course, true that the numbers of pupils in primary and secondary schools will rise in the next two years by about 3 per cent. a year, but what we should like to know are the Government's estimates of the numbers going into further and higher education, as in the nature of things it is far more expensive to provide for these than for primary and secondary school pupils. I find the sentence incredible in this context and totally disingenuous.

Between 1963 and 1966, the numbers of students in full-time and sandwich courses alone increased by 20 per cent. and there is no reason to suppose that that rate is likely to slow down. Indeed, I should have thought that it must continue. I hope that it would not be out of order here to quote a sentence from the National Plan: Despite the major progress already made within the further education system, the urgent need for a more skilled labour force will involve substantial expansion in further education. I hope that I will not be out of court with too many hon. Members if I pray in aid as another witness in this context Lord Balogh, who has constantly said that if we mean business about efficiency we must pay greater attention to what he called the "infrastructure" of professional education. On that point, I would not quarrel with him.

Mr, J. T. Price

The right hon. Gentleman has raised an important point, and I know that he is sufficiently fair-minded to know that any Administration, of whatever political colour, largely make their dispositions on the basis of the demographic forecasts of their technical experts. If I may refresh his mind on one in particular: when Lord Beveridge was given the task of designing a new social welfare system by the then Coalition Government, he forecast an expected unemployment rate of 8 per cent., which was never realised in practice. Similarly, many of the forecasts fed into the ears of Ministers of both parties, including the right hon. Gentleman himself, have been wide of the mark by miles. Therefore, I personally would reject a great deal of technical evidence which is given to us.

Sir E. Boyle

My answer to the hon. Member is that we can surely make some progress in statistical forecasting over a quarter of a century. He should not be so reactionary; he must believe that progress can happen sometimes. It is extremely unlikely that, when the number of students in full-time and sandwich courses alone has increased by 20 per cent. between 1963 and 1966, the sudden slowing down envisaged in this paragraph will prove correct.

I particularly raise in this context the development of the polytechnics, which are bound to suffer. Local education authorities cannot possibly provide books and equipment on the required scale. In fact, they are already feeling the squeeze. It was, I think, Mr. Eric Robinson, referring to Enfield College of Technology, who said: We have a new building, but not enough money to use it. If that is the case in 1968, the situation will clearly be worse in 1969 and 1970. It is a curious priority which puts the biggest squeeze, as I believe the Government are doing, on that part of the education service which most directly relates to productive and managerial efficiency.

The second sentence of paragraph 15 says that the expenditure: … takes account of the increase in loan charges as a result of the growth of the educational building programmes, and of the expected increase in the number of teachers in primary and secondary schools, which should make possible some improvement in staffing standards". This sentence is so much at variance with the statements of people who have to run the education service that, although one can only hope that it is right, it seems to be grossly over-optimistic. I would ask the right hon. Lady, does this sentence include part-time teachers without whom, in many areas, not only would an improvement in staffing standards be impossible, but the pupil-teacher ratio would certainly get worse?

I am glad that some hon. Members have referred to the problems of staffing in schools and the consequences of the Order on the future of staffing. There is already some sign of a falling off in the recruitment of off-quota teachers. They have been increasing by 2,000 a year. But the Department of Education and Science reckons that this year the addition is only 700. That strikes me as lamentable. As a former Minister, I was engaged in one of the many propaganda campaigns to get back more part-time teachers—to get back married women returners—during the early 1960s. The whole mood then was "how can we get more married women returners back into the schools?" We had a series of propaganda drives, and by 1964 it was fair to say that we thought that the prospects for achieving the full-time equivalent, annually, of 10,000 married women returners were better than the prospects of achieving a similar annual intake of graduates.

I would ask the right hon. Lady if this sentence includes part-time teachers and what will happen about "off quota" teachers'? It is all the more important to bear this in mind, because during the next decade, between 1968 and 1978 the total school population will rise from 7.4 million to 9.5 million. The primary school roll will rise over these next 10 years by 15 per cent., the secondary school roll by 50 per cent. and the over 15 by 125 per cent. Whatever views one holds, I feel that it is a mistake to talk about major issues of Government expenditure without being quite clear what are the relative quantities with which one is dealing. Over the next 10 years we will see a demographic movement which makes this issue of teacher supply of very special importance.

I come next to the question of what will have to be cut. This takes up the last rather grim sentence of paragraph 15: There will however be room for only a limited improvement in other standards. Anyone used to the drafting of Government documents will realise what this means. They would feel that there was something rather ominous in that phrase. It reminds me a little bit, if I may remind the House of this, of the comment by Sir Sidney Lee on the gastronomic habits of King Edward VII: "A hearty eater he never toyed with his food." When someone produces a sentence like this in a Government document one can be sure that there is rather more in it than appears at first sight.

My hon. Friend the Member for Ton-bridge has already said something about what will have to be cut. If I may quote Stuart Maclure once again, I believe that he is right when he says: Every local education authority is now purged first of all of any item which can in any way be described as development This is only the first stage in the process of budget-trimming. But this in itself is highly damaging if it lasts more than a very short time. The last attitude which ought to be encouraged is one of determined opposition to anything new. Innovation usually costs more in upheaval and discomfort than it does in money. There are always those who would rather stick in the same comfortable rut they've been in for years than try something new. This is true. One of the tragedies of the present situation is the discouragement to innovation and development. Then there is the very serious danger of a cut in school equipment, educational technology and so on. This is regretable, because educational technology may well prove very important to the economics of education in the future. As the House knows, I have a certain interest to declare when talking about books, being the director of a publishing firm, but it is worth remembering that expenditure by a local authority has to rise by up to 12½ per cent. simply to keep up with costs.

A small but very irritating matter is that of grants to voluntary bodies. I am always struck by the amount of Help that can be given by local authorities through relatively quite small grants to voluntary bodies. We have raised this point in many contexts lately, and I promise not to develop it, but I very much regret for instance, that the Government have pegged their grant to the new Community Relations Council, because of the amount of help that body should be giving by way of small grants to voluntary organisations concerned with immigrants.

Last, there is maintenance. The Government must be hoping for a series of mild winters. What will be the consequences of this in terms of particular authorities? I will quote two examples. I return to what I said in the debate on the Gracious Speech about the West Riding, and would like once again to refer to Alderman Broughton, who said that in the West Riding it had taken three attempts to get the estimates down even to 9.7 per cent. about the previous year. He said: To keep to a 3 per cent. increase in real terms would mean in the West Riding these things: having to keep the teaching staff to the level of January, 1967, despite an increased number of children; cutting out grants for school uniforms and essential clothing; reducing by 20 per cent. the purchase of books, stationery, apparatus and equipment; suspending non-vocational F.E. courses: eliminating direct grants to the universities and all discretionary awards; cutting out all school redecoration and reducing spending on repairs to a ceiling of £100,000. And still the total would top 3 per cent."—[OFFICIAL REPORT, 1st November, 1968; Vol. 772, c. 424.] That is the measure of the problem with which local authorities are faced today. I wish to quote an anonymous authority, a very large county borough in the North of England. This authority has given me some estimates which I will pass on approximately to the House, and I have promised not to reveal the identity of this borough. I am told: The extra expenditure on primary schooling in 1969–70 looks at the moment like being of the order of 8 per cent., though obviously there will have to be reductions on things like essential painting which has already been postponed for one or two years. I urge the hon. Member for Manchester, Gorton (Mr. Marks) to accept that it is a bit rough to criticise authorities because they have already tried to cut down their estimates. One of the reasons for the seriousness of the present situation is because this limitation of 3 per cent. comes on top of some years of limitation during which authorities have been trying to keep their expenditure down. The northern county borough which wishes to remain anonymous has given me some other interesting figures. For example, it informs me: Secondary education looks like going up by at least 7 per cent. And there is less room for pruning on maintenance because more of the secondary than primary buildings are relatively new. It is an interesting point to note that the percentage estimated for increased expenditure on teachers is relatively small—my informant would say too small—and certainly not more than 1½ per cent. for primary schools and rather less than 4 per cent. for secondary schools. Rents, rates and debt charges show the really large increases. Again, the considerable extra cost of running a comprehensive comes into these calculations, particularly where there are split premises. This is inevitably bound to add to the expenditure of local authorities.

Mr. Marks

Does the right hon. Gentleman have the figures for the school population of this northern county borough to which he is referring?

Sir E. Boyle

I do not have the figure for the increase in population, but I believe that it is not out of line with the figures for the country as a whole. I have reason to think that it will be rather below the national average. I do not wish to particularise too much in this connection because, as I explained, these figures were given to me on the understanding that I would not identify the county borough. Suffice to say that it is an authority with a considerable overspill programme.

One must consider, in this context, the pooled expenditure of F.E. colleges. Advanced F.E. expenditure initially looks like accounting for an increase of no less than about 14½ per cent. As for the figure for colleges of education, it seems as though an increase of about 10 per cent. must be expected in student numbers and an 8 per cent. increase in estimates. Somehow all these figures will have to be got down to an increase of not more than about 6½ per cent.—and then any further reduction will be the sole responsibility of the Government. Those are the sort of problems with which so many counties and boroughs are now faced.

I agree with the view in The Times Literary Supplement that we are getting back to the old concept of the early 50s which used to be called the "basic fabric of education", of which hon. Gentlemen opposite were so critical. I cannot help recalling my first debate in this House on education. It took place on 25th March, 1952. I recall the rather unusual winding-up speech made on that occasion by Sir Kenneth Pickthorn about Went-worth Woodhouse.

Having refreshed the memories of hon. Members, it is perhaps worth recalling what the right hon. Lady said on that occasion. She said that the Labour Party maintained that it was impossible to get a substantial amount spent on education without in some way impairing the education services. She made it clear that she was referring to a cut in the forecasts which local authorities thought necessary for the following year.

She went on to say that the so-called frills were the most important part of the educational system.

The present Secretary of State for Education and Science also took part in that debate. He was even louder in his protests. He stated: … any blow against the educational system is a blow against the economy and the economic prospects of the country, as well as against the children. He made a reference to the parable of the talents and, then added, rather strikingly: The question is not whether we should economist; in education in the midst of our difficulties, but that because of our difficulties we dare not economise on education."—[OFFICIAL REPORT, 25th March, 1952; Vol. 498, c. 279–80.] I know that we can all quote from past speeches, and it is, perhaps, a somewhat facile form of debating, but I cannot help drawing the contrast between what the Secretary of State said then and the problems that face local authorities in both big cities and counties at present.

I should like to take up the point made by my hon. Friend the Member for Tonbridge about adult education in Kent. It seems to me that we need not now add insult to injury. We all feel that there must be some priorities, and under present conditions it is quite inevitable, that there should be an increase in charges for adult education. I rather regret that the Minister for Sport should have said no more than that the prices part of the prices and incomes policy applied to the L.E.A.s, and that the situation in Kent was under investigation. I do not share the opposition to Mr. Aubrey Jones and his Board that some feel, but, with respect, I think that this habit of making him an excuse, and a refuge to which Ministers can all resort when under pressure, is a very great mistake.

No one doubts the seriousness of the economic situation and I am not suggesting that education should have been completely exempted from the cuts made necessary by the failure of the Government's economic strategy, but I do say that education has suffered disproportionately this year. We in this House should never forget two things: it is not just a platitude to say that the potential talent of our young people is our most valuable asset, and it is still true that too many children, even now, are being allowed to write themselves off below their true potential. I suggest it is thoroughly unfair, when we make a mess of the economy, that our young people should be among the chief sufferers.

My hon. Friend the Member for Worcester (Mr. Peter Walker) quoted the view that 1969 and 1970 will be the worst years for education since 1931. The one certain thing is—and this was repeated last week in the Times Educational Supplement —that they will certainly be bad years. I hope that in this situation the educational service will not lose heart.

It seems to me that there are certain big dangers which face the country at the present time. One danger is that we shall listen to those who offer us short cuts or soft option. Another is that there will be a widespread feeling of weariness and disillusionment. There is much more likely to be a feeling of weariness and disillusionment if we allow this gap between commitments and resources to grow too dangerously wide.

It is also very unfortunate that we should be debating this Order, and should be faced with this crucial problem both for local authority finance and for the education service, just when we also have major Burnham negotiations under way.

I hope that educationalists, faced with the inadequacies of the Government's proposals, will make their voice heard, and will remind us always of the crucial importance of this service for our young people and for the nation. As for ourselves in this House, I hope that we shall face honestly what the Order means, and we on these benches will certainly see that the responsibility for these acute difficulties is firmly laid where it belongs.

8.49 p.m.

The Minister of State, Department of Education and Science (Miss Alice Bacon)

This debate has ranged over the whole field of local authority expenditure, and even beyond. The right hon. Member for Birmingham, Handsworth (Sir E. Boyle) has spoken almost entirely about education, as have a few other hon. Members. I am winding up the debate because we anticipated that a great deal of it would be about education. In order not to be thought to be dealing in a cavalier manner with some of the hon. Members who have spoken on other matters, I shall try to deal with some points raised earlier.

One or two hon. Members raised the question of transport services and highways. The amounts agreed for transport services at November, 1968, prices are £211.4 million for 1969–70 and £234.8 million for 1970–71. The hon. Member for City of Chester (Mr. Temple) said that the 1967–68 relevant expenditure for highways was £190 million including loan charges of £24 million and that the 1970–71 proposed relevant expenditure is £191 million including loan charges of £36 million. I confirm those figures, but the sum allowed for 1967–68 for highways was £184 million. Local authorities had therefore overspent to the extent of £6 million. The figures for 1969–70 and 1970–71 represent restriction, but there will have to be some restriction on highways in the present economic situation.

The hon. Member for Portsmouth, South (Mr. Pink) said that Portsmouth receives a much smaller amount of supplementary education element in the grant than Southampton, but the education supplementary grant should not be looked at in isolation. This is only a topping-up element to take account of particularly high education costs. The hon. Member also complained that Portsmouth suffered because of its declining population, but Portsmouth gets extra grant because of this decline.

The hon. Member for Worcester (Mr. Peter Walker) made various points about the figures in the White Paper and in the Order. He said that compared with the £2,793 million relevant expenditure taken in last year's increase Order for 1968–69, local authorities had rated for a further £71 million and were expecting to have to find another £50 million, thus leaving little of the 3 per cent. for development. I think the hon. Member was getting a little confused between prices and development. The Order takes account of prices up to mid-November. Increases after that will be taken into account in any future increase Order. The 3 per cent. is quite separate; it is not for costs but for development.

The hon. Member for City of Chester complained about a false base in 1967–68. It is true that 1967–68 was £40 million overspent, but there is no mystery about the effect of this. My right hon. Friend, in opening the debate, said what the annual increases were in real terms in the five years 1965–66 to 1970–71. The hon. Member for Worcester said that local authorities estimate very accurately and over the seven years of general grant the error was only £8 million in £8,000 million, but the accuracy he mentioned applied to the estimates after they had been pruned by Ministers, as has been done on this occasion. Had local authority estimates been used, the error would not have been £8 million but at least £100 million more.

Mr. Peter Walker

Is it not true that the 1967–68 estimates as approved by the Minister proved to be £40 million wrong and the estimates for local authorities for the coming year will be £71 million wrong?

Miss Bacon

No, I cannot accept that figure for the reasons that I have given, but perhaps we can discuss this at a later stage.

The hon. Gentleman taunted us about the National Plan. But education will achieve the 25 per cent. growth forecast in the Plan in the time that was envisaged.

Many other questions were raised, such as on family planning and caravan sites. My hon. Friend the Member for Basset-law (Mr. Ashton) spoke about derelict areas, of which my right hon. Friend has taken note.

The hon. Member for Orpington (Mr. Lubbock) raised the question of the Caravan Sites Act. We know that he has an interest in this since he introduced that Measure, and I also have considerable interest in it from my local authority point of view. The burden of the hon. Member's complaint was that Part II of the Act had not yet been put into operation. But my right hon. Friend assures me that if any local authority wishes to go ahead, sympathetic consideration will be given to the matter of loan sanction. The hon. Gentleman must take into account the fact that the setting up of permanent caravan sites will mean capital expenditure which in the present situation we could not enter into, but I assure him that my right hon. Friend and my hon. Friend who looks particularly after this subject are as concerned as he is to do something as soon as possible.

Mr. Allason

Could the right hon. Lady at this point answer my question about whether a Supplementary Grants Order will be introduced to cover the increase in cost as a result of that Act?

Miss Bacon

We have not yet put Part II into operation, and so I cannot answer that question specifically. As I said, the first cost will be a capital cost. If after the capital cost has been entered into there are any loan charges, that is a question that my right hon. Friend will have to look into at a later date. But I hope that local authorities will progress in this respect where they can. I know the difficulty which the hon. Member for Orpington has mentioned about who is to be the first to begin, but we want to see this going ahead.

The hon. Member and the right hon. Member for Handsworth spoke about the Bromley reorganisation scheme. I was as surprised as anybody else to hear on the radio one morning that Bromley was to postpone its scheme for comprehensive reorganisation because of lack of Government finance. I do not think that was a particularly accurate account of what happened. The local authority has informed me that it does not intend to withdraw or amend the plan, which was approved last March. But it was not due to come into operation until 1975. What was to happen next September was that there was to be a change in the method of selection at 11. This was a preparatory stage.

As I have said on several occasions, we set on one side this year and next year £7 million for reorganisation schemes where comprehensive plans would be held up for lack of money. It is true, as the right hon. Gentleman mentioned, that I said that all plans due to come into operation in 1969 and 1970 had been saved by the £14 million. But Bromley did not ask for any of the £7 million. Indeed, as I said, its scheme was not due to come into operation until 1975.

However, I authorised the one building project which the local authority claimed was vital to the launching of its reorganisation scheme. If its reconsideration of some parts of the scheme leads to a change in what it needs in regard to buildings, I shall be prepared to consider fresh proposals. However, I think that the local authority has probably been having second thoughts about the preparatory work which is due before the plan itself comes into operation.

I assure the hon. Gentleman that my Department is in touch with the Bromley local authority to see what is happening. I am as sorry as he is if there is any mis- understanding or if the scheme is in any way held up, but I am assured that the final scheme is not held up.

Mr. Lubbock

After her further consultations with the local education authority, will the right hon. Lady be good enough to set out the facts in writing to me, so that the parents and teachers, who are most anxious about it, may have the fullest possible information?

Miss Bacon

Certainly, I shall do that. I do not believe that there is the difficulty which was envisaged in the newspaper reports and the reports on the radio.

Attention has centred on education, particularly towards the end of the debate, and it took up most of the speech of the right hon. Member for Hands-worth. This is not surprising, since of the £6,000 million local authority expenditure in the next two years which we are here discussing, education, including school meals and milk, accounts for over half. I hope, therefore, that the House will approve if I now concentrate on education.

My right hon. Friend the Minister of Housing and Local Government has already explained the economic background to the Order. I wish to add a word about total expenditure on education. My right hon. Friend the Secretary of State for Education and Science gave some figures in the debate on the Address, and I shall not repeat them all, but I must emphasise the rapid rate at which education expenditure has been growing, by about 60 per cent. in money terms over the last four years and at more than 5 per cent. a year in real terms. As a result, the percentage of the gross national product devoted to education has increased from 5.3 per cent. in 1963–64 to 6.1 per cent. last year.

Despite the need for restraint in public expenditure in order to shift resources for the benefit of the balance of payments and investment, total expenditure on education is likely to rise by another 7 or 8 per cent. over the next two years. Next year, for the first time in our history, we shall be spending more on education than on defence. That is why it is nonsense to talk about cuts in education expenditure.

Education is the largest single local authority service, and, as I have said, it accounts for more than half the expenditure which we are discussing today. Moreover, of the total expenditure on education three-quarters is in the hands of local authorities. Education, as we so often say, is a national service locally administered. Unless the Government and the local authorities recognise the crucial importance of education and ensure that adequate resources are made available to it, the service cannot prosper.

I shall come later to some of the detailed figures, but I wish to make clear from the outset that this Order provides for a substantial increase in real terms in local authority expenditure on education. If the broad pattern of expenditure shown in Appendix B of the Report presented by my right hon. Friend is followed, local authority expenditure on education will rise by £55 million this year and by nearly £60 million in the following year. This means a rate of increase of about 3¾ per cent. a year. Since an annual increase of about 3 per cent. in real terms is required to maintain existing standards, there will be a margin for improvements.

Paragraph 15 of the Report summarises the Government's views when it says: The expenditure envisaged in education allows in full for the expected increases in the number of pupils in primary and secondary schools and for the likely growth of further and higher education. It takes account of the increase in loan charges as a result of the growth of the educational building programmes, and of the expected increase in the number of teachers in primary and secondary schools, which should make possible some improvements in staffing standards. There will however be room for only a limited improvement in other standards. I want to emphasise the dominating rôle of teachers' salaries in the expenditure we are discussing. The right hon. Gentleman said that my party had once said that we would take teachers' salaries completely out of the hands of local authorities, and that they would be a charge on the national Exchequer. I think that he will realise that until we have the Report of the Royal Commission on Local Government we cannot make any major changes in local authority finance, particularly in education and teachers' salaries.

Mr. Allason

Then could the right hon. Lady say why the proposal was included in the Labour Party's 1964 election manifesto?

Miss Bacon

We set up the Royal Commission on Local Government, and the hon. Gentleman will realise that it would be foolish to make major changes in the finance of education prior to any changes which might take place in areas and functions of local authorities. One thing must come before the other.

Mr. Temple

The right hon. Lady's right hon. Friend said two years ago in a similar debate that he was putting in hand an immediate review of other sources of locally-raised revenue. What has become of that review?

Miss Bacon

I understand that my right hon. Friend has put the review in hand, but it would be foolish to reach conclusions about local government finance before getting the Report of the Royal Commission. We expect this early in the new year, and the time to look at local government finance will be when we have discussed it.

An Hon. Member

Waiting for Godot.

Miss Bacon

The Royal Commission on Local Government, if it reports next spring, will have taken far less time than most Royal Commissions take to report.

In round figures, the salaries and other costs of teachers in primary and secondary schools account for two-fifths of the total expenditure of local authorities on education and one-fifth of all local authority expenditure covered by the Order. A growth in the number of teachers such as the Order allows for is essential to the improvement of staffing standards in the schools and to the general development of the education service. That is why the Government gives the highest priority to it, and we hope that local authorities will do the same.

There is an important last point on teachers' salaries. The figures in the Order take no account of increases in wages, salaries or prices which may occur in the next two years. It follows that any increases in teachers' salaries next year will be a matter for a rate support grant increase Order. It is envisaged that for future years increase Orders will be made in the usual way. Local authorities can therefore confidently plan their spending on the basis that the grant they will get under this Order will not be eroded by inflation, and teachers can be confident that the Government will pay their proper share of a salary increase.

I turn now to teacher supply. It may be useful to begin by looking at what has happened during 1968. In the early months, fears were expressed that, by September, there would be widespread unemployment of teachers. We were told last summer that this would happen. September has come and gone and there is remarkably little evidence that any appreciable number of newly-trained teachers, who were willing to go where the jobs were, have been unable to find posts.

There may this year, as in others, be some people, particularly those with rather specialised qualifications, who have not yet found posts, and I hope that they will do so next term as normal wastage creates vacancies. But when the term began there were more vacancies than candidates in many areas.

Mr. Hornby

But this is not the point Surely the point does not concern trained teachers coming from colleges and looking for vacancies but the previous campaign to bring back into teaching trained teachers—for instance, after marriage—who could be used in the schools to bring down the size of classes.

Miss Bacon

My right hon. Friend the Secretary of State for Education and Science said in answer to a Question last week that there are 1,000 more part-time teachers in the schools than a year ago. If the hon. Gentleman will allow me to develop my theme, he will appreciate the position. In September, there were more vacancies than candidates. The fact that there might have been some difficulties for some people flowed from our policy of purposely making jobs scarcer in some places as part of a special effort to make the quota system do the job for which it was designed. That is the system by which my right hon. Friend, acting on behalf of local education authorities generally, rations the available supply of teachers among authorities.

When there is a shortage of teachers, some areas—and the right hon. Member for Handsworth, coming from Birmingham, readily understands this—find recruitment very difficult. These areas tend to be those which contain most of the deprived schools, whose children, as the Plowden Report reminded us, should really have above-average provision. The quota system has alleviated some of these disparities but as late as February, 1967, authorities were failing to get their quota of teachers and some were falling short by as much as 13 per cent. What that kind of deficiency means for the children and the teachers only those who have seen and worked in these schools know and appreciate.

Last year, we tightened up the working of the system and achieved an improvement. This year we made an even more determined effort to see that teachers were employed where they were most needed. Greatly increased allocations were given to educational priority areas and to those with many immigrants—the latter receiving 2,000 in all.

By restricting recruitment in the better-staffed areas, we also achieved more success in ensuring that the authorities in the difficult areas could actually recruit up to their new quotas. During the summer, one after another of the shortage areas reported that their difficulties were largely solved. Returns received this term showed that, for the first time, half the authorities were within 1 per cent. either way of their quota. Some areas which had benefited both from eliminating a deficiency and from increased special allocations have made phenomenal progress. Three had increased their force of full-time qualified teachers by over 10 per cent.

I have a cutting from the Birmingham Post of 30th August, this year, in which spokesmen for both Birmingham and Wolverhampton said that they were better off for teachers than they had ever been. This means that by making the quota work we have been putting teachers in the areas where they were most needed. It is true that somebody in Surrey or Sussex may not be able to find a job on the doorstep, but the essential thing it that part of our policy has worked in that for the first time places like Wolverhampton and Birmingham have the teachers they need.

I mention what has happened during the last year to draw attention to a noteworthy achievement by the Government and education authorities jointly, secondly, to show that the prophets of gloom may sometimes be proved wrong, and, thirdly, to suggest that the fact that jobs were deliberately made scarce in some areas—with good results—may have given many people the impression that we were near mass unemployment when we were not and may have coloured their assessment of the prospects for the school year 1969–70.

We are told that there will be a great deal of unemployment in September, 1969, but I think that I can dispel this fear. What are the prospects and what does this Rate Support Grant Order do? We know from information supplied by local authorities that they want to employ 13,000 more teachers next year. We have accepted that figure for the purposes of this Order which means that within this rate support grant there is an allowance for an extra 13,000 teachers next year, which is the precise number for which the local authorities have asked us. For the following year we have again accepted the total number of an increase of 11,000, and again the necessary finance is available in this Order.

This is a remarkable achievement. There will be 200,000 more children in the schools in the new year and from that it can be seen that if we have 13,000 extra teachers and 200,000 extra children, far from standards being depressed and far from classes becoming bigger, the classes will be smaller a year from now. That will dispel some of the gloom we have been getting.

Sir E. Boyle

The annual increase in the rate of off-quota teachers has fallen from 2,000 to only 700 in 1968–69. Has the right hon. Lady in mind any figure of what we can expect for 1969–70?

Miss Bacon

I am not sure that that figure is the right one, but, as the right hon. Gentleman knows, there were 7,000 temporary occasional teachers on 1st October and none may be employed after 31st August, 1970, because of the arrangement reached by the teachers' associations. We calculated that the number of teachers counting against quota will increase by about 15,000, but the number not covered by quota dropped by 4,000 between February and October, largely because of the new policy towards unqualified teachers. I am sure that none of us wants local authorities to dismiss part-time teachers, but I think that the right hon. Gentleman will agree with me that over the years, as we get more and more full-time teachers coming into the schools, local authorities, if there is a choice, will probably decide to employ the full-time rather than the part-time teacher. I am sure that for the next year we shall need many part-time teachers, particularly married women teachers who have been coming back into the schools.

It might be asked whether the number of posts will be enough to absorb the increased number of students coming from colleges. It must be remembered that the pay-roll of the local education authorities includes 7,000 unqualified teachers on 1st October, and it has been agreed with the local authorities and the teachers' representatives that no new appointments shall be made after 31st August, 1968. Taking account of the vacancies so created and the fact that more full-time teachers will become available, I see no reason to think that there would be a shortage of places for the newly-trained teachers who will complete their training next summer.

Turning to some of the other expenditures in schools, although teachers' salaries dominate expenditure on education, especially in primary and secondary schools, local authorities spend about £250 million a year on other running costs, maintenance of buildings and so on. We expect this expenditure to rise between this year and next by about 2½ per cent. per pupil. In the following year, there will probably be less available for this sort of improvement, but there is no reason why standards should fall. It is important that, when local authorities are looking for savings to keep the growth of their expenditure in line with the Government's intentions, they should remember that an adequate supply of books is as important as an adequate supply of teachers.

I know that a great deal of concern has been expressed about further education—

Mr. Lubbock

Before the hon. Lady leaves the subject of books, one hon. Member raised the problem resulting from the introduction of decimal currency. It is obvious that new textbooks will be required as a result of that. Arising from that and the coming change over to the metric system, will proper sums be made available?

Miss Bacon

I answered a Question about that a few weeks ago. We expect that local authorities will not have to engage in great expenditures for this but will be able to manage it through the usual arrangements for wear and tear and the provision of new books. We do not anticipate any heavy expenditure because of it.

A great deal of concern has been expressed about further education, which is the fastest growing sector of the local authority education service. Last year, the current expenditure of local authorities on further education was over £190 million. In 1963–64, the figure was £107 million. Again, there has been a very great inc-ease over the years.

Mr. Temple

rose —

Miss Bacon

No, I must get on.

Mr. Temple

What terms—

Mr. Speaker

Order. If the hon. Lady does not give way, the hon. Member for City of Chester (Mr. Temple) must keep his seat.

Miss Bacon

I have given way a great deal, as a result of which my speech is becoming rather a long one.

At present, there are 250,000 full-time and sandwich students, including nearly 70,000 advanced students taking courses at or close to degree level at polytechnics and elsewhere and receiving awards similar to those of university students. Then there are over 800,000 part-time day students, the majority taking day release. Finally, there are 2 million students taking evening courses, mostly of a cultural and recreational kind.

It is true that we are reducing by over £20 million in each year the authorities' forecast of expenditure on further education. But, in the Government's view, there will be sufficient resources available to local authorities to meet the likely demand for further education. I know that some local authorities are contemplating increases in fees for non-vocational evening courses—at present, typically £2 or £2 10s. for 36 classes in a year—to increase revenue. This is a difficult problem. On the one hand, authorities were reminded last year that students in these classes should be expected to bear a reasonable proportion of the cost and, in addition, increases in fees to take account of higher costs are justified. On the other hand, it is important that fee increases should not be excessive. The Government have no power to tell local authorities what fees they should charge for these classes, but I hope that they will strike a balance between these various factors.

I will not go into details about teacher training, except to say that there is great expansion in the colleges of education.

Concerning school meals, the forecasts allow for the growth in the school population and for the numbers taking free meals, which have increased from just over 300,000 in the autumn of 1966 to over 800,000 in the autumn of 1968.

Educational building has been mentioned. This is not, strictly speaking, part of the Order, except so far as the loan charges are part of it. The right hon. Member for Handsworth is usually very fair, but he has repeated something tonight which he said in the House on a previous occasion about the amount which, in his period of office as Secretary of State for Education, was devoted to the improvement element. I think that the relevant figure is the total amount spent on school building, not the improvement element.

The right hon. Gentleman, more than anybody else in this House, knows that when a global figure is given for school building the Secretary of State for Education has very little control over the amount devoted to improvement. We have, first to put roofs over heads and we have to make sure that the children on new housing estates, in new towns and in new development areas have schools to go to. The fact that in these last four years we have had to devote a great deal of our school building to these new development areas surely reflects the success of our housing policy and what we have done in the development areas. In 1963–64 the allocation for school building was £74 million or, if we allow for rising costs, £87 million. The amount of our school building programme this year is £129 million, even after taking out the amount for the raising of the school leaving age.

I will not talk about the urban programme since we had a debate about that last year.

Perhaps I can sum up like this. In spite of our economic difficulties, this Rate Support Grant Order provides for expenditure by local authorities of over £6,000 million in the next two years, with annual increases in both years. The Order also provides for grant at a higher percentage rate than before—56 per cent. next year and 57 per cent. in 1970–71 instead of 54 per cent. and 55 per cent.; and domestic ratepayers will get relief to the tune of 1s. 3d. in the pound next year and 1s. 8d. in 1970–71.

How can the Opposition talk of cuts in the face of these figures? Do they, with their clamour for savings in public expenditure, think that we should do more or less? On every possible occasion they have been clamouring for cuts in public expenditure. Yet tonight we hear clamour for local authorities to spend more money.

In education there will not only be more pupils and students, but also more teachers and some room for improvement in the service generally. In other services—health and welfare, child care, police and the fire service, for instance—there will be a steady expansion.

It is true that in present circumstances we cannot afford the annual rate of growth of expenditure to which local authorities have been accustomed, but the Government are determined to devote the largest possible share of the national resources to all these important local authority services. We look to the local authorities to see that value is obtained for every pound spent.

Question put and agreed to.

Resolved, That the Rate Support Grant Order 1968, dated 27th November, 1968, a copy of which was laid before this House on 3rd December, be approved.