HC Deb 07 April 1965 vol 710 cc625-36

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Grey.]

9.59 p.m.

Mr. Stan Newens (Epping)

Everyone who knows anything about local government recognises that there are to be very heavy increases in rates during the course of this year. The weighting for general grant to which I wish to draw attention this evening was determined in two Statutory Instruments which were discussed in the House on 15th December, 1964. Ultimately, they depended upon the 1958 Local Government Act, which brought in the system which we term block grant. The general grant depends upon a very complicated formula—

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Grey.]

Mr. Newens

I do not intend to go in great detail into the way in which the formula is made up, but I want to refer to the fact that when the Minister was introducing the two Statutory Instruments on 15th December, to which I referred, he mentioned the opposition which he himself has expressed in the past to the 1958 Act on which they were based. He said: I shall not … pretend for one moment that either the weighting or the factors are fair. My right hon. Friend went on to refer, in particular, to the position of the London boroughs, and to state that very heavy increases were expected. He said that one of the few great achievements of the Greater London Act has been to demonstrate once again the working of Parkinson's Law: the proliferation of new, powerful authorities inevitably generates a multiplication of staffs and a swelling salary bill."—[OFFICIAL REPORT, 15th December, 164; Vol. 704. c. 221–61] Therefore, the results which might occur when the rates were fixed this year were foreseen.

Now that the local rates have actually been fixed, the position has been shown to be even more alarming than was originally thought likely, and protests have occurred throughout London. Rates have soared well above the average which was expected throughout the country. I recognise that the fixing of the rate is not a Ministerial responsibility, and, therefore, I have no intention of raising it this evening. However, I suggest that when he determined the general grant, the Minister perhaps did not realise the seriousness of the position which would arise when the rates were fixed. Local councils must, of course, meet all their responsibilities, and I utter no word of criticism about the way in which they have done it in the London area. However, the fact that they have met their commitments has resulted in a very heavy increase indeed in the rates.

I shall take a number of examples from Chingford in my constituency, but these examples could be multiplied in many boroughs in the outer metropolitan belt. They constitute something which, in my view, calls for Ministerial action. In Chingford, the rates have gone up by 3s. 1d. to 13s. Id. in the £. It is true that the rate poundage of 13s. 1d. in Chingford applies also to the rest of the Borough of Waltham Forest, including the former Boroughs of Leyton and Walthamstow. However, the effect in Chingford has been considerably greater, because there is a higher average rateable value prevailing throughout Chingford than in the older former boroughs—

Mr. Speaker

The hon. Member would assist me if he could indicate what form of Ministerial action he is asking for. I have difficulty in seeing what it is, apart from legislation.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)

On a point of order, Mr. Speaker. I understand, on advice from my Ministry, that we are responsible for the general grant, which is applied to the boroughs as a whole. With respect, within this context I think that my hon. Friend the Member for Epping (Mr. Newens) is quite properly arguing that the amount that his borough is now receiving of the general grant is unjust and unfair, and that in that respect, therefore, there is Ministerial responsibility.

Mr. Speaker

I am obliged. I understand, therefore, that the hon. Member's speech is in relation to weighting. I did not hear his initial sentences.

Mr. Newens

I did refer to that in my opening remarks, Mr. Speaker.

I have had over 40 letters from my constituents and an official petition has been presented to the Minister by the former mayor of the borough about this serious situation. I am, therefore, asking the Minister to consider the general grant and the whole situation in the area. The effect of the increase in the rate poundage has been to put up the rates of Chingford by up to £40 per annum. For instance, one of my constituents, a widow aged 70, living on a fixed income, informed me that her rates will be increasing this year by £35. I have ascertained this to be correct. This seems to me to be a scandalous situation.

I checked on this lady's rate bills over the last 15 years. I discovered that, in the year 1951–52, she paid only £56 18s. 8d. but that in 1965–66 she expects to pay £145 4s. 3d.—almost three times as much. A system which results in that is manifestly unfair and I therefore ask my hon. Friend to say whether it is possible to do anything about the weighting of the general grant which will give relief to people who are in this very unfortunate position.

The unfairness of the weighting can be illustrated by reference to the fact that in Havering, a borough very similar in population to Waltham Forest, the grant is to be £3.9 million, whereas in Waltham Forest it is to be only £2.9 million. This results from a very complicated formula and is primarily because there are more children of school age in Havering than in Waltham Forest.

However, I maintain that the diminution of expenditure on education is not proportionate to the diminution of the numbers of children because, of course, overheads will be much greater in Waltham Forest than in Havering. The rate equivalent of the general grant to Essex prior to the formation of the new Borough of Waltham Forest was, in Chingford, 72d. but the general grant for Waltham Forest this year is 10d. down. It will be only 62d. which means, of course, that the weighting of the grant in the case of the new borough results in a very considerable loss of income.

I want to turn now to the effect produced by the amalgamation of the original boroughs on the rate deficiency grant. Leyton would have qualified for £85,000 which would have been equivalent this year to 2d. in the pound throughout the borough of Waltham Forest. In fact, the average rateable value for the whole Borough of Waltham Forest has risen and, therefore, the borough no longer qualifies for a rate deficiency grant. As a result, the Exchequer, in effect, is benefiting at the expense of the ratepayers of Waltham Forest and of Chingford. There is also the question of the Greater London Council precepts which include compensation to the truncated counties. To some extent this compensation is a burden on the ratepayers of Chingford who are already saddled with heavy burdens.

In these circumstances, action by the Minister is needed. I appreciate that in an Adjournment debate it would be out of order to discuss an inquiry into the whole rating system, or legislation in general, but I am asking whether my hon. Friend can offer any help by way of some alteration in the formula for the general grant.

I recognise that the fundamental reason for the serious situation which has arisen in the Chingford area is the reorganisation of local government during the period of the last Government, and I put the blame fairly and squarely of them. However, I am not satisfied with that and I ask my hon. Friend whether it is feasible to have some sort of amelioration as early as possible to help my constituents this year, as well as other people in the outer metropolitan London belt who are in a similar situation.

As things stand, all that can be done by people who are hard hit by rate increases is to apply for relief under the Rating (Interim Relief) Act, 1964, or for National Assistance. Many are too proud to apply for what they might be entitled to, and we have to take account of the fact that, rightlyorwrongly, people take that attitude. Hard-working people who have often struggled to buy their houses feel that it is beneath their dignity to apply for this sort of relief.

Those suffering hardship most of all are, first, the old on fixed incomes and, secondly, young owner-occupiers saddled with heavy mortgage repayments which they have been forced to undertake. I ask my hon. Friend to consider in what ways he can help these people.

I am aware that the rating system as a whole is breaking down, but that we cannot consider that in detail this evening. How can my hon. Friend help people who live in areas where high rateable values are normal and who will suffer grievously during the coming year unless they are helped?

I conclude by apologising to my hon. Friend for the way in which I have worried him about this subject. I know that I have harassed him repeatedly on this question and that it is a difficult subject to tackle. At the same time, I am also concerned to carry out my responsibilities to my constituents who have a just case. It is in this frame of mind that I ask my hon. Friend to say something about the way in which these people can be assisted in their plight into which they have been cast by actions wholly beyond their control.

10.14 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)

First, may I put on record that I have no complaint against the harassment of my hon. Friend the Member for Epping (Mr. Newens). As one who has been here for only about six months, he is a credit to his constituency, and, irrespective of party, he has tried desperately hard to put his constituents' point of view honestly and sincerely. That is the job of any Member of Parliament, whatever his party.

My hon. Friend can take credit from this. What he has done tonight is to follow up a long series of efforts which he has made on behalf of his constituents, and they have a right to be well pleased with his efforts. Whether they will be pleased with my reply is quite another matter.

This debate is, as my hon. Friend said, a follow-up to the deputation from Chingford which he brought to see me last week. That deputation, consisting of representatives of the former Borough of Chingford, presented a petition to the Minister signed by many thousands of residents. I welcome the present debate because, although it is bound to go over much the same ground, it gives me the opportunity to ventilate the matter before a wider audience.

I should like to follow my hon. Friend in his approach to the subject through the metropolitan weighting in the general grant formula. This weighting derives from the provision in the Local Government Act, 1958, that a supplementary grant is payable if the area of a local authority lies within the metropolitan district. The amount of the grant is a prescribed percentage of the basic grant and is the percentage that appears to the Minister appropriate having regard to the higher level of prices, costs and remuneration in and around the area.

The question whether some of the effects of the London Government Act could be met by an adjustment of this weighting was considered during the negotiations leading to the settling of the general grant for the current financial year and the next. The matter was also referred to by the Minister, in moving the General Grant Order, 1964, in the House. He accepted that the reorganisation was likely to involve increases in staffing, but he pointed out that the metropolitan weighting is limited by the terms of the Act to taking account of such matters as the higher salaries and wages which are paid in London and other items of higher expenditure which are associated with the London area and cannot be made to cover higher levels of staffing, and so on, deriving from reorganisation.

He also mentioned that the Government's examination of local government finance and the rating system has this question of the relative importance to be attached to the various factors determining Government grants to local authorities under consideration.

The average increase in rate poundage for England and Wales this year seems likely to be about 8 per cent. In London, on the other hand, it averages more than 20 per cent. Within both these figures there is of course a range. The increases for Waltham Forest are 1s. 11d., for Leyton and for Walthamstow, and 3s. 1d. for Chingford, the Chingford figure being almost the highest increase in the Greater London area, and representing a rise of just over 30 per cent. on the previous year's figure of 10s. in the £. Therefore, my hon. Friend has every right to raise this matter on the Floor of the House and to make the complaint on behalf of his constituents.

Rises in rates are unwelcome, whatever their size. When they are as big as the rise we are concerned with here they are bound to evoke fierce protest. And this rise has done so. I have seen that from the petitions which have been presented. My hon. Friend has given examples of the human problems that lie behind the figures.

I should like to make clear at once that ratepayers with small incomes who are in trouble over the increase should consider whether they might not be entitled to a weekly grant from the National Assistance Board. I know that in response to a letter addressed to their local office the Board will be pleased to send one of their staff to see the ratepayer and discuss the matter with him in complete confidence.

I understand the point which my hon. Friend made. Many of our people—decent, kindly people who are getting on in years—resent the idea that they should go to what they regard as a charitable body. There is nothing charitable about the National Assistance Board. We are all paying in for it. This is something which people are entitled to apply for if they are in genuine need. I say this to my hon. Friend and to his constituents who are in great need and to whom he has properly referred. I beg them to write a letter to the local manager of the National Assistance Board and ask for the private interview which will be arranged in their homes. No one will know about this. If people have a need, they have as much right to assistance as a married couple getting money for children's allowance.

I have been asked, also, whether the Rating (Interim Relief) Act would be of any help to people facing large increases in their rate bills. The purpose of the Act was to cushion the sharp change in rates experienced by some domestic ratepayers as a result of the 1963 revaluation. It provided that to become eligible for hardship relief a domestic ratepayer would have to experience a rise in rates between 1962–63 and 1964–65 of 25 per cent. or £5, whichever is the greater. It limited any relief given by a local authority to the amount of the excess of the 1964–65 rates over the 1962–63 rates, less the first 25 per cent. or £5, and would not, therefore, be applicable to the sort of situation which my hon. Friend has in mind.

Let us look, though, at some of the influences that may or will have contributed to the rise in respect of Chingford. Some of these influences affect all local authorities. These are mainly rises in costs, wages and prices since the last rates were made. Others apply especially to the new authorities in London. There must have been considerable difficulty in knowing how the proposed expenditures should be assessed, for the exercise in London was a novel one with the new boroughs taking over responsibility for services which previously had been the concern of other authorities.

And for the rating authorities there was, of course, uncertainty also about the level of the various precepts which the rating authorities would be involved with. There was not, in short, the experience of previous years to go on and this must have been a considerable limiting factor in the whole business.

Some outer London boroughs, moreover, gained as a result of being separated from the counties of which they previously formed part; whereas others, and these, I gather, number Waltham Forest among them, suffered a loss. This comes about as a result of a complex of factors—in particular, whether the rateable value per head was less than the county average, and whether the effect of general grant while the authority was still in the county was on average more than the effect of the grant which the new borough earns on its own.

It may help if I go over the matter of the general grant for Waltham Forest, since it has been argued that the amount notified to the Council must be wrong because it is £1 million less than the grant payable to Havering with much the same population. As the House will be aware, my Minister and I hold no special brief for the general grant. But we are saddled with it for the time being and we must work it as best we can.

The grant works by reference to a number of objective factors, which are intended to reflect the needs of the local authorities. There is a basic grant comprising an amount per head of population arid two authorities with similar populations will, of course, get similar basic population grants. But a local authority's expenditure is not influenced by population alone. The general grant formula therefore, contains factors which purport to reflect the circumstances which cause above-average expenditure. Thus there is an additional amount for each child under 15 years of age, because of the effect that the size of this element of the population has on child care expenditure.

There are also additional amounts for very young children and for old people, because their numbers in different local authority areas affect the relative needs for local health and welfare services. Density of population also influences costs. An aria with a declining population has commitments, which it cannot immediately terminate, on services provided for a larger population. The grant formula accordingly contains factors for these needs. And there is also the factor in respect of the higher level of costs in the metropolitan area.

These factors impinge differently in determining the grants of Havering and Waltham Forest and in themselves make a direct comparison solely on the basis of population an invalid one. But I have purposely left to the last a mention of the factor which has the biggest effect, apart from the basic population grant, in determining the relative sizes of general grants—that is, the factor based on numbers of school-children. My hon. Friend referred to this.

Grant in respect of the basic costs of education, that is, for a pupil ratio up to 110 pupils per 1,000 population, is contained within the basic population grant. Where the ratio is more than 110 an authority gets a supplementary grant, amounting to £94 in 1965–66, for each child in excess of that proportion. Havering, with a population similar to that of Waltham Forest, has 45 per cent. more schoolchildren to educate. Its proportion of schoolchildren to population is also high at 176 per 1,000 of population compared with 124 in Waltham Forest, a 42 per cent. difference.

Since education accounts generally for about 80 per cent. of the cost of all the services covered by the grant a difference of 35 per cent. in grant is not obviously out of balance to Waltham Forest's disadvantage when Havering has more than 40 per cent. more children to educate.

Then there is the question of the rate deficiency grant which Leyton qualified for last year. Neither Chingford nor Walthamstow qualified, and the new borough does not qualify either. The grant last year to Leyton was worth about £79,000, which is equal to a rate of just under 1¾d. in the new borough. In the new borough the rateable value per head exceeds the national average and so it automatically gets no grant, but, as can be seen, the average effect over the borough is not large.

I now turn, in conclusion, to the petition which my hon. Friend on behalf of his people presented to my Minister. It asked him to hold an inquiry into the rate rise in Chingford with the object of reducing the rise. The Minister fully understands and sympathises with the motives leading to the request. So far as rises in rates in London generally are concerned I give this undertaking and assurance, namely, that these will be taken into consideration in the Government's present examination of local government finance and the rating system. But this particular rate in Waltham Forest is a matter for the council of the new London borough. It is the council's by law. It is not for my Minister to look over decisions of the rating authorities each April. The council has this job. It must be left to it. It has the powers, and although on this question of the actual individual rate my hon. Friend has quite properly referred to the general grant which has a great deal to do with this, the council has the powers and my Minister has not. It is, of course, the local authorities at the end of the day who are accountable to their electorates.

I must say this to my hon. Friend. My right hon. Friend the Minister, and I, and all those at the Ministry of Housing and Local Government, are concerned and worried about the present situation of rates, particularly in the outer London area. My right hon. Friend is concerned at the moment with a review of subsidies. This he inherited, quite properly, from his predecessor. We shall, I hope, very shortly make an announce- ment as to our intentions with regard to the whole question of local government finance, and, of course, of subsidies.

I say to my hon. Friend quite sincerely that it was proper, in my view, for him to raise this matter on behalf of his constituents; it was his duty to do so; and I have every sympathy with him, but there is nothing more I can say to him tonight to give him more personal comfort. The London Government Act, I think, we would have amended had we been elected earlier last year, but we were elected at a time when most of the officers had been appointed, and in my view it would have been wrong for us to have upset so much of what had already been done.

To some degree, perhaps, many local authorities in London—perhaps in my hon. Friend's borough: I do not know—estimated in the dark, if that is the right phrase, believing that certain amounts of money which they thought they would require for certain services would be about right. I hope that in the long term they will prove to have been wrong and to have over-estimated, and that, as a consequence, my hon. Friend's constituents, and, for that matter, my own constituents in London, may receive the reliefs to which they are justly entitled.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.