HC Deb 20 October 1966 vol 734 cc442-80

5.15 p.m.

Mr. MacColl

I beg to move Amendment No. 1, in page 2, line 3 leave out 'provided by local authorities'.

This is a small but rather complicated Amendment. When my right hon. Friend is fixing the aggregate amount of rate support grant, he has to do a series of sums. He had first of all to find the aggregate total amount available by Parliament. Then he has to find how much of that sum will be allocated to grants in respect of specific services provided by local authorities.

There are a certain number of items of expenditure which fall to be defrayed out of the rate fund, such as expenditure upon county and borough police forces, magistrates courts and probation service. The aggregate amount of the grant is fixed to include the specific grants towards the services but the ad hoc committee is responsible for them. This means that they are provided by that committee and not by the local authority. Therefore the use of these limited words "provided by local authorities", will have some effect on the amount of the grant. This is slightly more than a drafting Amendment but it is not a very major point. It arises in these particular circumstances in relation to these services.

Mr. Temple

The Joint Parliamentary Secretary has said that this is a fairly complicated matter and that the Minister will have to do a series of sums. I would like to welcome the Minister and to wish him every good fortune in his responsible office. I would certainly wish him a series of very cool wet towels to wrap round his head when he is doing this series of sums.

The Joint Parliamentary Secretary and mystelf have debated on many occasions the words "relevant expenditure", and I must admit that I cannot understand how he is able to handle a Bill of this nature, bringing so many other grants into relevant expenditure after all that he has said about irrelevant expenditure in the past.

One of the important aspects of this Amendment is that it makes it perfectly clear that police expenditure is part of relevant expenditure. I wish to draw attention to this point about police expenditure. This Bill was introduced in May and since then various statements have been made by various Minister about the importance of increasing the scope of the police services. The police grant is a 50 per cent. grant, and under these new formulae all specific grants as well as all other grants are deemed to be relevant expenditure.

These specifics are then taken off and we arrive at the figure of the rate support grant. I hope that the Minister can reply to this point. Can he say that he is satisfied, in view of the changed circumstances since May, that the additional police expenditure envisaged will be met without vast increases of expenditure being incurred by ratepayers?

There has been no debate on police expenditure during the passage of the Bill. This Amendment highlights the fact that police expenditure is within "relevant expenditure" and is maintained as a specific grant, but I submit that no extra money will be provided for the expansion of that service unless very special provision is made by the Government at the time of the determination of the global sum of money to be given to local auhorities.

I make this point only because of the extreme relevance of the increase in police expenditure to our country, and I am fearful lest that increase falls on the ratepayers rather than on the Home Office.

Mr. MacColl

I think that my right hon. Friend the Minister would choose to make his maiden incursion into our debate on some other subject rather than in this abstruse field.

We are aware of the growing importance of the police force and the amount of expenditure on police forces. The estimates of that expenditure are now in the process of being collected. Many of of them are in. When we get them in and examine them, we shall be able to see the size of the problem. It is something which we shall take into account when we consider the aggregate amount of the grant.

Amendment agreed to.

Mr. Deputy Speaker

In calling Amendment No. 2 in the name of the right hon. and learned Member for Huntingdonshire (Sir D. Renton)—in page 2, line 24 to leave out 'and'—may I say that it will be convenient to discuss at the same time Amendment No. 4.

Sir David Renton (Huntingdonshire)

I am much obliged, Mr. Deputy Speaker. Amendment No. 2 is merely a paving Amendment. No. 4 is the substantive Amendment which I would wish to move. If a Division became necessary, I should hope that it would be possible to have it on Amendment No. 4.

Mr. Deputy Speaker

I see no reason why that should not happen.

Sir D. Renton

I beg to move Amendment No. 4, in page 2, line 24, to leave out "and".

I hope that, first, I may be allowed to congratulate the Minister of Housing and Local Government on his appointment. We have known each other for over 30 years, and I wish him well in his appointment. I am sure that he will be a very great improvement on his predecessor. Indeed, I commiserate with him on the most appalling inheritance which he has found in his Ministry.

During the 1964 General Election the Labour Party promised early relief for ratepayers. This Bill is the second bite of the cherry. The first bite was not much of a bite. It was the Rating (Interim Relief) Bill which gave relief to some ratepayers but at the partial expense of the general body of ratepayers. One would have hoped, therefore, that all ratepayers would enjoy some relief under this Bill, but, alas, that is not so. Some local authorities will come off worse as a result of the Bill, and therefore a good many ratepayers will come off worse.

In order to fortify that plain statement of fact, may I refer to what the previous Minister said in answer to a question which I put to him during the Second Reading debate. I said: Would the Minister agree that if the new rate support grant replacing the general grant produces less money for a county council than the general grant now produces, there is a serious risk that the 5d. extra due to the domestic element could be wiped out? The right hon. Gentleman, with all his candour—and he can be a very candid man—said: Yes, there might be a possibility. We are negotiating with the county councils on this point to ensure that it does not happen."—[OFFICIAL REPORT, 14th June, 1966; Vol. 729, c. 1275–6.] Nothing was written into the Bill during its long passage in Standing Committee to ensure that that did not happen, and nothing said by the Minister or the Parliamentary Secretary since the Second Reading debate gives any indication that it will not happen. We are all in the dark as to how each local authority will be affected by the Bill.

We are therefore in the very difficult position of not being able to tell our constituents definitely whether, as the Government promised, they would be relieved by the Bill, or whether, as will happen in the case of the county of Huntingdon and Peterborough, of which I am one of the two Members, the rate burden will increase. It was against that background that I tabled Amendment No. 4.

May I explain how it can help the Government over their difficulties? Paragraphs (a), (b) and (c) of Clause 1(3) specify matters which the Minister shall take into consideration when determining the amount of the rate support grant, after consultation with the local authorities. They include future trends in the cost of providing services; fluctuations in demand for services; and the need for developing them. All those are matters relating to the future, and obviously they should be taken into consideration.

There is, however, a serious omission. Nothing is said in the Bill about mitigating the harsh effect on ratepayers in those counties where the Bill will provide less Exchequer support than they get under the present system. This is one of the very few Bills which I can remember changing the financial support given by the Exchequer to outside bodies into which no transitional arrangements are written. The knife falls. We have the present system. One day in future, when the Minister makes an order under the Bill, we shall have the future system, and, however rigorous the effect of the change, nothing is to be done about it. There is to be no tempering of the wind to the shorn lamb. However, if my Amendment is accepted, it will be incumbent on the Minister to take into consideration the effect of the Bill.

I suggest that among the matters to be taken into consideration, should be the one set out in Amendment No. 4(d)— the need to prevent any local authority from suffering a substantial decrease in grant compared with the grant or grants received by them in the year immediately preceding". On the first occasion that the Minister has his negotiations for fixing the rate support grant, "the year immediately preceding" will be the last year under the present system. But on any future occasion when he goes through this biennial exercise it will be the year immediately preceding the making of a new biennial order. Therefore, the Amendment has the advantage of being both immediately transitional and very helpful to prevent sudden changes to the detriment of a local authority and its ratepayers in future. The Government ought to be grateful to anyone like myself who, on this occasion, is trying to save them from breaking faith with the voters.

5.30 p.m.

Not all local authorities who would benefit from the acceptance by the Government of the Amendment, or something similar moved in another place, have obligations under the town and Development Act or are for other reasons receiving rapid increases of population, but nearly all local authorities which are in that position are anxious about the effects of the Bill. It would not be in order for me to go into this matter in great detail, but it is relevant, in order to show that the Bill will have particularly adverse effects in the case of those local authorities with schemes under the Town Development Act, for me to explain the reasons.

They are twofold. When a large number of people move out of a city into the area of a receiving authority, the great proportion consists of young married couples with young children, and after they arrive more young children come along. Therefore, on top of the children coming into the primary schools through natural increase of the people who were there already, local education authorities have to account for further large increases in numbers in the primary schools. This has very serious effects.

I do not wish to burden the Committee with a lot of figures, and if I sought to fortify my case by doing so it might be wearisome. Nevertheless I ought to mention, by way of illustration, that whereas on 31st March, 1965, the average debt outstanding per head of population in England and Wales in respect of educational commitments was £19.7, in the county of Huntingdon and Peterborough it was £31.7. That shows the tremendous increase above the average, in respect of every educational commitment, that occurs when there is a large increase in population.

I know that the Minister is an open-minded man, and I ask him to bear in mind the fact that it is in the national interest to have these town development schemes and a better-distributed population, and it seems rather a shame that ratepayers in the districts and counties which are receiving these people from the cities should have a rate burden which is so much higher because of this educational commitment.

I do not wish to go into the other aspect in detail because I know that many of my hon. Friends have strong cases to make on this point, but it is apparent that, if town development is taking place, there is a special commit- ment for the building of new roads, which are expensive. I will leave it at that.

I implore the Minister to accept the Amendment. It will not create a specific charge upon him. It will merely mean that the problem of preventing sudden increases of rates in those counties where the Bill operates less helpfully than the present system does will be easier to solve.

Mr. Daniel Awdry (Chippenham)

I support my hon. and learned Friend's Amendment. I shall do so shortly because he has covered the ground very fully. There is no doubt, however, that some local authorities are worried about these new arrangements. They feel that a great deal more research could have been carried out on the effect of these changes. My county of Wiltshire is anxious about this question and wishes me to support the Amendment. I discussed the matter fully with the county treasurer only yesterday. I am certain that many other counties share Wiltshire's view.

The amount of grants now received by counties is very substantial. In the current year, under the present general grant and rate deficiency grant, Wiltshire will receive £10½ million. A further £1½ million will come from the school meals grant and the highways maintenance grant. The county 1d. rate in Wiltshire produces only about £70,000. Even a small fluctuation downwards in the amount of grant would have serious repercussions on the ratepayers and on the amount of rate which would have to be levied.

That is Wiltshire's fear. All that this small Amendment seeks to do is to avoid that hardship falling upon the ratepayers. I cannot imagine that the Government would wish to quarrel with out intention in this matter. If I manage to catch the eye of the Chair on the next Amendment—which is a very important one—I shall develop the case further, because a very important principle is involved. This Amendment seems fair and sensible. I know that it has wide support throughout the country and I hope that the right hon. Gentleman, in his first intervention—if this is to be his first intervention—will be wise enough and big enough to accept it.

Mr. Francis Pym (Cambridgeshire)

I am glad to have an opportunity of supporting the Amendment. I congratulate my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) on the excellent way in which he moved it. The purpose of the Bill is to relieve the ratepayer, and in those circumstances it cannot be right to introduce a new system of grant distribution which will have the effect of making some authorities worse off. No research has been carried out to make sure whether this will be so, but all the evidence that can be adduced goes to show that this will probably be the case. It will probably be so for my county of Cambridgeshire.

In the early summer the Government claimed that the amount of money that they would make available by way of grants would have the effect of reducing poundages by about a 5d. rate. But this will not happen in Cambridgeshire; in deed, there may have to be an increase in the rate. In that county the position is made the more serious because it has already suffered under the 1958 Act. We must be quite frank about it. The amount of grant received at present does not conform to the national pattern and therefore does not reflect the true needs of Cambridgeshire. That is why that county has the third highest rate of all English counties. Had the 1958 Act not been passed, Cambridgeshire would have received £250,000 per annum more by way of grant. This is equivalent to a rate charge in excess of 1s. in the £.

In 1963–64 I was already representing this serious situation to the then Government. This adds emphasis to this Amendment. During the early 1960s expenditure per head in Cambridgeshire has exceeded the average for the English counties by sums varying from 2s. to 12s., whereas the general grant per head has been over £1 below the average. I am sure that the Minister will understand the great significance of this. It arose from a defect in the distribution formula, and therefore an amendment was needed. But the amendment is not provided by the Bill, because the rate support grant is to be calculated and distributed broadly on the same basis as the general grant and the rate deficiency grant which it replaces.

Many of the existing anomalies remain. My right hon. and learned Friend the Member for Huntingdonshire raised the question of education. An important aspect of this matter which applies peculiarly to Cambridgeshire is that the resident student population at Cambridge University is included in the figures of population of Cambridgeshire for calculating the supplementary educational grant. The number involved is about 10,000. In a county with such a small population as Cambridgeshire, hon. Members will appreciate what a difference that makes. This is because, of course, the ratio of pupils per 1,000 of the population is shown as being unduly low.

It is true that secondary school pupils at technical schools, who were excluded under the 1958 Act, are now to be included under the Bill, and therefore, in that sense, the pupil ratio calculation is improved. But the new factor which comes in under this Bill is the question of roads. It is clear that the counties will suffer while the boroughs benefit and the sum of money available to the counties will be diluted, so that a county like Cambridgeshire will be worse instead of better off.

In supporting the Amendments, I hope that the Minister can give a clear undertaking, that in no circumstances will any local authority be worse off after the passage of the Bill than it is now. That is the purpose of the Amendments—as it were, to put a bottom in the market. I seek to make sure that there is no deterioration in the present position in Cambridgeshire or any other county. I want the Minister's assurance, if possible, that the new method of distributing grants can and will protect all authorities from the danger or the risk that their grant may in some way be reduced.

Mr. John Hay (Henley)

I should like to add my support for the Amendment and to pay tribute to the powerful case deployed with moderation, brevity and cogency by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton). These are Amendments and this is an issue on which he could have made a very long speech, but he chose not to do so. I am sure that he was right, and I will try to follow his example.

We are concerned here with the repercussions of the change in the grant system in several respects. Two have already been mentioned. One is the situation in which growth of population needs to be taken into account and the other is the case in which educational facilities will have to be improved and increased largely because of the increase in population. A third point mentioned by my hon. Friend the Member for Cambridgeshire (Mr. Pym) was that of highways. It is on this issue that I should like to speak.

5.45 p.m.

I do not contest the desirability of reorganising the grants structure in respect of highways. In many respects, this structure has become out of date and I do not object to the fact that a change is being made. But one immediate observation which I would make is that the change comes at a moment when the great majority of, if not all, local highway authorities are in the middle of their road programmes, which have been settled and approved for some time ahead. As I see it, a very special responsibility therefore rests upon the Government to ensure that what they do by changing the rules in the middle of the game does not have an adverse effect on the road programme—more adverse than that of Ministerial decisions already taken.

When my right hon. Friend the Member for Wallasey (Mr. Marples) was Minister of Transport—the years of expansion of the road programme—we were constantly urging local highway authorities to establish long-term, rolling programmes. We constantly promised them that we would match their approved expenditure by increased grants. I remember a number of occasions, when I was Parliamentary Secretary at that Ministry, when I met deputations from local authorities and urging them, with all the power I had, to go ahead and spend more of their rate money on improving highways, promising them that we would match what they could do.

To give them credit, most local highway authorities followed the lead which we gave them. But now, suddenly—there is every reason for them to complain—the whole basis of their estimates has been falsified and upset. In addition many of these local highway authorities have got on better with the task than others. Some have been much more willing to carry the road programmes on the rates, especially in what is called maintenance and minor improvement. The Joint Parliamentary Secretary to the Ministry of Transport will know the important work which can be done under the overall heading of maintenance and minor improvement. Very often, a "minor" improvement to a road is minor in nothing but name, in that it really ranks as a very important improvement.

Therefore, the expenditure of this type of local authority, which has tried to get ahead with its road programme, has been higher. But, of course, the need for improving the roads was there and, under our Administration at any rate, the need was always the test. We were always concerned with the volume of traffic. The need as a basis for the amount of grant to be paid to local highway authorities appears to be abandoned, although I see that, in some whimsical fashion, the word "need" is attached to a particular element in the rate support grant.

The fact is that grants for other than principal roads will in future be based on a common amount per mile for all roads. In addition, there will be an amount in respect of principal roads, but that will be scaled up or down in relation to the population of the local authority. As I conceive it, this will have two effects. The first is that local highway authorities which have a high mileage of roads relative to a small population will lose, some very heavily. Let us remember that a small population usually goes hand in hand with a comparatively small rateable value. This is not an invariable rule, but it is true on the whole.

The second result will be that a local highway authority have a smaller proportion of principal roads in relation to a large mileage of all roads and a low population per mile of road will also lose heavily. We cannot spell this out. We cannot give details. We cannot be sure of our figures, because, of course, as has been said all through the proceedings on the Bill, the Government stubbornly refuse to give us any exemplifications and many local authorities are completely in the dark about what the effects will be.

These are the two most probable effects on highways. It seems likely to be the effect in the county of Oxfordshire, which I represent. My hon. Friend the Member for Banbury (Mr. Marten) is at one with me in this, but we do not propose to take up time in making two speeches and I have his agreement to make the point for this county——

Sir D. Renton

It is only fair to say that my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) asked me to make my points on behalf of his constituency, too.

Mr. Hay

I had noticed that the name of my hon. Friend the Member for Peterborough was attached to the Amendment.

Oxfordshire, on all the grounds which I have set out, seems to be likely to lose a considerable amount of money. At present, the highway rate in Oxfordshire is about 1s. 2d. above the average for all English and Welsh counties. That is a pretty high figure. The total county rate is 1s. 10½d. above the average for all English and Welsh counties.

The House will therefore see that there is very little, if any, leeway in respect of this county. In Oxfordshire, we have a higher average mileage of roads, a lower average population, a lower average rateable value and a lower proportion of principal roads by comparison with all English and Welsh counties, and yet—and this is the significant point—traffic volumes in the county of Oxford are extremely high and are going up all the time.

Faced with this situation the county appears to see only two alternatives. The first I would regard as disastrous, and that is to reduce its road programme. A great deal has been done in the course of the last few years, but much, much more remains to be done, and I should regard the abandonment or cutting-back of the road programme over the next few years, particularly in maintenance and minor improvements, as a disaster.

The second alternative is to increase the rate levied to compensate for the apprehended loss of grant. So far as it has been possible to work out figures in the absence of exemplification, we calculate that if we were to take this course it would mean an additional 7d. rate. I hope that the Minister had grasped those figures, which are of the utmost importance and gravity to ratepayers in the county of Oxford.

I recognise the Government's problem. In highway expenditure, the only main alternative to carrying on with the present system—which, as I have said, is unsatisfactory in so many respects—would be somehow to base the grant upon traffic density or traffic volume. That would be difficult because if one tried to do it on that basis, presumably one would have to set up some enormously bureaucratic machinery to keep a constant and almost daily count of traffic on the road and to adjust the amount of the grant year by year accordingly. I do not think that that is a practical way of dealing with the matter.

I fall back upon the Amendment. I suggest that the Amendment which proposes that in calculating the amount the Minister should take account of the need to avoid any disproportionate decrease in the amount of grant over the preceding year would be doing something very useful indeed to help local highway authorities in this situation. I therefore believe that this should be one of the considerations written into subsection (3) of the Bill. It may not be a great deal but at least it will do something.

There is another Amendment on the Notice Paper which gives another method whereby some help could be given to local authorities in this situation. I stress that it is not an alternative to the Amendment moved by my right hon. and learned Friend; it is an addition and another way in which the Government can show that they want to assist local authorities out of what is a very difficult situation which some of them are facing. The intention of the Amendment is to see a transition from the present system of grant to the new and recast system of grant, and I sincerely urge the Minister to accept it.

Mr. John Astor (Newbury)

I should like briefly to support the Amendment moved by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton). It seems to me wholly consistent with the Government's policy which was stated by the then Minister of Housing and Local Government on Second Reading as steadily to shift the increasing burden from rates to taxes. Some of my hon. Friends have already pointed out that the Bill as it stands could undoubtedly have the opposite effect in certain cases, and it seems to me particularly regrettable that the group of authorities which are likely to be most seriously affected are those which already have the major problem of having to cope with greatly increasing populations.

The county of Berkshire has, I think, the most rapidly increasing population of any county in England, and we are therefore in Berkshire fully familiar with the difficulties. Over the last few years just to provide the additional services required by these newcomers to the county it has been necessary to increase our annual expenditure by between 14 and 15 per cent. Admittedly, this pays some regard to increasing costs and to some improvement in services, but the major element is to provide services which would not otherwise be available to the new population.

Reference has been made to the two main points of education and highways, and it is established that where there are increasing populations they tend to be of young married people moving in, and this produces a disproportionately large number of children in the primary schools. On the evidence available at present it is estimated by the county treasurer that there is likely to be an increase in rates of about 6d. in the £ in the county of Berkshire. I know that all the evidence is not conclusive at the moment, but that is what seems likely.

I might say that the other three hon. Members with constituencies in the county of Berkshire have discussed this with me. Unfortunately, they are not able to be here this afternoon, otherwise they would have supported this plea. I am sure that all authorities will welcome the greater freedom of action and responsibility which will be conferred on them by the Bill. It seems to me quite unreasonable that, by conferring that additional responsibility, we automatically burden them with an increase in expenditure which they will not be able to control unless they are prepared to lower their standards, which I am sure nobody wishes them to do. I hope that the Government will accept this proposal.

Mr. James Allason (Hemel Hempstead)

We know that some authorities will suffer very considerably as a result of this Bill and that all their ratepayers will find their rate bills increased in the next year when they might have expected them to fall. The particular sufferers will undoubtedly be counties with expanding populations. Many hon. Members have given instances of how this is likely to come about.

The Government have consistently taken the line that they need proof that counties with expanding populations will suffer before they are prepared to take any action about it. I therefore welcome the Amendment moved by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton which avoids for the Government the difficulty of their disbelief. I should like to put to the Government the fact that there is as much proof as is ever likely to be obtained that where there is an expanding population there must be increased costs.

My right hon. and learned Friend spoke of education. I remember that in one area of expanding population we found that the birth rate was 40 per thousand, compared with the national average at that time of 14 per thousand. When babies arrive at this rate it is inevitable that there must be a tremendous expansion of services. The argument is that the rateable value also increases, but it increases a long time after the expenditure has been incurred. Apparently the Government will not accept that argument. Will they take from me figures of what has happened in Hertfordshire as a result of a consistently expanding population? It has been expanding for years at a pretty fast rate.

6.0 p.m.

For example, in 1959–60 the proportion of expenditure amounted to 55.7 per cent. supplied by the Government by way of general grant, which was in line with the national average of just over 55 per cent. Since then the pro-portion which Hertfordshire has received has steadily dropped, usually at the rate of 1 per cent. a year; from 55 per cent. to 54 per cent. and then to 53 per cent. In the current year we are receiving only 49.5 per cent. as against the national average of 55 per cent. This represents a loss to the county of £1¾ million, equivalent to an 8½d. rate. This is solely on account of the factor of expanding population. If this does not prove that help is required, I cannot think of anything that could provide proof.

So far as can be discovered, as a result of the Bill Hertfordshire will lose another £300,000, equivalent to a further 1½d. rate. In consequence, the county will be losing the equivalent of a 10d. rate as a result of the factor of expanding population.

I hope, therefore, that even at this late hour the Government will accept that expanding populations cause undue hardship to ratepayers. Hertfordshire is profoundly dissatisfied with the unfair allocation which will result from the Bill and other counties with expanding populations should take warning from the experience of Hertfordshire.

Mr. Julian Ridsdale (Harwich)

I support the Amendment which was so ably moved by my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton). Coming from Essex, an area of greatly expanding population, I am glad of this opportunity to support my right hon. and learned Friend's suggestion and to say why. The main reason is because the safeguard which it would provide is necessary and because it would be of some help, although the problem is even more serious than this safeguard could solve.

I would like included a separate factor in the distribution formula of the rate support grant for the purpose set out in Schedule 1. This is supported by Essex County Council, particularly because the problem in that county is so serious. I remind the Minister of how serious it is. It is not only affecting young married people but particularly retired people. In my constituency alone since 1954 the population has increased by between 17,000 and 25,000. This has resulted in the need for more sewerage, schools and welfare facilities.

The rates have been going up by about 10 per cent. a year for the last five years and are likely to continue to rise at that rate for the next five years. This is in an area which has little industry, remembering that the Rating (Interim Relief) Act, which I supported in its earlier stages when it went before the Allen Committee, only tinkers with the problem faced by people in the seaside areas arising from the burden which is falling on them.

The previous Minister talked about a reform of the rating system and the Royal Commission has been set up. However, the Lord President of the Council said today that that Commission will not report until the winter of 1968, which shows that the Government are running away from this problem and have no intention of honouring some of the pledges they gave prior to the General Election.

It is for this reason that I support the Amendment. I do not wish to be drawn into the technicalities of the matter, and I will merely say that it at least provides a safeguard. However, so that ordinary people may understand what is happening, I hope that the Minister will give a definite pledge that particularly the elderly will not be forced to carry a burden which it is impossible for them to bear. After all, 15,000 to 20,000 people coming into a constituency is a considerable burden to shoulder. In the coastal areas the number of retired people is not 11 per cent. or 12 per cent.—the average for the rest of the country—but 25 per cent.

I therefore welcome the safeguard provided by the Amendment and hope that it will be accepted. It does not go far enough and Essex County Council wishes that it went further. Another Amendment will be discussed later. Meanwhile the elderly must be safeguarded and we must be sure that the Government will not use the Bill as a means of extracting money from people who cannot afford to pay it.

Mr. Arthur Jones (Northants, South)

I join my colleagues in some of their criticisms of the Bill. We have seen a clear example today of the strong lobby possessed by some county councils and the excellent way in which their case and fears have been expressed. I am surprised that no hon. Gentleman opposite supports us in our criticisms of the Bill.

We are faced in this Measure with proposals the consequences of which cannot be assessed, and no adjustments or transitional arrangements are proposed. This applies not only to the authorities mentioned by my hon. Friends but authorities throughout England and Wales. I am glad that my hon. Friend the Member for Harwich (Mr. Ridsdale) reminded the Government of the undertakings they gave before the General Election about rates, because the White Paper which preceded the publication of the Bill said that the proposals of the Government were designed to reduce the burden of rates and to produce a fairer distribution of Exchequer assistance to local authorities.

Questions have been asked today about the police and the rising allocation of Government and local authority finance that will be needed to expand the police service. Reference has been made to education and highways, in respect of both of which the method of computation for grant-aid is being changed; highways in the different nomenclature—the types of road—and education in the completely different method of assessment for support grant, moving it from the number of pupils to units. As far as I am aware, it is not general knowledge yet what effect that method of assessment under the new proposals will have and whether the new proposals of the unit method of assessment have been finalised.

It is in the context of this uncertainty that local authorities will be asked to prepare their assessments soon for the next financial year. An impossible task is being laid on local authority treasurers. In these circumstances, we plead for a minimum figure of grant or for some transitional arrangements. This was referred to briefly by my right hon. and learned Friend the Member for Huntingdonshire (Mr. Renton).

I want to elaborate on the historical aspect. In the past, when a new grant scheme has been introduced, it has always been customary to allow a transitional period during which the change in the rates in the £ levied by local authorities takes effect gradually. Thus, when the first block grant scheme was inaugurated by the Local Government Act, 1929, provision was made not only for the weighted population formula to be applied gradually, but for the payment of additional grant from the Exchequer where it was needed to ensure for each county and county borough council a minimum benefit equivalent to 1s. per head of the population. In addition, there were rules for adjusting the gains and losses of county districts.

The Local Government Act, 1948, legislated for transitional grants from the Exchequer where needed to ensure that county and county boroughs derived a gain from the reform of local government administration and finance in that year equivalent to a rate of 6d. in the £ and those grants were paid each year for five years. Section 15 of the Local Government Act, 1958, which gave rise to the present system of general and rate deficiency grant, provided for transitional arrangements. Although those arrangements did not guarantee a minimum gain to counties and county boroughs at the outset, the Act provided for making good losses.

It is in the context of transitional arrangements made hitherto that, within the framework of this new Bill, which changes so many of the methods for the arrival at the grant, and a specific grant system, that I state, and I am sure that there cannot be anything but general agreement on this—that pressure should be put on the Government to make some transitional arrangements——

Sir D. Renton

My hon. Friend has been very helpful in giving us examples of transitional payments involving grant. There are no transitional arrangements in this Bill, but I do not know whether he appreciates that my method introduces a transitional arrangement without the burden of the Government having to find a further grant from the Exchequer.

Mr. Jones

I follow that point perfectly clearly. It means that the grant shall not be less than that granted in the immediate preceding year. That is a further advantage that lies in the wording of this Amendment.

6.15 p.m.

Mr. MacColl

My right hon. Friend had hoped very much to be able to be present for the whole of this very important debate, but our estimated timetable has got a little askew and he has had to leave us to fulfil an important public engagement. He will come back immediately he has performed that duty to the public, and is extremely sorry not to be able to be here now.

This is a very important subject of discussion, but, if I may say so with great respect, it is not a new subject. The arguments have been deployed forcibly, but I do not think that any new information has been produced to add very much to what has been said before about the effect of the grant. It is as well to recognise what we are talking about. We are simply talking about a guarantee that no one will get less grant. The Amendment has nothing to do with whether or not a certain rate poundage, or a certain rate burden, is higher. We are dealing only with the grant.

From very considerable discussion with local authorities, and among ourselves, we have every reason to believe that we have here a good grant system and a better system than we had previously. As a result, we think that the distribution of the grant will be better than it was under the old system. The question is whether, when we give very substantial advantages to some local authorities, we should have a transitional arrangement protecting the others from any possibility of their grant falling. Put like that, it would be a difficult proposition to defend.

The grant may fall in a particular area because of very great changes in the position there. For example, a large industrial undertaking may be set up in a certain area where the whole financial position has very greatly changed. A very substantial difference in the fall of population would mean that we would not really have a very good case for stopping the grant. This Amendment seeks to put into the Bill a permanent direction to the Minister. It is not limited to transitional arrangements. The point has been put to us that we ought to have a transitional arrangement, and it has been pointed out quite justly that other Measures have provided for such arrangements.

This is very largely a practical point. I am advised that our experience of the workings of transitional arrangements has not been at all happy. The hon. Member for Northants, South (Mr. Arthur Jones) quoted the 1929 Act, but my recollection is that the transitional arrangements in that case were very complicated. I am not sure whether by 1939 a full grant system was working—but my recollection may be at fault there. The transitional arrangements under the 1958 Act have been very difficult to work. One eventually needed transitional arrangements for the transitional arrangements, because it was found that some people got more grant than it was ultimately found they were entitled to have, and special arrangements had to be made to take care of that situation.

Therefore, our answer to the narrow point of why we do not have transitional arrangements is the purely practical point that they are not easy to work. Having got, as we think, the right giant system, and a flexible system that can be adjusted more sensitively than the old system could be to changes, we think it better to take account, if necessary, of weighting for increased population in the later general grant Order. Having got a flexible and sensitive system of grant we do not think it desirable to complicate matters by having transitional arrangements. I am not sure whether the point in the Amendment was raised in Committee, but I know that it has not been put forward by any outside body as being something they wanted.

The argument advanced now has been based almost entirely on rate poundage. The case was put in terms that in one instance there was the third highest rate poundage in the country and in the other there were astronomical increases, but rate poundage is only part of the total formula. There is rateable value and rate poundage. I should have thought that a fairer test would have been to take the average domestic rate payments rather than rate poundages.

With the exception of Hertfordshire, which I concede has had higher payments than most, the counties which have been mentioned this afternoon in most cases are above the average and in one case below the average, but not, I think, substantially. In England and Wales, the average domestic rate poundage from hereditaments was £40.35. In Cambridge and the Isle of Ely, which was quoted by the hon. Member for Cambridgeshire (Mr. Pym), it was only £1 more, £41.61. In Huntingdon and Peterborough it was only marginally more, less than £1, £40.99. In Bedfordshire, it was £44.13. In Northamptonshire, on which we have had a very moving speech at the end of the debate, it was very substantially below the average.

That is why I suspect that the hon Member for Northants, South, with his great ability, did not touch on his own county, but made his argument rather more general. In Essex, as the hon. Member for Harwich (Mr. Ridsdale) quoted, it was £43.15, of £3 more.

Sir D. Renton

For which year is the hon. Gentleman quoting these figures? A lot depends on that.

Mr. MacColl

For 1966–67.

Mr. Hay

Will the hon. Gentleman say what it was in Oxfordshire?

Mr. MacColl

I shall try to get the figures for Oxfordshire. I was collecting these as the debate widened, but I shall certainly try to do that. As I have said, Hertfordshire shows a substantial increase—not an increase but it is above the average—but in the other cases there is not a substantial amount. In Oxfordshire, it was £43, substantially the same as in Essex.

Mr. Allason

The hon. Gentleman is making my point for me. I was giving the case of Hertfordshire as an awful example because we have been in this business of expanding population longer than any other county and this is what will happen to other counties. The proposals will not give us a great deal of help because already our rates have gone up so high. I was being altruistic in making the case for other counties with expanding populations.

Mr. MacColl

I was anxious not to be unfair in making the case about Hertfordshire. I am not committing myself to saying that because the hon. Member's county has had an expanding population and heavy domestic rate payments therefore the two are co-related. There may have been other reasons—the standard of services and special problems of an area of that sort. We have to look a little wider at the general position and not just at the position of one special county because no doubt before long we shall find that Hertfordshire is reaping where it has successfully and prudently sown.

The hon. Member for Cambridgeshire raised two points. The particular point which I look at is the question of the effect of the undergraduate population on the grant. Undergraduates are counted in the population. In the modern world, although less so than in my time when they did not have so many children. That means that the proportion of school children to population is reduced and that has a lower effect on the grant. On the other hand, the county gets a basic per capita grant for population including the undergraduates and that to some extent is a balancing factor the other way. Finally, there is the fact that because of the increase of popula- by undergraduates, the 1d. rate product per head of population is lower and that will have an increasing effect on the resources element in the grant. That illustrates the difficulty. This is a complicated problem of balancing the factors working in different directions. It cannot be said that they all work in one direction.

The hon. Member for Henley (Mr. Hay) quoted the case of highways in Oxfordshire. He said that, as he has every reason to be, he is proud about the record of his county in this matter. It has a good record in what it spends on roads. It is likely that it will not get as much contribution towards that, but this again illustrates the difficulty of being fair. This arises because in the past the county has had a very high grant for maintenance and its maintenance costs per mile are much higher than the average. That is because it wanted to have a very high standard of roads. That no doubt is highly desirable. If we are to provide money in grant where are we to place it? Are we to place it with the counties which have a high standard of roads and have been paying above the average on maintenance of roads, or are we to weight it in favour of those which have more leeway to make up and have to be encouraged to adopt higher standards? It is impossible to find a system whereby Oxfordshire will not lose without upsetting the balance of the whole system, taking the country as a whole.

There are very strong reasons for not having transitional arrangements. One has to look at these, not from the point of view of a transitional scheme, but of what we are going to do both in respect of the effects of the transfer from the old grant to the new and of the changes in the new grant. Obviously, some counties will gain and others will lose. That is bound to happen when we have a change of grant, not because it is arbitrary, not because it is unjust, but because it is more sensitive to changes and will place the money where it is mainly needed. That, after all, is one of the major objects of a grant.

This matter of the effects on particular counties has been examined considerably both here in debate and in discussion with particular authorities and with the local authority associations. General agreement has not been found on the idea that there should be a particular change giving particular help to the authorities which have increasing populations. If we are wrong about this, as I said the machinery of the grant is flexible enough to adjust it later—not by this rate support grant Order, but by another Order.

We had a somewhat melancholy utterance by the hon. Member for Hemel Hempstead (Mr. Allason) about this. If we find that he is right and we are wrong and that this problem gets worse under the new grant as opposed to the old grant, as he was fair enough to appreciate, we can adjust the formula in such a way as to take that into account. That could not be done under the old grant.

Therefore, I have to invite the House not to accept the Amendment because I do not think that it would make a general improvement in the interests of the general grant system or of local government as a whole.

6.30 p.m.

Mr. Temple

I am sure that the whole House is indebted to my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) for bringing this matter forward at a fairly late stage in the Bill. We on this side of the House need not apologise for this matter being brought forward at a late stage, because throughout the whole passage of the Bill we have pressed for exemplification. Had we received exemplification, there would have been no need for the Amendment. It would have been perfectly clear who were the gainers and who were to be the losers.

The Joint Parliamentary Secretary's reply was very much below his usual standard. It was certainly detailed, but it was also extremely disappointing. The hon. Gentleman said we were dealing only with an increase in grants and not dealing with an increase in the rate poundage. The two are directly interrelated. The lower the grant, the higher the rate poundage. I do not think the hon. Gentleman can get away with that reply.

The hon. Gentleman admitted there would be gainers and losers, and he said that the matter could be adjusted. It certainly can be adjusted, but only after two years. The Amendment would mean that any county or authority that was a loser would immediately be able to have this matter put right rather than waiting for a period of two years or more.

I stress that there is nothing in the Bill to say that the rate support grant Order which will be brought forward in December this year will be for a two-year period. It could be for any period of two or more years. It might well be a longer period than two years.

We have been told that the Government are satisfied that the distribution will be satisfactory. But we do not know. Apparently the local authority associations know and the working parties know. Significantly, one of the few speakers from the other side of the House today asked why the deliberations of the working parties were not available to hon. Members. I have been chided on many occasions for having, in the view of the Parliamentary Secretary, tried to look into the workings of the working parties. Apparently those workings are supposed to be secret and, therefore, no Member of Parliament has access to the detailed workings of the working parties. No Member of the House outside of the Government has any idea of what the effects of the new grant will be.

My right hon. and hon. Friends were quite right to draw attention to the many unknown factors which there are within these grants. My right hon. and learned Friend the Member for Huntingdonshire stressed the need for transitional arrangements. I will return to that point in a moment. He went on to say that we were all in the dark, and I agree with him. The unknown factors were brought out very clearly by my hon. Friends the Members for Cambridgeshire (Mr. Pym) and Northants, South (Mr. Arthur Jones), when they referred to the new educational units.

Nobody knows the effects on ratepayers of the new educational units, nor the effect on the grants. My hon. Friend the Member for Henley (Mr. Hay), with his vast knowledge of all that goes in the making up of road programmes, said that the new grants might have a very detrimental effect on road programmes or, conversely, might have a very detrimental effect on ratepayers. My hon. Friend is in a position to make a very sound judgment, in view of his vast experience in this matter, on the effect of road programmes.

My hon. Friends the Members for Newbury (Mr. Astor) and Hemel Hempstead (Mr. Allason) stressed the difficulties of counties or districts with rapidly expanding populations. I agree. That is another unknown factor which would be taken care of if this Amendment were accepted.

In a very succinct speech, my hon. Friend the Member for Harwich (Mr. Ridsdale) stressed that what was needed was safeguards. That is what we are pressing for in the Amendment. My hon. Friend the Member for Northants, South pointed to very powerful precedents for transitional arrangements. The Joint Parliamentary Secretary said, in effect, that the transitional arrangements that were in the 1929, 1948, and 1958 Acts were not, in the light of events, proved necessary. I will tell him why they were not found necessary in the 1958 Act. Before the Government which I supported introduced the 1958 Act, we issued a White Paper which in some considerable detail gave the expected effects of the new grants which would be brought forward.

I have in my hand this White Paper issued in February of this year which preceded this legislation. In the White Paper there is no detailed forecast of the possible effects on rating areas of the new changes in grant. In the 1958 Act we tried to make it absolutely clear, or clear beyond many doubts, what the effect of our proposals would be. I served on the Standing Committee which considered the 1958 Act. At that time the Labour Opposition asked for detailed exemplification of what would be the effect of our proposed grants on all the various rating areas. Mr. Henry Brooke, as he then was, then the right hon. Member for Hampstead, said that it would be a difficult job for his Department to produce such exemplification, but, nevertheless, he said that in the circumstances if it was the wish of the Opposition he would produce the exemplification. He did so.

We have asked constantly for this exemplification. I do not believe it is fair to any of our constituencies to pass a Bill of this nature without safeguards in it, and this is an essential safeguard. We are asking that where there is a substantial decrease in grant as between one year and another it shall be taken into consideration by the Minister. Surely the Minister should be able to accept an Amendment of this nature, which would give him powers to have regard to unexpected factors.

A little later this evening we shall discuss an Amendment the effect of which will be to put right a state of affairs which has evidently come to light in the working parties comparatively recently where sparsely populated counties were going to be affected very severely by the new grants. How do we know this evening that there may not be many other types of authority, which, due to a quirk of these formulae, will be affected adversely?

We have thought about this matter very carefully. We feel very strongly about it. We think that the Minister should be able to have regard to counties or districts which might well be the losers. I advise my right hon. and hon Friends to go into the Lobby in support of the Amendment.

Amendment negatived.

Mr. Deputy Speaker (Mr. Sydney Irving)

Amendment No. 3.

Sir D. Renton

The Division will come on Amendment No. 4. We do not wish to miss the opportunity of dividing.

Mr. Deputy Speaker

My predecessor in the Chair gave an assurance that the House could divide on Amendment No. 4 if it so wished.

Mr. MacColl

I beg to move Amendment No. 3, in page 2, line 27, at the end to insert: 'and for the purpose of determining the said amount and portion the Minister may make such adjustments in respect of relevant expenditure and grants as appear to him to be required to offset the effects on those factors of the constitution or alteration after the passing of this Act of any joint board'. This is an Amendment which I find it very difficult to explain except by putting it in arithmetical terms. I touched upon this in Committee. The problem arises of the effect on the grant formula of the growth of joint boards, mainly for the police. I wish to compare the effects where the police are taken away from a county police authority and put under a joint police authority, and the simplest way is to explain it numerically.

If the relevant expenditure in respect of the police under the county police authority is £1,000, the aggregate grant of 54 per cent. will be £540, which will go into the total aggregate grant. The specific grant, which is 50 per cent., will be £500, so that £500 of the aggregate grant will be part of the specific grant and will be deducted, leaving £40 for the rate support grant.

If that police authority merges with another or joins a joint authority, the expenditure is no longer £1,000 because it is incurred by the joint body. The whole of that expenditure does not come into relevant expenditure until after the deduction of the 50 per cent. grant, so that the relevant expenditure falls to £500. The 54 per cent. then falls to £270. No specific grant is to be deducted because that has gone to a joint authority, which is not a local authority for this purpose, and the amount then available for the rate support grant will be £270.

The total effect of this operation would be that the total grant would rise from £540 to £770—an increase of £230. It might be said, "Why grumble? That is very lucky". But it would be unfair to do this when there has been no change in the cost or in the police but purely a change in the technical question of which authority administers the police service.

At one time we had hoped that this would be a small problem and that we could ignore it as de minimis and not

become too much involved in rather abstruse questions. But with the recent increase in the number of joint police authorities and the likely future increase it has become a rather more serious matter. That is why we propose the Amendment, which enables the Minister to make an adjustment in the formula to deal with this curious anomaly.

Mr. Temple

The House is very indebted to the Parliamentary Secretary for his detailed explanation. I had an opportunity of studying this extremely complex matter before I rose and at the moment I can claim that I understand it, and I can advise my hon. and right hon. Friends that the Amendment will make the accounting a little more comprehensible where new joint boards and police authorities are being established. Anything which makes accounting a little more comprehensible is valuable, and we on this side of the House can agree with the Amendment.

Amendment agreed to.

Amendment proposed: In page 2, line 27, at end insert: 'and (d) the need to prevent any local authority from suffering a substantial decrease in grant compared with the grant or grants received by them in the year immediately preceding'.—[Sir D. Renton.]

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 107, Noes 136.

Division No. 175.] AYES [6.43 p.m.
Alison, Michael (Barkston Ash) Elliott, R. W. (N'c'tle-upon-Tyne, N.) Kimball, Marcus
Allason, James (Hemel Hempstead) Errington, Sir Erie King, Evelyn (Dorset, S.)
Astor, John Gilmour, Ian (Norfolk, C.) Loveys, W. H.
Balniel, Lord Glover, Sir Douglas Lubbock, Eric
Bell, Ronald Goodhew, Victor McAdden, Sir Stephen
Bennett, Sir Frederic (Torquay) Grant, Anthony Mackenzie, Alasdair (Ross&Crom'ty)
Bessell, Peter Grant-Ferris, R. Maclean, Sir Fitzroy
Biggs-Davison, John Gurden, Harold Maddan, Martin
Black, Sir Cyril Hall, John (Wycombe) Mathew, Robert
Body, Richard Hamilton, Michael (Salisbury) Mawby, Ray
Boyd-Carpenter, Rt. Hn. John Harris, Frederic (Croydon, N. W.) Maydon, Lt.-Cmdr. S. L. C.
Bromley-Davenport, Lt.-Col. Sir Walter Harris, Reader (Heston) Miscampbell, Norman
Brown, Sir Edward (Bath) Hay, John Monro, Hector
Bullus, Sir Eric Heald, Rt. Hn. Sr Lionel More, Jasper
Carlisle, Mark Heseltine, Michael Morrison, Charles (Devizes)
Clegg, Walter Higgins, Terence L. Murton, Oscar
Coolie, Robert Hiley, Joseph Nott, John
Cooper-Key, Sir Neill Hobson, Rt. Hn. Sir John Onslow, Cranrley
Corfield, F. v. Holland, Philip Pardoe, John
Costain, A. P. Hordern, Peter Peel, John
Crawley, Aidan Hunt, John Prior, J. M. L.
Crosthwaite-Eyre, Sir Oliver Hutchison, Michael Clark Pym, Francis
Dance, James Irvine, Bryant Godman (Rye) Quennell, Miss J. M.
Davidson, James (Aberdeenshire, W.) Jenkin, Patrick (Woodford) Rawlinson, Rt. Hn. Sir Peter
Dean, Paul (Somerset, N.) Jennings, J. C. (Burton) Ronton, Rt. Hn. Sir David
Digby, Simon Wingfield Jones, Arthur (Northants, S.) Ridsdale, Julian
Eden, Sir John Jopling, Michael Roots, William
Rossi, Hugh (Hornsey) Teeling, Sir William Wills, Sir Gerald (Bridgwater)
Russell, Sir Ronald Temple, John M. Wilson, Geoffrey (Truro)
Scott, Nicholas Thatcher, Mrs. Margaret Winstanley, Dr. M. P.
Shaw, Michael (Sc'b'gh & Whitby) van Straubenzee, W. R. Wolrige-Gordon, Patrick
Stainton, Keith Walker, Peter (Worcester) Wylie, N. R.
Stodart, Anthony Walker-Smith, Rt. Hn. Sir Derek Younger, Hn. George
Summers, Sir Spencer Walters, Dennis
Taylor, Sir Charles (Eastbourne) Weatherill, Bernard TELLERS FOR THE AYES:
Taylor, Edward M. (G'gow, Cathcart) Webster, David Mr. Blaker and Mr. Eyre.
Taylor, Frank (Most Side) Whitelaw, William
Alldritt, Walter Hamilton, William (Fife, W.) Noel-Baker, Rt. Hn. Philip (Derby, S.)
Anderson, Donald Hamling, William Ogden, Eric
Archer, Peter Haseldine, Norman O'Malley, Brian
Atkins, Ronald (Preston, N.) Hattersley, Roy Oram, Albert E.
Atkinson, Norman (Tottenham) Heffer, Eric S. Orme, Stanley
Bacon, Rt. Hn. Alice Hilton, W. S. Owen, Dr. David (Plymouth, S'tn.)
Barnett, Joel Hobden, Dennis (Brighton, K'town) Page, Derek (King's Lynn)
Bennett, James (G'gow, Bridgeton) Hooley, Frank Palmer, Arthur
Bidwell, Sydney Horner, John Pannell, Rt. Hn, Charles
Blenkinsop, Arthur Houghton, Rt. Hn. Douglas Park, Trevor
Booth, Albert Howie, W. Pavitt, Laurence
Boston, Terence Hughes, Emrys (Ayrshire, S.) Pentland, Norman
Brown, Bob (N'c'tle upon-Tyne, W) Hughes, Roy (Newport) Perry, Ernest C. (Battersea. S.)
Buchanan, Richard (G'gow, Sp'bum) Hunter, Adam Perry, George H. (Nottingham, S.)
Butler, Mrs. Joyce (Wood Green) Jackson, Peter M. (High Peak) Price, William (Rugby)
Chapman, Donald Janner, Sir Barnett Pursey, Cmdr. Harry
Coe, Denis Jenkins, Hugh (Putney) Randall, Harry
Concannon, J. D. Judd, Frank Rees, Merlyn
Corbet, Mrs. Freda Kenyon, Clifford Robertson, John (Paisley)
Crossman, Rt. Hn. Richard Kerr, Mrs. Anne (R'ter & Chatham) Robinson, W. O. J. (Walth'stow, E.)
Davies, Dr. Ernest (Stretford) Kerr, Dr. David (W'worth, Central) Rogers, George (Kensington, N.)
Davies, Robert (Cambridge) Kerr, Russell (Feltham) Rose, Paul
de Freitas, Sir Geoffrey Lee, John (Reading) Shinwell, Rt. Hn. E.
Delargy, Hugh Lestor, Miss Joan Silverman, Julius (Aston)
Dewar, Donald Lewis, Ron (Carlisle) Silverman, Sydney (Nelson)
Dickens, James Lipton, Marcus Small, William
Dobson, Ray Lomas, Kenneth Snow, Julian
Driberg, Tom Lyon, Alexander W. (York) Spriggs, Leslie
Ellis, John Lyons, Edward (Bradford, E.) Steele, Thomas (Dunbartonshire, W.)
English, Michael MacColl, James Strauss, Rt. Hn. G. R.
Evans, Albert (Islington, S. W.) Macdonald, A. H. Symonds, J. B,
Evans, Ioan L. (Birm'h'm, Yardley) McGuire, Michael Taverne, Dick
Faulds, Andrew Mackie, John Tinn, James
Fletcher, Raymond (Ilkeston) Mackintosh, John P. Tomney, Frank
Fletcher, Ted (Darlington) McMillan, Tom (Glasgow, C.) Wallace, George
Floud, Bernard MacPherson, Malcolm Wellbeloved, James
Foley, Maurice Mason, Roy Whitaker, Ben
Fowler, Gerry Mendelson, J. J. Whitlock, William
Fraser, John (Norwood) Mikardo, Ian Winnick, David
Gardner, Tony Miller, Dr. M. S. Winterbottom, R. E.
Garrett, W. E. Milne, Edward (Blyth) Yates, Victor
Garrow, Alex Morgan, Elystan (Cardiganshire) Zilliacus, K.
Ginsburg, David Morris, Alfred (Wythenshawe)
Gregory, Arnold Morris, Charles R. (Openshaw) TELLERS FOR THE NOES:
Grey, Charles (Durham) Morris, John (Aberavon) Mr. McBride and
Griffiths, David (Rother Valley) Murray, Albert Mr. Walter Harrison.
Griffiths, Will (Exchange) Newens, Stan
Sir D. Kenton

I beg to move Amendment No. 5, in page 2, line 45, at the end to insert: (6) The Minister shall make provision to ensure that any increase in the rate burden exceeding the amount produced by a rate of 2d. in the pound for that year which any local authority suffers as a result of the changeover from general grants to rate support grants shall be spread over a period of six years. If the Government had had the good sense to accept Amendment No. 4 which I moved and my hon. Friends supported, this Amendment would still have been desirable and necessary, but, as the Government have just voted down Amend- ment No. 4, though by a small majority—which is of some consequence—this Amendment has become absolutely vital in order to mitigate the harshness of the Bill's effect.

I shall not repeat the arguments which I put when speaking to Amendment No. 4, and I ought, therefore, to make plain exactly what the purpose of Amendment No. 5 is. Whereas Amendment No. 4 would have been partly transitional and partly permanent in its effect, Amendment No. 5 is entirely transitional. It provides that any increase in the rate burden exceeding 2d. in the £ on the rates shall be spread over six years instead of operating straight away. It is another way of tempering the wind to the shorn lamb.

It is a fairly modest Amendment. It would not involve an extra financial commitment for the Government because an order will have to be made which will be in operation for at least two years and could be in operation for six years. Although this is, obviously, a complicated matter, I do not imagine that it would be beyond the wit of the right hon. Gentleman and his advisers, in making that order, to ensure that, if counties are to suffer substantially—and an increase of 2d. in the £ on the rates is substantial—such an increase could be spread over a period of up to six years instead of coming into force all at once.

Knowing the way things work, I assume that the Parliamentary Secretary will pray in aid the arguments which he used on the previous Amendment in order to try to defeat this one. I hope, therefore, that I shall be in order if I answer one of the arguments which he raised earlier and which, as he presented it, seemed to be his principal argument, though, in my view, an utterly inadequate one. He said that even in those counties which complain that they will be worse off as a result of the change-over from the general grant to the rate support grant the domestic ratepayer is paying rates not so very much above the average. That is under the present system. But, as my hon. Friend the Member for Hemel Hempstead (Mr. Allason) pointed out, although they are not very much above the average at the moment, by the time the Bill has been in operation for several years, ratepayers in those counties will be paying very much above the average and, so far from there being any general relief for ratepayers, these people will, as a result of two Acts of Parliament brought in by this Government, find that they are much worse off.

I am sure that the Government do not want that to happen. They do not want to lose all those votes, which they will surely lose if they do nothing about it! Here again, we offer them a way out, at least a partial way out. They have the opportunity to make people feel less harshly the increases due to the changeover from the present system to the future one. Obviously, if increases in rates are spread over six years, individual ratepayers, although they may complain at there being any increases at all in view of the undertakings given in the past, will not feel it to be quite such a severe burden.

I ask the Parliamentary Secretary and his right hon. Friend to bear in mind that we are here dealing especially with very humble people. It is those who can lest least afford to bear any increase in rates who will be most resentful of rates being increased at all. One could go on elaborating this argument, but I hope that I have said enough to make it plain that this is intended to be a helpful Amendment which would not be costly and which would get the Government out of a difficulty which they have created for themselves.

7.0 p.m.

Mr. Awdry

By now the Minister must realise that the major changes which he is making are bound to have serious results for some local authorities. He said as much in the earlier debate. Particularly difficult problems would arise for those authorities where rapid expansion is planned, and in this connection I want again to mention Wiltshire, as I said I would. My colleagues on this side of the House who represent Wiltshire wish to be associated with what I am about to say.

To deal with the national problem of pressure of population in the South-East—and everyone agrees that it is a national problem—the Minister's predecessor recently proposed the transfer of 75,000 more people from London to Wiltshire by 1981. In a county like mine, this will obviously mean a great deal of capital expenditure on roads, schools, health clinics and many other services before the population comes and before the industry arrives. The planning is starting now, but the people will not arrive in Wiltshire until about 1970.

The proposed changes which the Government are making in the highway grants clearly illustrate how unsatisfactory will be the position for Wiltshire. At present, the maintenance of Class I roads and both the maintenance and improvement of Class II and Class III roads are subject to percentage grants, varying from 75 to 50 per cent. Those grants are to be replaced by a system which pays regard only to the mileage of roads. The rapid expansion planned for Swindon, which is in my county, will involve a large expenditure on road improvements both inside and round the expansion area. But the new system will not help Wiltshire, because the total mileage on which the new system is to be based will not be increased. The new rate support grant to an authority which is to increase very fast in the next few years will be a matter of too little and too late.

If the Minister will not accept the Amendment—and I have a nasty suspicion that he will not—will he at least give us some indication of how he intends in future to help counties like Wiltshire which in the coming years are to accept large increases of population? The point was well made in the earlier debate by many hon. Members who have already suffered this experience and who are trying to avoid the experience falling on my county.

It is obviously wrong that all the initial cost of providing these services should fall on the present ratepayers. As it is national policy to expand these areas, there should be some new thinking on the Government's behalf and a new policy, a national policy, for financing this expansion.

This is the anxiety of my constituents, and I hope that the Minister will deal with it. I can assure him that, as my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) said, the Government will lose many votes if they do not wake up to the fact that this is an urgent problem about which many counties and many people are deeply worried.

Mr. Hay

I must confess that I was profoundly depressed by the Parliamentary Secretary's speech on the last Amendment. The general feeling of depression which came over the House was reflected in the very poor vote which the Government had in the Division, and is evinced by the fact that, with the exception of the Parliamentary Private Secretary, there is only one hon. Member on the back benches opposite. That shows the importance which hon. Members opposite attach to the very serious damage which this change in grant structure will do to the finances of local authorities.

This Amendment is another intended to provide some transitional relief to local authorities who will be hard hit, as has been said. I have no doubt that the Parliamentary Secretary will come out with much the same sort of arguments which he used before. He will say that because in the past it has been found that transitional arrangements when grant changes have been made were not very effective and were sometimes cumbersome and awkward for Departments, in this case we should not have any transitional arrangements. My hon. Friend the Member for the City of Chester (Mr. Temple) made it clear in the last debate that that argument would not do.

We are faced with the fact that the only method of adjustment open for the Government once the Bill reaches the Statute Book is the Order, and the Order will not be made until two years have passed, and it may be much longer. That is not good enough. Local authorities throughout the country are desperately worried about what their situation is to be. Many of them are perhaps unjustifiably worried when the event is finally made clear, but many others are quite rightly worried.

There should be some kind of transitional provision. I have never known an Act of Parliament which changed the rights of individual authorities or people to compensation or to grants of Government money without some transitional relief being afforded. It is normally given and I cannot understand for the life of me why such a provision is not already in the Bill.

I turn to another argument which the hon. Gentleman used and which he will no doubt use in connection with this Amendment. He said that the effect of what was being done was to change the balance, that some local authorities which at present were getting good grants would lose while others who were not getting adequate grants would gain, and that there would, therefore, be a general acceptance that some would gain and some would lose. He seemed to think that that argument was conclusive. However, it is completely possible for Parliament so to adjust the change in the balance as to ensure that although we cannot prevent there being losers, the amount lost does not come upon them all at once and that the loss, which has to be suffered because the system is altered, is tapered over a period. That is the purpose of the Amendment. It sets a period during which the transition can be made and limits the amount of damage which any authority may suffer.

I believe this to be an eminently reasonable idea and I implore the hon. Gentleman—I have been a little rough with him in my earlier remarks—to consider this Amendment with much more sympathy than he was able to show to the last. This is not just propaganda, for there is a problem and it is incumbent upon the Government to try to do something to relieve it. After all, they are making the change. We have not opposed or violently objected to the fact that a change is being made in the grant structure, but we ask the Government to make sure that if there are to be losers in the exercise, the amount of the loss will be mitigated as far as possible by an extension of the period during which that loss is suffered.

Mr. MacColl

Many of my comments have been anticipated. I know that when hon. Members opposite say that I am not at my best, I have made a fairly effective contribution to the debate. I am alarmed only when they pay me compliments about having been reasonable and considerate. It is then that I think that I may be wrong.

I do not want to go over again the case which I have already put, but there are great practical objections to a transitional scheme. I quote the examples of the 1929 grant and the 1958 grant to take the first and the last. They created slowness in getting the advantages of the change and also created complications in estimating. If one is wrong in the estimate of the previous grant and expenditure, that affects the amount one will eventually get. Therefore, it may be that a local authority will get paid something to which it is not entitled and it then has to pay it back. It then gets many complicated difficulties of readjustments and these, as I have said, lead to a transitional scheme on a transitional scheme.

The right hon. and learned Gentleman said—and he is probably right—that the Amendment would not cost the Govern- ment a lot of money. But it would cost the receiving authorities a lot. The way in which the 1958 grants worked was that some of the additional amount being given to authorities was held back as a fund out of which transitional payments could be made if necessary to authorities which were not gaining so much under the new system.

Thus, the effect of having a transitional arrangement would simply be that the authorities benefiting from the new grants would have to wait to get the benefit so as to meet the needs or the possible needs of others. That does not seem good sense. If one has a grant scheme which one thinks effective, there does not seem much point in holding back its effects in this way.

Another practical difficulty lies in striking the two figures on which one is to measure the effect on the receiving authorities. One has to start with the amount in one year and compare it with another. The trouble is that some of the amount in the starting year may be capital grants for improvements of Class II or Class III roads and these come into the needs element. Therefore, on paper there is a fall in grant, but in fact a capital grant for this purpose is once and for all and the authorities would not be getting it in later years. Thus, one gets an anomalous impression of a loss which is not really a loss at all because the authority would not have the money again under any system of grant.

The other point concerns the threshold of the 2d. rate—that when there has been the loss of a 2d. rate one begins to get the advantage of the transitional scheme. In the London Government Act, the threshold was 5d. We now have a number of boundary adjustments to make and in the boundary orders which hon. Members have seen from time to time the figure is 6d. It would, therefore, be a little unreasonable to have a figure of only 2d.

We are certainly open-minded about the effect in the new towns—as quoted, for example, by the hon. Member for Chippenham (Mr. Awdry)—in considering whether or not we need a change of system. We have had discussions with the local authorities concerned. At the moment, however, our impression is that the amount of expenditure involved is not so great in relation to the total expenditure that it will make a very harsh burden. However, this is something that we will keep under review. My right hon. Friends the Minister of Housing and Local Government and the Minister of Transport will bear this in mind and keep in touch with each other about it. That is not a commitment. It is merely saying that we are anxious to get expanding towns going and want to do what we can.

The critical point about this is that the right hon. and learned Gentleman said that we ought to be able to look at it again. He was talking about this going on for several years. But, despite what the hon. Member for the City of Chester (Mr. Temple) says, we can make a quick adjustment whenever a new rate support grant comes into operation. The Bill is flexible enough to deal with any major error we may have made of that sort. We do not think that we have made an error. We think we have it right. But if we do have it wrong in any case, then, when the new rate orders come to be dealt with, we shall be able to examine the position.

This new grants scheme is a great improvement on the old one and by and large it will be of great benefit to most people. There is no case for delaying its benefit by having it tied down by transitional arrangements.

7.15 p.m.

Sir D. Renton

If I may have leave of the House, I will reply briefly.

The Parliamentary Secretary has added only one point to his argument against this Amendment compared with what he said in reply to the previous Amendment. He said that the Amendment would not cost the Government much. He probably meant that it would not cost them anything. He added that it would cost something to the other authorities concerned and that this was another reason against the Amendment. But that is not our fault—it is the Government's fault. They held this out as giving relief to ratepayers and then introduced a scheme under which some ratepayers can get relief only at the expense of others. That is a shocking situation.

Mr. MacColl

But that is true of all grant schemes. For example, the 1958 Act had a transitional scheme which was at the expense of the gaining authority. The then Government said that they thought that, in justice and good policy, certain authorities ought to get more but that the Government would not give them more because the money had to be held back under a transitional scheme for other local authorities.

Sir D. Renton

I can see that I have the hon. Gentleman really worried. He leaps to his feet to point out what we have mentioned several times and complained about—that there is no transitional scheme in the Bill whereas before there has always been a transitional scheme. Whether those transitional schemes worked well or not, there is no reason why we should not have had a transitional scheme, supported by the Money Resolution, in the Bill to ensure that the Government should carry out their undertaking to give relief to ratepayers.

But the longer one continues this argument with the Government, the clearer it becomes that one is wasting the time of the House. I shall not press this matter any further. I shall not even ask my hon. Friends to divide. But I think that it is a most deplorable situation that the Government have led us into over this and I deeply regret the way in which the Amendments have been handled today.

Amendment negatived.