§ 11.5 p.m.
§ The Minister for Local Government and Development (Mr. Graham Page)
I beg to move,That the Rate Support Grant (Increase) (No. 1) Order 1971, a copy of which was laid before this House on 25th November, be approved.It might be for the convenience of the House if we also discussed the second order:That the Rate Support Grant (Increase) (No. 2) Order 1971, a copy of which was laid before this House on 25th November, be approved.The Local Government Act, 1966, requires these orders to be accompanied by explanatory reports, by my right hon. Friend the Secretary of State. The reports were printed as House of Commons Papers Nos. 21 and 22, duly laid before the House at the same time as the orders.
205 A year ago we debated the Rate Support Grant Order, 1970, which fixed the amount of grant for 1971–72 and 1972–73. That debate provided a useful opportunity for a wide-ranging review of local authority activities. Under the 1966 Act, the main grant settlement is made every two years. This is an "off year" and our discussions are confined to the increase orders which are made to take account of increases in prices, costs and remuneration since last year. That is as far as they go.
The main grant settlement is based on expenditure reflecting the levels of prices, costs and remuneration then current. To prevent the value of the grants being eroded by subsequent unforeseen rises in the level of prices, costs and remuneration, my right hon. Friend is empowered to increase the grant if it appears to him that the effects of those rises in prices, costs and remuneration on relevant expenditure by local authorities is substantial. There are, however, no powers in the Local Government Act, 1966, to vary grant settlements to take account of increases or decreases in local authority expenditure resulting from policy decisions of either central or local Government.
Such variations can only be considered if this is provided for in other legislation. In the case of Order No. 2 such provision has been made to take account of policy changes introduced by the Courts Act and the Education (Milk) Act. The powers of the Secretary of State in connection with increase orders are very narrow. The only options open to him are either to make an increase order taking into account all changes in prices, costs and remuneration, and the increases which he is directed by Statute to take into account, or to decline to make an order at all. He could decline to make an order as did the previous Government in 1968 as part of their post-devaluation policy.
Apart from 1968, increase orders have been made in each year since the rate support grant was introduced. However, and I say this with some regret, this is the first time the House has been invited to approve two such orders at the same time covering three separate financial years and one of them covering a third increase. Dealing with No. 1 Order, this is the third increase provided for the year 206 1970–71, the grant for which was originally settled in 1968, increased in 1969 and 1970 and is now being increased for a certain period of 1970–71.
Perhaps hon. Members may feel that this procedure is somewhat cumbersome. The original intention was sound enough in the 1966 Act—to give authorities advance notice of the amount of grant they would receive and the level of expenditure that the Government considered appropriate for at least two years ahead, expressed in real constant price terms and to provide a safeguard against rising prices. But in practice both central and local government have found this system a little too inflexible and thus, in a Green Paper which has been issued by the Government—The Future Shape of Local Government Finance—we have suggested there might be an annual settlement covering three years, the grant for the first year being fixed and that for the two subsequent years being provisional. However, on this occasion and for the present we must administer the law as it is. The No. 1 Order, covering 1970/71, takes account of pay and price movements in the five months November 1970 to March 1971, a previous increase order having dealt with movements up to November 1970, the financial year not ending until 1971.
There were two substantial pay awards, the largest in the case of the police, between November 1970 and March 1971. The House would not wish me to go through all the figures because they are clearly set out in the House of Commons papers and the orders. Suffice it to say that there is an increase for that period of £7 million in the rate support grant in the year 1970/71, all of which is allocated to the needs element.
The No. 2 Order covers the years 1971/72 and 1972/73. Again, I will not go into the figures in detail. They are set out clearly in House of Commons Paper, No. 22. Perhaps the only thing I ought to mention specifically is the statement in the appendix which shows an offsetting saving in respect of the Courts Act and the Education (Milk) Act. These work out as £21.9 million in 1971/72 and £39.2 million in 1972/73. The savings under the Courts Act arise from the transfer of responsibility for certain higher courts and for legal aid in criminal cases from local authorities. The 207 saving under the Education (Milk) Act relates to the reduction in free school milk from this autumn.
This recognition of the financial effect of a significant change in local authority responsibilities can, of course, work both ways. On a previous occasion where the responsibilities were increased—I am thinking of the Children and Young Persons Act in 1969—there was a specific provision that the cost should be recognised and that was done in the 1970 increase order. The final result of the No. 2 Order is that, allowing for all the figures set out in House of Commons Paper No. 22, the rate support grant is increased by £152 million for 1971–72 and £187 million for 1972–73.
It is estimated that the increase in expenditure will require an increase of £18 million in the first of these years and £20 million in the second, an increase in the resources element. The rest of the increase in grant is added to the needs element.
Many of the detailed estimates of the effects of pay and price increases to which I have referred are based on figures collected by local authority associations and by the Greater London Council. Other estimates are made by the Departments concerned. Much of this work must be done at very short notice. For example, it was possible to include the effects of the pay award for teachers in colleges of further education which was announced as late as 20th October. But it has not been possible to include the recent pay award to manual workers which was made only on 1st December, after these orders had been laid. The effects can be provided for in a subsequent increase order, and the local authority associations have suggested that they may wish to seek an order in the spring so that authorities do not have to carry the full effect of the award for a complete year. To alter the established annual cycle would be extremely difficult, but the Secretary of State will consider any proposals the associations may make.
On behalf of my right hon. Friend and myself, I should like to express our very sincere thanks to all those concerned who have worked out these figures and have given us the estimates. The local authority associations and the Greater 208 London Council have been consulted on both orders, and there is complete agreement on the details of them. I commend the orders to the House.
§ 11.16 p.m.
§ Mr. Denis Howell (Birmingham, Small Heath)
I am glad to have the Minister's assurance that the local authority associations are happy with the detailed working arrangements in the two orders. The production of two interim orders to increase the amount of finance for local authorities is an admission by the Government of their failure to deal with rising prices; or, to put it in another way, it is an acknowledgment of the rate of inflation and its effect on ratepayers. Had the Prime Minister been accurate in his forecast that he would reduce prices "at a stroke", we should not have had these orders before us. Here we have two strokes, and that policy has still not been implemented.
Although we do not oppose the orders because we are anxious to give local authorities all the support possible, the Minister has posed for us a difficult decision in respect of the school milk situation. This is a saving to which we on these benches have considerable objection. We do not believe that we should, in an interim order or indeed in any other legislation, have proposals for Government savings to be brought about as a result of ending the school milk scheme, in view of the tremendous harm it is likely to do to school children and the intense bitterness it has caused in education circles.
I am glad that the Minister was able to say that his arrangements were flexible enough to include the £20 million extra which results from the arbitration award for teachers in colleges of further education. However, there are other substantial wage negotiations which are giving concern to local authority associations. I am not sure whether the hon. Gentleman's remarks on this subject amount to an offer to produce another interim increase order in the spring, which he said the local authorities would like to have. If it is, I welcome it. It is absolutely proper, in the circumstances. It is a matter of concern that local authorities are expected to finance wage increases of this substantial character, and which, I am told, in respect of, for example, the manual workers' claim, amount to 209 £.44½ million this year. That is a lot of money for local authorities, in their normal financing arrangements, to find without the Government producing an extra order. And this takes no account of the police claim. The police claim is still under negotiation but is likely to be a very substantial addition to the £44½ million which I have mentioned. I acknowledge, therefore, that the Minister very properly referred to this in his speech, and I hope very much that he will find it possible to help the local authorities in this way, in what is a difficult economic time for them, by producing even the fourth interim increase order which, I think, he mentioned.
I would make two or three general comments arising from the present unemployment situation and the policy of the Government and the request of the Government to the local authorities to bring forward schemes immediately to help ease the unemployment. This of course is a very important matter, of great concern to many people as unemployment is increasing. I am not quite sure what the Financial Secretary is saying, but it is obviously not worth bothering about; he does not wish to repeat it. As I say, this is a matter of concern to us as it is to all local authorities.
If local authorities do bring their schemes forward, how are they the schemes to be financed? One of the things which one would have liked to have seen in this interim order is some realistic financing arrangement to give incentive to local authorities to provide employment to people unemployed in their localities. There is no sign of such incentive in this order. As far as I can see all the Government have been doing is this: when they have asked local authorities in a crisis situation to take panic, crisis action to produce extra schemes, the Government have concentrated almost exclusively on the capital side. It ought to be said at once that it is very unlikely that the local authorities can produce capital schemes which will have any effect at all this winter, which is when the urgency of the situation ought to be recognised and dealt with. To the extent that they can, that means that again we are asking local authorities to incur debt charges at a difficult time for their ratepayers, without giving them the additional help which one 210 would have liked to have seen in an order of this size.
In any case, it seems to me that it is not on the capital side that the Government can implement their policy. We welcome the policy, but it is not on that side that it can have any effect. If we want to reduce the number of unemployed and get more people employed by our local authorities we have got to give local authorities more revenue assistance now so that they can take on extra personnel now to do the multiplicity of jobs which we all know need to be done by every local authority, certainly those in our big towns. It would be helpful to have a word from the Minister on whether it is the Government's policy, even if it might require an additional order, in terms of revenue to encourage local authorities to take more people on.
I was discussing this point with a construction friend in Birmingham, and I asked whether the Government's new policy had found its way through to industry. He said that the great difficulty is that although there were a number of small schemes for such things as sewers, this does not do much to ease the overall situation. It would be of marginal help to the construction industry, but one could not take, say, an unemployed toolmaker from B.S.A. and expect him to do work on a main sewer. It will be much more relevant if there is a greater increase in revenue—greater than the sort of sums envisaged in this order—to encourage local authorities to take on people to do all the jobs that ought to be done—and certainly to undertake the smaller jobs which could be carried out immediately.
I was interested to hear the suggestion that Liverpool could employ 10,000 unemployed workers immediately on road works, parts maintenance, repairs, renovations and so on. Liverpool offered to do this as a contribution to the unemployment problem if the Government, in their wisdom, would agree to pay to the Liverpool Corporation the equivalent amount of unemployment benefit these men would be drawing if left at home to do nothing at all. This idea is well worth consideration—I put it no higher than that and is certainly an interesting suggestion in easing the present difficulties.
As I drove through Birmingham this morning, I thought how filthy and littered were the streets, and surely these streets 211 should be tidied up. I have had complaints from constituents about the dumping of rubbish and about the deterioration of whole streets, and only this weekend I raised this matter with the town clerk. The thought occurred to me that the Government, by means of such an order as this, should be encouraging local authorities to take on workpeople to deal with this task now. This is the time—at a moment when unemployment is gaining ground—when all these jobs which have been put off for so long should be undertaken. This suggestion applies to other areas as well.
Therefore, I give a general welcome to this order, but I hope the Government will see that local authorities will not stand out too long in financing these important matters. Certainly my colleagues and I will support the Minister if he comes forward with imaginative ideas on how to use these Rate Support Grant (Increase) Orders to give local authorities a positive incentive to take on more labour to do the jobs that need doing, and so help to alleviate the critical unemployment situation.
§ 11.28 p.m.
§ Mr. Arthur Jones (Northants, South)
I was interested to hear what the Minister said about the figures involved in the order. I thought this indicated the considerable success of the Government in bringing about stability in local authority financing. However, when he said that this is the third increase we have had for the year 1970–71, I was not so sure that this was the right conclusion to draw.
He referred to the needs element amounting to some £7 million and mentioned the specific amount of £5 million for the police. This increase indicates the assiduity and sound judgment of those responsible for the preparation of these accounts.
This is the third time that we have had to adjust the figures, which leads one to doubt the accuracy of the previous statistics. I had thought to pay tribute first to the Government and then to those responsible for the figures, but I find myself in some difficulty in trying to do either.
In any case, the figures are microscopic in terms of the total expenditure involved, which is £3,593 million. In other words, the total of £12 million with 212 which we are concerned is very small compared with that overall sum. But I recall being advised at my mother's knee that if one looked after the pennies, the pounds would look after themselves. Last week the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) told us that he learned his football in the back streets of Birmingham. I was disappointed that he did not tonight tell us where he learned about finance, enabling him to bring a measured judgment to bear on complicated matters of this kind. Perhaps he will tell us on another occasion.
I suggest that the principle of looking after the pennies applies equally to public expenditure as to personal affairs. Even marginal savings are indicative of the effort that must be made to contain public expenditure. But there was not a word from the hon. Member for Small Heath about this. He said that we should make more resources available to local government and he gave examples of where this additional expenditure should go, but he did not bring to the discussion that care which must be adopted towards public money. Unless we take care and adopt a measure of control and accountability, we shall never ensure that the taxpayer and ratepayer gets value for money.
In the No. 2 Order we see increases for the current year of £152 million, and for 1972–73 of £187 million. Total costs for administration and wages are £308 million and £382 million respectively. This reflects the tremendous problems associated with inflation. In other words, it is in this adjustment of the figures that we see the problems facing the public purse in terms of the rapid inflation in the current year and the estimated inflation in the subsequent year.
Hon. Gentlemen opposite may contest this, but in my view there is no doubt that the fires of inflation were stoked materially by the ineffectiveness of the Socialist Government. They refused to bring hard bargaining to bear in wage awards, and I can bring evidence to support my view. In contrast to their efforts, the present Government have stood firm to a degree that hon. Gentlemen opposite never did. The Labour Government saw the need to damp down the fires of inflation but did practically nothing to do so.
§ Mr. Denis Howell
The hon. Gentleman will be aware that night after night we had orders on the prices and incomes legislation coming before the House, when he and his hon. Friends were voting against us on the ground that we ought not to have been interfering in the free movement of wages. That may have been right or wrong, but at least the hon. Gentleman ought to acknowledge that we were trying to do something about it.
§ Mr. Jones
—by the late Socialist Administration. It was that that led to a 15 per cent. or 16 per cent. average level of wage increases in the public sector in the last round of negotiations.
From the present Government we see a much more responsible attitude. This is now reflected on both sides of the negotiating table. To some extent we have reversed the dangerous inflationary position which we were in last year, when the average level of wage settlements then, very soon after the Socialist defeat in June, 1970, was about 15 per cent. or 16 per cent. We have stood firm in the months since then and we now have settlements of about 7 per cent. or 8 per cent. That is clear justification for the success of the Government's determination and their policies in public sector wage negotiations.
I leave contentious matters now. Both sides of the House are concerned with the protection of the ratepayer and to see that he gets value for money. The domestic element introduced by the previous Government was a method of screening the domestic ratepayer from the escalation of costs borne by the ratepayer. This was a reflection of the inflation at that time. The Socialist Administration endeavour to protect the domestic ratepayer by introducing the domestic element. But what we now see, to a remarkably successful degree, is the stabilisation of public expenditure related to increased resources. That is the method by which ratepayers can be offered the best protection.
214 Regarding savings, outlined in the orders, it is significant to see the extent to which the lower levels of interest rates are reflected in both orders. I hope that it is not too controversial to say that the Government's record on interest rates is eminently and clearly more successful than that of the previous Administration. Two years ago the level of interest rates for borrowings by local authorities was between 8 per cent. and 10 per cent. The circumstances are quite different today and are reflected in the orders. We have seven-day money, at 8th December, at between 4 per cent. and 4ȕ per cent., and six-day money between 4½ per cent. and 4 9/16 per cent. That is half the average level of rates that we had for most of the time under the Socialist Administration. It is an immense saving of the interest content of public expenditure, which is shown in the estimates before us today. I remember a very prominent Socialist promising us a 3 per cent. rate of interest. What did we have in the years when the Socialists were in office?
I deal with some of the specific services that are referred to, firstly, with libraries, museums and art galleries. Total expenditure for the current year is £67½5 milion. In the next financial year it will be £71 million. I notice a balancing item of only £100,000, which may refer to fines on overdue books, the sale of post cards and perhaps the hire of records by those enlightened library committees who offer that facility to the public. We will not be able even to maintain the present level of library service, let alone enhance it, unless we ensure that private money goes into it.
§ Mr. Jones
The standards of this service which have been very high for many years, are in danger of not being maintained. At a meeting I had with members of the council of a certain county in the middle of England I made the case for private resources going into the library service. The council members were as surprised as the hon. Member for Birmingham, Small Heath is at my suggestion. They said, "We have the best library service in United Kingdom." However, after some discussion an elderly gentleman who was sitting on my immediate left said, "I am the chairman of the library committee. It is true that in the 215 past three years the standard of the library service in this country has not been maintained, because of lack of resources. We do not have anything like the number of books we should have in relation to the numbers of borrowers. Our standards are falling below those we should like to maintain". This experience is shared widely throughout the country.
Britain has a splendid library service, but a charge could well be justified, particularly for books of fiction. I believe that people would readily pay a charge to hire books of fiction. I do not say that this applies to the children's section, to research facilities, or to serious books. If we wish, not only to maintain the present standards of the service, but to increase them, we should be bold enough to examine the significance of private resources in the library service. By so doing, we could ensure greater fairness to all authors, some of whom come off badly under the present system.
That is one example of the protection of ratepayers. Another concerns sewerage and sewage disposal. Circular 92/71 was introduced last week relating to the establishment of regional water authorities. The substantial shift of responsibility from local government services to the new regional water authorities will have significant effects on the type of rate support grant order we shall see in future. As I understand it, the circular says that all trunk sewers will be taken over by the new authorities. The responsibility of local authorities the subject of rate support grant expenditure will be greatly reduced. As new charging systems must be worked out for the new authorities for sewerage and water abstraction, it should be ensured that the remaining local authority services are able to charge industrial and commercial undertakings for effluent discharged into the sewerage system. I am sure that we shall look for added resources for sewerage and sewage disposal, not leaving the substantial responsibility for this expenditure on the domestic ratepayer, which is what happens now—
§ Mr. Deputy Speaker (Mr. E. L. Mallalieu)
Order. I have allowed the hon. Gentleman very considerable latitude in discussing this matter. I would 216 be grateful if he would come back more particularly to the Order.
§ Mr. Jones
Thank you, Mr. Deputy Speaker. I am referring to the items which are specifically referred to in the No. 2 Order with regard to sewerage and sewage disposal, which relates to a total expenditure of £144 million per annum so far as the ratepayer and taxpayer is concerned, and the offset amounts total for the current year is a very small sum of £1.7 million. I think there is a substantial case for ensuring that the expenditure for sewerage is more equitably shared between the domestic ratepayer and the industrial and commercial user. I think this applies to the refuse service as well, for which the total expenditure is over £110 million, and here the figure of offset is only £100,000.
With local government reorganisation I hope we shall see all the advantages of increased techniques used in refuse disposal. I am sure there are many sophisticated improvements which could be adopted. I am thinking particularly of incinerators. I know that considerable sums are being spent by way of research particularly at Warren Spring laboratories at Stevenage. Some of us were in an all-party group which had a look round those laboratories recently, where they are associating their research with material recovery. Here I think there is a further field for a more equitable share of expenditure in refuse disposal.
I hope that I have touched on what hon. Members will consider to be important issues. I am sorry if it is felt that I am detaining the House too long, but this is an opportunity that arises only once a year to discuss the matter in broad terms. I hope we shall see further efforts on the part of this Administration to ensure the best possible use of resources and to look for ways and means by which some of the expenditure can be more fairly shared.
§ 11.48 p.m.
§ Mr. Eric Ogden (Liverpool, West Derby)
The hon. Member for Northants, South (Mr. Arthur Jones) mentioned many matters which are of importance and of interest, and he is right to raise them at any time when the opportunity presents itself. They could well be raised in a whole day's debate, particularly such controversial matters as water resources, 217 for which we are told legislation may be introduced next year and which may divide the House right across, not on party lines but on other lines.
The hon. Gentleman told us that he was taught at his mother's knee that if one looks after the pennies the pounds will take care of themselves. I asked my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) where he acquired his knowledge of local government or of anything else for that matter. I should have thought that the back streets of Birmingham. Manchester or Liverpool would be as good a place to look after the pennies, including the ratepayers' pennies, as anywhere else.
The hon. Gentleman defended his Government very ably, and perhaps a little vociferously at times. He may be right when he says that the Government have been standing firm for a period, but it seems to me that in the first 15 months they were facing in one direction and that in the last three months they have been facing in an entirely different direction. Before they were a "cut Government expenditure" Government, they were a "cut local authority expenditure" Government. The Chancellor of the Exchequer delighted in saying that he had taken £3 million out of the local authority kitty. Now he has, quite rightly, in the last two months asked local authorities to spend more money, and he has been urged by his hon. Friends to do so. But this is and must be a completely different operation and different policy from the one which they had in the first 15 months.
§ Mr. Arthur Jones
I do not see a contradiction in what I said. I am happy about expenditure, provided that we get productivity with it. That is the key to sound use of resources.
§ Mr. Ogden
I do not disagree with that. I am only pointing out that, if standing firm is the issue, the Government stood firm for the first 15 months in one direction, and for the last three months they have faced the other way.
Hon. Members who have taken an interest in these Statutory Instruments over the years know that the debates during the time of the Labour Government were usually led from the Opposition Front Bench by the hon. Member for 218 Crosby (Mr. Graham Page), now the Minister, and for the Government by our late friend James MacColl. I am sure that James MacColl would have been more than pleased to think that his part in that partnership had been taken over by my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell). The original partnership of Widnes and Crosby, both from the Merseyside area, was, more often than not, a sparring partnership, and I suspect that the sparring part has probably now been increased by my hon. Friend the Member for Small Heath.
My hon. Friend the Member for Small Heath referred to the suggestion which has come from Merseyside, from three Labour members of the corporation, that instead of simply paying people unemployment benefit we should pay the money into the local authority to supplement moneys spent on large projects of public work within Liverpool, this being a useful way to spend public money in a worthwhile way. This proposal should be considered. The Minister knows the circumstances on Merseyside now, with 52,000 people unemployed—6.5 per cent. in November and 6.4 per cent. in October. In the Liverpool travel-to-work area, it is 7.2 per cent. In Liverpool alone, there were 24,000 unemployed in October, and 25,000 in November. The situation will get worse, and there is a hard winter ahead.
We are not asking the Government to provide help which we are not trying to provide ourselves. The Minister knows that, three or four years ago, at the time of the Labour-controlled council, the Liverpool authority, under Alderman Sefton, raised or used the product of a 6d. rate to provide more work in the Liverpool area. The product of the old penny rate in Liverpool today is £262,000, so a 2½p rate would yield almost £1½ million. At that time, the idea was to provide employment in the short term, but, as it was a new venture, most of the money was used to provide capital equipment—a television camera for a school, facilities for a hostel, and so on—which helped in the long term but did little in the short term.
The proposal coming up now is that the Liverpool Corporation be urged to provide the product of a 2½p rate, that is, £l½ million, to be used wholly inside 219 Liverpool. It would be money from Liverpool ratepayers to provide employment for Liverpool ratepayers. On the basis of an average wage of £20 a week—which is not too much—such a sum would provide work for almost 1,500 people for the whole 12 months. This time, it could be used not necessarily for equipment but for the sort of work which can be done mainly by unskilled labour, the sort of work which the Secretary of State for the Environment has been telling us is basic work which ought to be done and can be done in the short term, work employing people's bodies rather than machines and capital equipment. There are parks and council estates—at Gillmoss, Croxteth, Dovecot and Clubmoor, for instance—where there seems to be more grass in the gutters than on the lawns.
I take it that, under the Rate Support Grant Order, there is nothing in law to prevent ratepayers' money being used for this purpose, and nothing to prevent the controlling authority on the city council from using it to provide direct employment in that way, giving practical support in those terms.
The Minister will know the saying that a little cash is worth a great deal of sympathy. We hope to have some suggestions at least that cash will be forthcoming as well as sympathy from him and the Government.
§ 11.55 p.m.
§ Mr. Graham Page
With the leave of the House, I should like to deal with some of the points raised in the debate.
My hon. Friend the Member for North-ants, South (Mr. Arthur Jones) complained about the No. 1 Order being the third time the figures have had to be adjusted, but this partially meets one of the points made by the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) on catching up with the increases as quickly as possible. The order covers the period from November, 1970 to March, 1971, and it follows from the fact that this cycle of increase orders happens in November that we cannot take into account increases that occur since that period. In 1970ߝ71 there was the £17.6 million increase in pay awards, mainly to the police. Other costs increased by £15.8 million, making a total increase 220 in expenditure over that period of £33.4 million.
My hon. Friend mentioned the saving on interest rates, which brought that figure down. The net result was an increase in relevant expenditure for that short period of five months of £21½ million. Taking 57 per cent. of that, we had to take £12 million into account. Against that, the specific grants were £5 million, reducing it to the figure of £7 million which I mentioned before. So there is some virtue in the fact that we have brought in a third order to catch up with the increases over those five months. It works out as only a small figure—the £7 million—but it was something which we should give to local authorities for the increase in that period.
My hon. Friend praised the Government for containment of inflation, whereas the hon. Member for Birmingham, Small Heath complained of the Government's failure to deal with rising prices. All I am concerned with in the order is to take inflation into account. Perhaps I shall be forgiven if I do not go into the argument about how inflation was caused or who was to blame for it. In the Order I want to return to the local authorities their increased costs caused by inflation. That is what the orders do, and the figures are agreed by both central and local government.
My hon. Friend referred in particular to the offset savings in respect of interest rates, and they are very significant. He gives me an opportunity to correct two figures I gave rather hurriedly in my first speech, when I said that the offsetting savings attributable to the Courts Act and the Education (Milk) Act were £29.9 million for 1971–72 and £39.2 million for 1972–73. That was the total offsetting savings for those two years. In respect of the Courts Act it will be £3.4 million for 1971–72 and £14.7 million for 1972–73, and in respect of the Education (Milk) Act it will be £5.4 million for 1971–72 and £8.3 million for 1972–73. I must be excused for not discussing the merits of the school milk situation. I am concerned only with taking into account the figures which are estimated as a saving under that Act, and which have been agreed between central and local government.
The hon. Members for Birmingham, Small Heath and Liverpool, West Derby 221 (Mr. Ogden) raised the question of the unemployment situation and the Government's request to local authorities to bring forward work which will be labour-intensive. I thank the hon. Member for Liverpool, West Derby for his kind remarks about those who took part in the previous debates. It is sad to me to have lost a very great friend in James MacColl. Although we used to argue fiercely across this Dispatch Box, we were the greatest of friends outside the Chamber.
Schemes which local authorities are bringing forward to meet the unemployment situation are mainly financed by capital, and the Government are giving the authority for local authorities to borrow the capital sums to meet any schemes which accord with the rules laid down. The interest on these borrowings is not taken into account in these Orders. I could not by law take it into account in such orders. I would have to ask the House first to amend the Local Government Act, 1966, if I wished to do so.
The additional loan charges arising from infra-structure programmes will be taken into account in the order which will permit us to take them into account—that is, the order for the following year after the existing order has been completed, the Rate Support Grant Order for 1973–74. That is, according to the 1966 Act, the first occasion on which we can take them into account, unless we amend the Act.
The estimated increase of expenditure by local government in loan charges is only a very small figure compared with the total amount of local government expenditure. In 1971–72, it is only £500,000; for 1972–73, it is £2.2 million. These figures are very small in relation to the relevant expenditure as a whole. I do not think that small amount would be a deterrent to local authorities in raising the money to carry out infrastructure schemes. Most of them get a little back in the resources element. It is only a little; in the case of Liverpool, it is only 19 per cent., which is a small part of the city's total expenditure.
The proposal that the local authorities should not bother about borrowing capital for this purpose but should merely pay out of their rate funds for increasing the employment of labour is interesting. We are anxious that any 222 infra-structure scheme should be encouraged. I give an undertaking that I am prepared to discuss this with the Liverpool Corporation to see if there is any way of fitting in its proposal with an infrastructure scheme. Having a Treasury Minister sitting beside me, I say that with some trepidation, but we can at least discuss it to see whether there is some way of permitting such a scheme in Liverpool.
§ Mr. Page
It is sometimes a disadvantage to be the Member for an area which one is trying to benefit—I find that in my constituency at times. But I will look at the scheme to see whether there is any way in which we can promote these infrastructure schemes without putting too much red tape round them and saying we cannot help.
§ Question put and agreed to.
That the Rate Support Grant (Increase) (No. 1) Order 1971, a copy of which was laid before this House on 25th November, be approved.
That the Rate Support Grant (Increase) (No. 2) Order 1971, a copy of which was laid before this House on 25th November, be approved.—[Mr. Graham Page.]