HC Deb 25 March 1971 vol 814 cc962-77
Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Before calling the hon. Member for Walthamstow, West (Mr. Deakins), who is fairly new in the House as I am fairly new in the Chair, I would point out that the Chair is in considerable difficulty in these debates in divining what is in order and what is not. I am advised that it is not in order to talk about the general field of the present provision—for example, that one must keep the debate to the Supplementary Estimate and the purpose for which that is to be used and not range over the entire field. I do not know whether the hon. Member will be able to do that. I think it will be difficult, but I hope that he will do his best.

Mr. T. L. Iremonger (Ilford, North)

On a point of order. In that case, Mr. Deputy Speaker, I should say that I think you have been more than kind to me.

Mr. Deputy Speaker

That was more because I was collecting myself than out of absolute kindness.

7.53 p.m.

Mr. Eric Deakins (Walthamstow, West)

I want to draw the attention of the House to the item on page 207 of the Estimates for 1970–72, Class VI, No. 8, Rate Support Grants to Local Authorities, increased provision of £2,880,000, … to take account of increased prices, costs and remuneration since the Rate Support Grant Increase Order, 1969, Statutory Instrument 1969, No. 1806. I want to mention the effect of increased prices and costs on local authorities in the Greater London area and the effect of this increased provision.

Every hon. Member will be aware of the importance of the rate support grant for local authority expenditure and also that we live in a time of inflation. Whether or not it is the raging inflation which some hon. Members have claimed in recent debates I do not know, but it is certainly an inflation of costs and prices which has severely affected local authorities, particularly those in the Greater London area. I would suggest that increased provision of less than £3 million, which I work out at about a sixth of one per cent. of the original rate support grant, is nowhere near sufficient to cater for their needs.

This is particularly so in London, because the Greater London boroughs have certain powers which boroughs in other parts of the country do not have—or not to the same extent. In London we are particularly concerned about the rising costs of wages and salaries, and also the rising costs of building materials. If this is all that local authorities can expect, it is a very poor look-out for the future of local authority services.

We know that there has been a great deal of inflation in the last few years, and since this provision was first estimated inflation must have added tens of millions of pounds to the costs of these authorities. Yet we are talking only of a further increase of nearly £3 million. If this is the final story on the rate support grant for 1970–71—

The Minister for Local Government and Development (Mr. Graham Page)

I am trying to follow the hon. Member. I am not certain of his reference to a mere increase of £3 million.

Mr. Deakins

It is the further increase, the increased provision in the Table on page 207. It is £2,880,000. My point is that this will strengthen the tendency for local authorities in the Greater London area in default of any greater increase in their rate support grant to cut back on their services. Indeed, they have only two alternatives. Either they must accept the full burden on the local rates of the increased prices, costs and remuneration of the past year, or they must cut their services. Some local authorities, including the one in which I am particularly interested, Waltham Forest, have taken the second alternative in an attempt to keep the rate element of their expenditure fairly stable. I will not go into the reasons why it has tried to do this in election year, but all local authorities, whatever their political complexion, have been struggling against this burden of rising costs.

The problem is such that they are no longer capable of solving it without greater provision from central Government by means of the rate support grant. I will not explain what has been done in my borough in this connection, except to point out that we used to pride ourselves on our welfare services. They have been cut, not severely but in a penny-pinching fashion, and this has resulted in the cream being taken off the cake—for example, making it more difficult for old people to attend chiropody sessions and things of that kind.

Even the amount spent on keeping streets clean—a basic service one would have thought—has been cut in my borough, and in the opinion of many citizens our streets are a disgrace. The attitude of the council has been, "If we cannot get more money from central funds, we will have to penny-pinch as much as possible to try to keep the rates down." Although an understandable attitude, my hon. Friends and I do not share it and we feel that the Government could have given more help.

Increased prices and costs have meant local services costing substantially more in the last year, and I appreciate that they have also gone up for other organisations. If the rate support grant is at an end for this year and there is to be no additional supplementary provision, then the process of cutting local services will, I am afraid, continue.

Mr. Clinton Davis (Hackney, Central)

Has Waltham Forest found it necessary to increase its charges for services rendered in, say, the public library system and the welfare services, as has been the case with other London boroughs, and what effect has this had on the welfare services?

Mr. Deakins

Each London borough must make up its mind about the action it will take against this background of rising costs. Waltham Forest has not increased its library charges, but there have been increases in charges for certain welfare services and these have particularly hit some senior citizens and children; for example, some charges at swimming baths have gone up.

The effect of the cuts to which I have referred has not meant a large saving in the aggregate over the borough as a whole. However, these cuts indicate the attitude of some local authorities in the London area in the face of rising prices and costs and their reluctance to increase rates, particularly in election year.

In the wider context of services for people living in London, these may be considered to be rather minor points, but I come to the issue of housing, which is probably more important in London than in any other conurbation. My local authority, like many others, has a long waiting list. More than 6,000 names are on the housing list, and each name probably represents a family. If the rising costs of building materials adversely affect the ability of local authorities to build houses, the effect on—

Mr. Graham Page

On a point of order, Mr. Deputy Speaker. I am in some difficulty. As you pointed out earlier, we are dealing with the rate support grant. Housing expenses do not come within this province. I am wondering, therefore, whether I shall be obliged to reply to the points which the hon. Gentleman is now making.

Mr. Deputy Speaker

I appreciate the Minister's difficulty. I am sure that the hon. Member for Walthamstow, West (Mr. Deakins) appreciates how irritating it is for a Minister if when he comes to reply to a point he is told that he is out of order, possibly because the Chair missed something earlier. I am sure that the hon. Gentleman will assist me.

Mr. Deakins

Certainly, and I will not pursue this housing question further, except to reiterate that if the rate support grant is inadequate local authorities are obliged to look at all the services they provide in an endeavour to make savings.

As we are speaking of less than £3 million to finalise the grant for 1970–71—this must be so at this late stage of the year—my local authority will be confirmed in its feelings that there is no more to be hoped for from central funds, which means that some services will have to be cut.

I hope I am in order in referring to education, because the rate support grant covers some current expenditure for education and loan charges paid by local authorities on loans raised for educational building. This, too, is an important service, not only in London but throughout the country.

It is particularly important in urban areas where schools are old, some dating back to the nineteenth century, and others which are badly sited with inadequate accommodation and bad facilities. In many instances there is insufficient housing provision for the teachers who are required to work in those schools.

We need to rethink the way in which the rate support grant is used to finance local authority services. I understand that some suggestions for reforming local government finance will be before the House later this year. We must ensure that sufficient money comes from central funds to enable local authorities to carry out the tasks for which they were elected, and education must be almost the most important one.

In many greater London boroughs the education service is important not only in itself but for remedying the deficiencies of an inadequate home environment, principally caused by inadequate housing. At a time of rapid inflation, local authorities have a job to even stay still in their education provision. Indeed, they must spend more to provide the same services.

With the school population increasing, particularly in secondary schools, it is essential that local authorities are not restricted in their ability to provide not only good education services but improved ones, and only an adequate rate support grant from central Government can make this possible.

I am particularly concerned in my borough with the inadequate provision of nursery schools. We have only two in the whole borough, though I regard it as equally shocking that there are only 29 in the whole of the greater London area. Nursery school provision, financed through the rate support grant, is an area where local authorities can do more than in any other way to remedy the deficiencies in the environment of many citizens' children.

If it is impossible for local authorities to build as many nursery schools as they like, it should be possible for them to encourage the development of play groups, and my local authority has started in a small way to do this. But much more remains to be done and the Government seem unaware of the need to allow local authorities to spend more on those parts of the education service which will most benefit children.

We must rethink the whole of local government finance. This is not the occasion to go into that, but one cannot avoid the conclusion, when discussing this increase in the rate support grant, that our present way of financing much local authority expenditure is inadequate.

We hope that, under the provisions of the Chronically Sick and Disabled Persons Act, 1970, local authorities will be able to provide much better services for those who are physically handicapped or chronically sick, but, again, their ability to do that will depend on the amount of money which the central Government make available through the rate support grant. Care for the chronically sick and physically handicapped, a service operated at local level, ought to be the subject of national provision, with national standards.

Many of us on this side have signed an Early Day Motion put down by my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris) urging the Government to give early implementation to the provisions of Section 1 of his Act. But this will entail expenditure by local authorities on a service upon which they have not spent money hitherto except through their welfare services. The Act will put greater burdens upon them. It has done so already for those local authorities with a social conscience, yet there is no sign in the present provision that account is being taken of that, yet this is an invaluable service for bringing new life to a section of the community which is, perhaps, the most under-privileged of all.

The problem is not confined to Greater London. When faced with a choice between restricting its services, putting up the rates or asking the central Government for more money, local authorities are put in a cruel dilemma. It is the Government's long-term policy to cut down in many ways on the amount of money which they pay to local authorities. This will have deleterious consequences, certainly in the Greater London area and, I am sure, for many local authority services elsewhere. Housing, in particular, will be affected, and to a lesser extent the effect will be felt in many of the welfare services operated by larger local authorities.

What is a progressive local authority to do when faced with rising costs and increased wages and salaries for its staff and all those who are directly or indirectly employed by it? If it does not want to put up the rates, which is unpopular, or ask the central Government for more money, which it will not get, there is only one course open to it, to cut its services. But any progressive council elected on a programme for doing the best it can for its citizens will think most seriously before cutting any of its services. Unfortunately, however, this is happening in many of the Greater London boroughs.

I suspect that no local authority likes to cut any of its services. Whatever its political complexion, it does not wish to reduce the standard and availability of services to its citizens. Some local authorities have salved their consciences —rightly, in my view—by allowing the rates to increase this year. But they were, as I say, put in a cruel dilemma, and I sincerely hope that the same dilemma will not be forced on them next year by cuts in the rate support grant, which, we understand, is the Government's longterm intention.

We shall have to think further about the whole future of local government finance and the operation of the rate support grant. If the rate support grant is increased, as I and many of my hon. Friends would wish, it will be a charge on direct taxation. Many of us on this side—I regret that not all my right hon. and hon. Friends agree—believe that direct taxation is a progressive form of taxation, falling as it does on those who can afford to pay, and we should, therefore, welcome any extension of the rate support grant if it were financed out of direct taxation. By contrast, putting up the rates is to increase indirect taxation. This we should strongly oppose. At the same time, we have to be realistic—

Mr. Deputy Speaker

Order. The hon. Gentleman is going a little wide now.

Mr. Deakins

I shall bring myself back to the rate support grant, Mr. Deputy Speaker. If local government finance is to be reformed and the rate support grant is to be abolished—in which case we shall not be able to have a debate of this kind in future—the Government must bear in mind the need of boroughs like Waltham Forest for more rather than less money from the central Government. for otherwise the burdens on them will be too great, in deciding what services they must cut because of inflation of costs and prices year by year.

We have had a long battle about inflation and who is responsible—no doubt, it will continue for many more months—but we must not forget the innocent victims of that battle, of whom the local authorities are certainly one.

The Vote we are debating touches this problem in its reference to increased prices, costs and remuneration. Increasingly, unless we have local government finance right from the start, with a proper balance between central and local government, we shall not be able to continue even with the present level of local authority services, and this at a time when there is a demand from all citizens for better services—personal welfare, education, housing, and so on.

The local authorities have to spend more money. They cannot lay off men. They cannot stop building houses, they cannot stop improving, repairing and maintaining schools. They have to do all these things, yet, even if they do no more than maintain their current activities, they face an increasing burden of costs.

Unless the rate support grant is increased in future far more than the provision we are now discussing, many of them will take the easy way out, as mine has done in Waltham Forest, and choose to cut services in order to save a small amount on the rates. This is socially regressive. In the long term it does not solve the problems of the people who live in the Greater London conurbation. In the future, and certainly for next year, the rate support grant ought to reflect that need in advance of the inflation of costs and orices so that local authorities, whatever their political complexion, may continue to do the job for which they were elected, that is, provide a decent standard of services in education, welfare, housing and the rest for the citizens who live in their area and support them.

8.19 p.m.

Mr. Clinton Davis (Hackney, Central)

In his very fair exposition, my hon. Friend the Member for Walthamstow, West (Mr. Deakins) has posed the problem confronting local authorities because of an inadequate rate support grant, putting them in the position of having to choose whether to restrict services, ask the Government for more aid, or increase the rates.

Every member of a local authority is only too well aware of that problem. The answer to it depends largely on the political philosophy of the party in power in a local authority at any one time. As a result of the 1968 elections, the answer of Conservative local authorities has largely been to restrict services. In the few authorities still controlled by the Labour Party in Inner London, the answer has been somewhat different. I hope that after the May elections, when we shall have an opportunity to express our political philosophy because we shall be in power in Inner London, the answer will not be to restrict services, although we shall face a great dilemma because of the policies being pursued in Parliament.

The way in which rising prices emasculate local services can be exemplified by my own borough, but it is by no means on its own in this respect. I have previously said that my borough is spending in the current year about £40,000 less on providing for the homeless, when we are affected perhaps more than any other Inner London borough by the problem of homelessness. I do not suggest that Conservative councillors in the London Borough of Hackney want to encourage homelessness. That would be a rash statement. But they look for the possibility of making cuts, and it occurs to them that perhaps dealing with the homeless does not produce a positive response from the electors, because it is dealing with a minority of people, and, therefore, is one of the things that should be slashed.

The Government should consider this situation very carefully, because if it happens in my borough I am certain that it occurs elsewhere. It is not only measures to deal with homelessness that are affected. Library services, chiropody services and a whole variety of work undertaken by local authorities are affected by diminished or inadequate Government support. The answer, though only a partial answer, is that if the Government are not prepared to do their duty in this regard—and they have a great moral and political duty—the local authority must take its courage in its own hands and say, "We must tell the electors quite categorically, 'The Government are not performing their functions properly, and your choice is either to have reduced services or better services, but if you have better services the rates must go up.'" The situation is absolutely analogous with the direct taxation position on the national scene.

The effect on the provision of housing in Inner London—

Mr. Deputy Speaker

Order. We cannot deal with housing.

Mr. Davis

I appreciate that, Mr. Deputy Speaker, but perhaps I may address a point to you and if I am out of order—

Mr. Deputy Speaker

Order. I simply want to save the hon. Gentleman time.

Mr. Davis

The point I was making is that the indirect effect of inadequate Government aid is such as to impinge on all the functions of local authorities. To that extent, since housing, in Inner London at all events, is the most important function of local government, it is necessarily affected, because a local authority must look at the financial situation in the round, and, although the rate sup- port grant does not directly affect housing, the indirect effect is considerable.

Mr. Deputy Speaker

Order. I am sorry to intervene, but we are likely to be in difficulties if we are not careful. I should remind hon. Members that this subject and the Estimates deal with the effect of increased prices and costs on the rate support grant. It is a very narrow debate. Questions of local government policy on services and so on are out of order.

Mr. Davis

I will take the coward's way out and not pursue the matter by trying to work out legal, technical arguments which might bring me within order. I accept your Ruling, Mr. Deputy Speaker. I did not intend my intervention to be of any length. To speak at length would be appalling after having been reminded only this afternoon that I had spoken for no less than 51 minutes in a recent debate. It would be an injustice to those who want to speak on other matters if I prolonged the debate.

Suffice it to say that I support my hon. Friend's criticisms of the Government for the inadequate assistance they are providing local government, particularly in the areas we represent in London. I only hope that this is not an indication of Government policy in the years ahead, though I fear that it is.

8.25 p.m.

The Minister for Local Government and Development (Mr. Graham Page)

I find it difficult to respond to arguments based on such a wholly false premise as the premise that the Government have reduced the rate support grant, the amount contributed by the taxpayer to the ratepayer. Talk about cuts in the grant is so remote from reality that it is difficult to start to explain the position to the hon. Members who have put their argument in that form.

The rate support grant for the coming two years—although we are not directly concerned with that in the Supplementary Estimates—is larger in absolute amount and in proportion to the local government expenditure than it has ever been. But the increase we are discussing is larger than any increase has ever been, and for a very good reason, which is that this Government were left with a situation in which they had to make the very large increased grants on the previous grants. The figures are clearly shown in the Supplementary Estimates, Class VI, 8, where it is explained that the increase for the year 1969–70 is £7 million and that for the year 1970–71 it is £129 million.

These are substantial sums. The figure of nearly £3 million required by the Supplementary Estimate is at that small figure because already sums had been taken into account in the previous Estimates over and above the rate support grant. In other words, a first shot was taken in the estimates earlier in the financial year and this is the second or final shot which results in an addition of £3 million.

By means of these increase orders the rate support grant for two years is kept up to date. In regard to the relevant expenditure accepted by the previous Government in 1968, we have had to make these increases in order to keep up that figure—that is to say 57 per cent. of local government expenditure. In the new rate support grant we have increased the proportion to 5½ per cent. The Secretary of State is authorised to take into account any increase in prices, costs and remuneration which has taken place since the previous rate support grant or a previous increase order, whichever is the later.

I would draw attention to the fact that the Secretary of State is entitled to take into account only what has occurred. The hon. Member for Walthamstow, West (Mr. Deakins) asked that we should take into account in advance what local authorities might have to spend. This is not possible by law under the terms of the Local Government Act, 1966. The most the Secretary of State can do in making an increase order is in addition to taking into account what has already occurred in prices costs and remuneration; he can take into account an increase which can be clearly foreseen and quantified. But that is a difficult matter, and no such item was included in the increase order that we are discussing, which came into operation in December, 1970. That order took into account prices at November, 1970. It was fixed at the figures of £7 million and £129 million for the two years respectively after lengthy examination with the local authority associations.

I can say from my own knowledge of those negotiations that at the end the local authority associations expressed themselves satisfied that, within the rules of the game, they had achieved what they had hoped to get and there was a feeling of agreement between the Ministry and the local authorities. The local authority associations collect the facts from their constituent bodies. It is they who diligently go to the local authorities and discover the real facts of expenditure and would take into account arguments such as those put forward today by the hon. Members for Walthamstow, West and Hackney, Central (Mr. Clinton Davis). They come to the Department of the Environment armed with those facts to argue them out with the officials and Ministers there.

Mr. James Scott-Hopkins (Derbyshire, West)

I am not following the course of the discussion. What my hon. Friend is saying is that hon. Gentlemen opposite have been completely misinformed since the whole of their case depends on the fact that the rate support grant has gone down, whereas my hon. Friend is saying that it has been increased. If that is the case, why have hon. Gentlemen opposite argued as they have done today?

Mr. Clinton Davis

Our case is that the grant has been inadequate, which is quite different from what has been said by the Minister today.

Mr. Page

That was not exactly the case put forward by the hon. Gentleman. As I understood him, he was saying that the rate support grant had been cut.

Mr. Davis

Yes.

Mr. Page

If it is argued that it is inadequate, there is an argument for saying that the percentage should be increased and the proportion which the taxpayer contributes to the ratepayer should be increased, but that proportion has been increasing over past years and is now at a higher proportionate figure than it has even been before; indeed it is at a higher absolute figure than ever before; yet we have to keep it up to date by these increase orders.

The negotiations which proceeded prior to this increase order in December, 1970, came to the conclusion that the relevant expenditure of the local authorities had increased by £13 million for the year 1969-70 and £243 million for the year 1970–71, and it was on those figures that the figure of 57 per cent. was taken as the increase in grant. These increases represented a 7.3 per cent. inflation during the period November, 1969, to November, 1970.

As I have said before, the Order is based on prices as in November, 1970, and includes the effect of the substantial autumn pay award to local authority manual workers. It did not take into account the police award, which has been made since and dated back. To that extent, there might be some complaint that it did not—indeed, could not—take into account fully the expenditure applicable to the year 1970–71. Nor did it take into account the teachers' award which is expected but has not yet been made and which will, one assumes, be dated back to a period prior to November, 1970.

But, even though these matters were not taken into account, we have not received any request for a further increase order. It would be most unusual to have an increase order again within a period of four months. This matter will be negotiated again during the summer, and no doubt by November or December we shall be laying before the House a further increase order in order to keep the rate support grant up to date. But it would be unusual for any further order to be laid within such a short period as that between December last and the present time. Nevertheless, if there were a serious condition, I have no doubt that we should receive a request from the local authority associations for a further increase order. I recollect that during the negotiations they said that they expected a number of wage awards which might be dated back, and that if there were a serious situation they would come to us before the end of the financial year for another increase order. They have not done so, and, therefore I presume that they do not find themselves in very grave difficulty at present.

I have spoken of the over all figures because it is not for my Department to allot the sums to Greater London or the London boroughs. All I can tell the House is the amount of the total increase in grant and give some indication of how that increase was calculated as an over all sum. I will not trouble the House by reading it out but there is a clear list in Appendix I to H.C.173 on the Rate Support Grant (Increase) Order, 1970, which sets out the items where there has been an extra expenditure. One sees some rather large items for 1970–71, such as over £50 million for administrative, professional, technical and clerical staff; £59 million for teaching staff; £29 million for manual workers. These were the sort of figures which had to be taken into account in deciding what should be the right figure for the grant for that year.

Mr. Deakins

The Minister mentioned increased wages for manual workers, and he said earlier that the rate support grant under this Vote had nothing to do with housing. Are we therefore to assume that wage increases to manual workers of local authorities do not cover manual workers employed by direct labour building departments of local authorities?

Mr. Page

It is a little complicated. The figures are righted in the accounts by not taking account in the rate support grant of sums which are paid to the housing account, if I may put it briefly in that form. I refer the hon. Gentleman to the Local Government Act, 1966, which states what is relevant expenditure and what is excluded from relevant expenditure before the 57 per cent. which the taxpayer has to pay is calculated.

I do not make any political point about it, but I should like to assure the House that there are long, careful and very knowledgeable negotiations each year in connection with the rate support grant between the local authority associations and the Department of the Environment. I think that the local authority associations feel that their representations are taken fully into account in these negotiations and that they are able to put forward a full case on behalf of their constituent authorities.

The result is that when we get to the final point of the figures there is agreement on, say, 90 per cent. of them, but dispute on perhaps some vital 10 per cent. at the end which has to be decided at Ministerial level. It is decided as best one can between the taxpayer and the ratepayer. It is a difficult matter, and certainly we in the Department do not enter the negotiations in the spirit of cutting down the taxpayers' contribution. We know that the taxpayers' contribution will increase slightly every year not only in proportion, but absolutely. We try to keep a reasonable balance between the taxpayer and the ratepayer in the provision of the important services by local authorities.