New Clause 5 (Hansard, 13 April 1972)

Hon. Members
Hear, hear.

§ Mr. Speed
I beg to move, That the Clause be read a Second time.
Having broken my speaking fast—it is 23 months since I last spoke in this Chamber—I thank right hon. and hon. Gentlemen opposite for their good wishes to me and hope that the proceedings during this stage of the Bill will be as civilised and good mannered as they were in Committee, where I was rather more silent than I am going to be now.
The Clause provides an enabling power to authorities in a metropolitan county to make a scheme for the purpose of reducing disparities in the rates levied in different districts within the county. It is based on a similar provision in the London Government Act, 1963, with the difference that in the case of London the scheme is made by the Secretary of State.
The need for such schemes arises from the wide variations in rateable values and expenditures that can arise within a metropolitan area because of the tendency for office and shop premises with high values to be concentrated in the centre, for there to be other areas of very poor properties with low values and an outer ring of high value residential properties, and also from the fact that, because distances within these metropolitan areas are relatively small, 1449 districts are often providing services for people other than their own ratepayers.
These features are particularly pronounced in London. It is possible that they will also be pronounced in the new metropolitan counties, but it is not clear whether that will be the situation or not. Moreover, it may be that the new rate support grant system under consideration by my Department, which it is hoped to introduce in 1974, will help to smooth out many of the irregularities in rate burden that would otherwise occur. If that is so, the new Clause may not be necessary. However, we feel that it is desirable to include this enabling power in the Bill.
The London Act provides for the scheme to be made by the Secretary of State, but in practice a scheme is made only at the request of the London Boroughs Association, which takes the initiative in preparing it. At present there are eight boroughs in London which are contributors and 25 boroughs which gain from the London scheme. They gain from the scheme through the rate support grant in London. The Department has no interest in the details of the scheme, and we feel that no purpose would be achieved in involving the Secretary of State in the new arrangements, because this is effectively the situation in London now. Clearly, it is desirable that all the authorities in the county should be agreed on whatever scheme is made, and this is provided for in the Clause.
The Clause applies only to metropolitan counties, because in those counties the districts will be the major spending authorities, with education, social services and the rest. It is expected that in non-metropolitan counties the county council will be the major spender and equalisation will thus be achieved through the county precept.
In the new Clause, which looks complicated but is designed to achieve a simple aim, subsection (1) provides a general enabling power. Subsection (2) provides that equalisation of the rates between districts may be achieved in any one or more of three specific ways—first, by transfers of money from one authority to another, either directly or through the metropolitan county council; second, by means of adjustment to the county precept, which is effectively the way that it is done in London at the moment; or, 1450 third, by adjustments to the amount of rate support grant payable to the authorities concerned.
Subsection (3) provides for revocation or variation of the scheme, and subsection (4) provides that in calculating the resources element of rate support grant payable to each authority no account will be taken of rates or payments under the equalisation scheme. The amount of resources element payable to any authority depends upon, among other things, its actual expenditure in any particular year. It would not be right or sensible for an authority which, because it was relatively prosperous, was contributing through the scheme to another authority to receive grant on this expenditure while the poorer, receiving authority had to lose the grant.
The subsection is drafted in terms of the present rate support grant system, as provided for in the 1966 Local Government Act, but if, as intended, a new grant system is introduced before 1974, the legislation—either this complete new Clause or this particular subsection—may have to be amended to take account of this.
The local authority associations have been consulted about this. They have no objection, and it is a sensible and seamanlike precaution to introduce.

§ Mr. Arthur Blenkinsop (South Shields)
First, I welcome the hon. Member for Meriden (Mr. Speed) to the Front Bench opposite. It will be pleasant to all of us to see that he has plenty of opportunity to take part in future as he has not been able to do in the past.
We are very happy to see this new Clause, and we broadly welcome its provisions. The provision is, clearly, sensible. I noted what the hon. Gentleman said about the inapplicability of this to the non-metropolitan counties and the non-metropolitan districts. I am not altogether sure that that fully applies. There might be situations in which such a provision might be favourable in that wider setting.
This is certainly the kind of question which calls to our minds again the value of some kind of regional structure and provision of this sort. The hon. Gentleman must not be surprised if we call some further attention to this matter at later stages, when we are dealing more 1451 specifically with some of the Amendments relating to regional matters.
The principle established here could, clearly, have great importance at a regional level. I am not altogether satisfied that it has covered the full problem which may exist, even though on a more limited basis, between non-metropolitan counties and districts. I should like to know whether the Minister's mind is completely closed to the possibility of some extension of this kind of provision if one could establish, as I think one could, its desirability. Otherwise, we welcome this provision.

§ Mr. Roper
Like my hon. Friend the Member for South Shields (Mr. Blenkinsop), I am glad that the Government have introduced this new Clause, which extends to the other metropolitan counties the scheme devised by Professor A. R. Ilersic and used in the Greater London area. It goes much further than the transitory powers in Clause 244 of the Bill as amended, which makes for some differentiation in rating on a transitional basis, and it is extremely important, particularly in those metropolitan counties where some districts have very much greater wealth—not only in offices but also in residential and industrial property—than others.
In our conurbations, including my own, this will go some way towards meeting the very difficult financial problems of the new authorities, and to some extent some of their problems in education, which we shall debate later. But I assume that this, too, will have to be re-examined next year when the Government bring forward their more general proposals on local government finance.