RATE SUPPORT GRANT (Hansard, 20 December 1973)

§ Mr. Graham Page
I was attempting to put these guidelines under three headings. The first is that in making the cuts there should be no reduction in essential services; secondly, that there should be no reduction in the ability to meet emergencies; and, thirdly, that they should look for the area of cuts at projects requiring materials depending for their production on energy and fuel.

§ Mr. Kaufman
The right hon. Gentleman must surely recall the reply given by the Chancellor of the Exchequer to my right hon. and learned Friend the Member for Aberavon (Mr. John Morris) on Monday, when he said: If, as we all hope, the industrial troubles are settled soon, certainly there would be no 1736 immediate change in the proposals that I have made."—[OFFICIAL REPORT, 17th December 1973; Vol. 866, c. 976.] Therefore, regardless of the energy situation, the Chancellor will insist on these cuts in local government services.

§ Mr. Page
The situation in industry has gone so far by reason of the difficulty over energy and fuel, whether as the result of action overseas or within this country, that we cannot hold out prospects of getting back on to target at any early date. It would be too optimistic to suggest that we could restore these cuts at an early date.
We are calling them cuts, but they are not cuts in existing expenditure or a lowering of standards; they are a slowing up in the rate of growth. About 12 months ago we were hoping that local government would grow at 4½ per cent. a year. These cuts represent a reduction of that 4½ per cent. to 2½ per cent. Growth of 2½ per cent. is still expected in local government. Therefore, these are cuts in anticipated expenditure rather than in real expenditure at this time.
Because we must make these cuts at a time when the country is being asked to make sacrifices by a five-day week with three days of lighting and heating, when people are being asked to make sacrifices in the home by heating only one room, and when there are difficulties regarding transport, and so on, there is all the more reason for local authority money to be spent on social services and helping those who may suffer hardship in these circumstances. That is not the area in which to make the cuts. I know that it makes good reading when reference is made to meals on wheels, the chronically sick, and so on, but that is not the area in which to make the cuts. That will not save energy and fuel.

§ Mr. Kaufman
Where then?

§ Mr. Page
In projects which depend on materials which are dependent upon energy and fuel for their production. I am sure that is where the reduction can be found.

§ Mr. Kaufman
Absolute nonsense.

§ Mr. Page
I am giving the hon. Gentleman the guidelines that I hope local authorities will adopt in deciding where to make the 20 per cent. cut in capital 1737 and the 10 per cent. cut in current expenditure.
No cuts are required in housing, which includes improvement grants. Therefore, some of the fairy story with which the hon. Member for Ardwick entertained the House is far from the facts. There is no reason for Manchester City or Greater Manchester to reduce its expenditure on housing or on improvements. Because I was anxious to give these sort of guidelines to local authorities, I have arranged about 10 meetings in the regions. I chose Manchester as the first. I visited Manchester yesterday to discuss with the districts of Manchester, with Greater Manchester county and with a number of local authorities in the northern part of Cheshire, and so on, what their problems were and where they could make the reduction without causing hardship to the people. They were very co-operative in considering ways in which this could be done without hardship to the people, who will suffer enough because services have been withdrawn from them.
It is not all the Government's fault that the services have been withdrawn. The hon. Member for Ardwick said that this was all the fault of the Government. He said that it was unnecessary to make any cuts. On that matter he disagreed with his hon. Friend the Member for Small Heath, who said that he thought that the cuts were necessary. The cuts are necessary, but they are not all the Government's fault. If the Government allowed the use of resources to go on indefinitely and unrestricted, they would be blamed for creating greater hardship. I accept the words of the hon. Member for Small Heath when he said that the prime duty, certainly of local government, was to look after the quality of life.
There are certain things which we shall have to look upon as luxuries, which come within the phrase "the quality of life." I am thinking particularly of the Bill dealing with the protection of the environment which is at present in another place. It may well be that we shall have to delay bringing into operation some of the desirable matters that the Bill proposes. We may have thought that it would come into operation on 1st 1738 April next, but it may be next autumn, or something of that sort. But these are new requirements for the environment. We may have to delay some of those.
I assure right hon. and hon. Members that the cuts in central Government expenditure are far more severe than those in local government. My hon. Friend the Member for Northants, South (Mr. Arthur Jones) drew attention to the fact that central Government should coordinate more its demands upon local government and not set a target which local government could not achieve unless provided with greater resources from central Government. I hope that I have understood him correctly. That is a point which is frequently raised with me by local authorities—that in central Government we ask them to do more and do not give them the money with which to do it. It is a very sound point. We propose to restrain ourselves in asking local government to do too much.
My hon. Friend asked whether the necessary political decisions on this matter will be made. My answer is certainly in the affirmative. He asked about loan sanctions passed by the Department and not by Ministers. Loan sanctions are to a great extent something of the past. The capital allocation to local authorities is divided between key sector, free sector and the locally determined schemes. The key sector requires loan sanction from the Secretary of State. I assure my hon. Friend that we are looking with great care at the requests for loan sanction in that sphere. Only where there is a risk to public health or where the expenditure is connected with housing are we inclinded to grant that loan sanction at present.
In the free sector we ask local authorities to reduce by 20 per cent. the capital which they commit to projects and, indeed, to do the same when they are financing out of their own resources. The locally determined schemes, which now run at £348 million over the whole country, will be subject to the reduction of the 20 per cent. and then distributed among the counties for distribution over the county area.
I come to what was said by the hon. Member for Ardwick. It is rather frustrating for a Minister, who has worked 1739 for many months on a formula which gives the great cities a distinct advantage over all other areas, to be kicked in the teeth for doing it. The needs formula which has been applied this year gives the cities a very great advantage over the rest of the country in the amounts allocated to them. This was indeed an undertaking of my right hon. Friend the Prime Minister when he met the representatives of the great cities. The result has be en that, given the same size of cake to divide, many areas of the country are contributing towards the advantage gained by the great cities.
It has been necessary to soften the impact in the first year of the new needs factor of the rate support grant, so we have had to introduce further factors to even out the burden falling on other areas, such as that of my hon. Friend the Member for Norfolk, South (Mr. John E. B. Hill). But given the same size of cake to divide, the other areas of the country have to meet the subsidy to the great cities if we are to keep to our undertaking. We can smooth out the effect by introducing other factors into the formula, and that we are doing in discussion with the local authority associations. I assure my hon. Friend the Member for Norfolk, South that the effect is being evened out to a greater extent than he thought.
Within the needs element of the rate support grant there is, of course, the factor of density. My hon. Friend made a distinction between density and sparsity, but the density factor, which is measured in terms of 1.5 acres per head, benefits counties such as Norfolk. I am quite sure my hon. Friend will not find that the formula means an increase of 20 per cent. in the rates. This also answers my hon. Friend the Member for Hemel Hempstead (Mr. Allason), who spoke of increased rates in Hertfordshire.
The hon. Member for Gorton asked me about monitoring. There is still power under the statute to monitor the rates again this year. I assure the hon. Member that I found no satisfaction in carrying out the monitoring, although I persuaded local authorities to think again about their rates to the extent of £13 million. I have therefore claimed—I do 1740 not know whether the claim is right—to have saved ratepayers £13 million by the monitoring. But it is not the sort of principle which I enjoy following, and, unless it is absolutely necessary—it is only local authorities which will make it necessary—I do not want to undertake that job again. It helps, of course, to talk over the budgets with local authorities, and that was perhaps the best advantage of monitoring. The central Government got to know what local authorities thought, and local authorities got to know the view of the central Government. There was a kind of co-operation by means of that monitoring.
I think I have covered all the points that were raised in the debate. At one time it was a debate on an increase order. It has turned into a debate on the reductions in local government expenditure and public expenditure. Hon. Members have taken some of the statements by my right hon. Friend the Chancellor out of context, but if those statements are put into their true context of the amount contributed by the central Government to local government, and of the control which local government has to a great extent over that contribution—and certainly the control which it has over the rate poundage which it collects—it becomes clear that it was right for my right hon. Friend to ask the local authorities to look to their responsibility in that respect.
Of course, my right hon. Friend does not need to ask many of the local authorities to do so. They are responsible bodies, and the whole policy of the Government has been to give them more and more responsibility. There are some, however, which need reminding, and that is what my right hon. Friend has done.