HC Deb 09 March 1973 vol 852 cc849-60

4.12 p.m.

Mr. Gerald Kaufman (Manchester, Ardwick)

I wish to raise the subject of urgent importance—

Mr. Robert Hughes (Aberdeen, North)

On a point of order.

Mr. Kaufman

—to 550,000 citizens—

Mr. Deputy Speaker

Order. I am sorry but the hon. Member for Aberdeen, North (Mr. Robert Hughes) wishes to raise a point of order.

Mr. Hughes

On a point of order, Mr. Deputy Speaker. I apologise for taking up my hon. Friend's time, but I did not hear Item No. 4 on the Order Paper called. Can you tell me what happened to it?

Mr. Deputy Speaker

The custom of the House is always that if these motions are not reached they are not called.

Mr. Hughes

Thank you, Mr. Deputy Speaker.

Mr. Kaufman

I am raising a matter of importance to 550,000 citizens of the city of Manchester, namely, the problem of their rates and the massive rate burden which has been imposed upon them. That rate was fixed on Wednesday this week when those people heard that their rates were to go up, on the basis of the old valuation, by 18p for the domestic rate. That is a 15 per cent. increase in the rate and it is a symbol of the city's problems. It is also a symbol of the Government's lamentable failure to accept their share of responsibility for dealing with the problem.

It has been acknowledged—by the Prime Minister himself on the Floor of the House—that Manchester, in common with other great cities, faces three great problems over its rates. The first is the general problem of inflation. The second is the problem of the falling population, which means that fewer people are having to maintain existing services and are even having to finance their expansion, as I shall explain. The people who remain are often less well off, for many of the middle and higher salary and wage earners have moved outside the city boundaries. The third problem —the only one on which the Government have attempted to take action—is the problem of revaluation.

In the city of Manchester the cost of the essential services has soared over the last year. In the coming year the cost of cleansing is up by 20 per cent.; that of education by 16 per cent.; that of health by 22.1 per cent.; and that of the social services by 25.5 per cent. Clearly, no civilised and self-respecting city could possibly slash expenditure on items such as those. But in addition the city is expected by the Government to maintain and increase its civic expenditure, with a consequent burden on the rates for matters which the Government have asked the city to spend money upon. They include assistance to the sick, the handicapped and the housebound as a result of the Chronically Sick and Disabled Persons Act.

Operation Eyesore, a Government measure about which the Secretary of State for the Environment has boasted, will impose a burden of £300,000 per year on the city of Manchester with no grant aid to areas which have been improved. The raising of the school leaving age, something for which the Government claim credit, will impose additional expenditure on the city of Manchester. The Housing Finance Act, a deplorable measure in itself, will also impose financial burdens on the city of Manchester.

All those items add to the rates at a time when the city's population is falling. It has fallen by 112,000–17.1 per cent.—in the last eight years. But, while the number of ratepayers is falling the responsibility of the city towards those 550,000 ratepayers who remain is not falling in any way commensurately. In these same eight years during which the population has fallen by 17.1 per cent. the number of pupils in the city's schools is down by only 8.1 per cent. Pupils as a percentage of the city's population have risen by 2.3 per cent. in the last six years, and are increasing at an accelerating rate.

The city of Manchester—I deeply regret it—has special problems caused by increasing poverty. The position is that 25 per cent. of pupils at Manchester schools qualify for free school dinners, and the dimension of our problem in Manchester can be shown by the fact that our 25 per cent. compares with the national average of 10.7 per cent. We are second highest for free school dinners, with the expense that that involves, among all the counties and county boroughs in the country. Are we to reduce expenditure on this item? Are we to send these children home hungry?

There are 2,091 children in care in the city of Manchester, or 13 per 1,000 of the city's population, compared with 8.2 in all the county boroughs. The Manchester figure is 50 per cent. more than the average county borough figure. There are 2,051 old people, or 3.5 per 1,000 of the population, in residential accommodation, compared with 2.7 per cent. in all county boroughs. Again, we are ahead of the county borough average. Are we to slash expenditure on this service? Are the old people to be turned into the streets?

The cost to the ratepayer of clearing derelict sites is £900,000. The face of Manchester, I am sorry to say, is not a pretty one. Is this expenditure to be slashed and the city to become waste land? There is a need to renew and enlarge decrepit sewers which were laid decades ago. That need is becoming pressing. If it is not met, there will be a health hazard.

Added to those problems is the factor of revaluation, which is capricious and unfair. It is estimated that in Manchester the revaluation has added between 7½p and 9p in the pound on the rate of the average householder. Faced with these desperate problems, the city has set out to provide the minimum essential services while keeping the rate down as low as possible, and on that basis it has looked at its estimates and cut them to the bone. Between the preliminary estimates and the substantive ones, a total of £1.9 million was cut off planned city expenditure.

The Prime Minister called for a ceiling of 5 per cent. rate increase. The city of Manchester took that seriously and examined what a ceiling of 5 per cent. would mean in terms of reduced civic services. It discovered that among the cuts which would be necessary—these are by no means all—in the city's services to keep the rate increase down to 5 per cent. would be, in education, to defer annual programmes of painting and improvements and to reduce the standards of class materials and equipment; in health, to delay the purchase of new ambulances and to delay the opening of new health centres; for the fire brigade, to defer the opening of a new station and to defer vehicle renewals and the purchase of equipment; in recreation, to reduce maintenance and painting—I have received many complaints already about facilities for recreation in Manchester; in social services, to cut by half the maintenance, painting and special repairs of premises and to cut by half the purchase and replacement of furniture and fittings, to reduce the benefits for people in residential accommodation—holidays, sweets, tobacco and so on—and to abandon some badly needed schemes for supervision of the elderly in their own homes and to abandon the provision of additional clubs for old people. Another economy would have been almost to wipe out altogether the city's aid to the Hallé Orchestra, one of the shining emblems of the existence of the city of Manchester.

These economies would have led to the loss of 794 jobs, 396 employees would have had to be dismissed and 398 others would not have been taken on in jobs that were planned, and this at a time of heavy unemployment. The saving would have been £3.4 million. But to slash these services, to get rid of these jobs and to cut this expenditure would have turned Manchester into a filthy, festering, heartless, miserable, slum city, and, clearly, no self-respecting city, let alone a city with the pride of Manchester, was going to tolerate that.

So, four weeks ago, after great pressure, Manchester, together with representatives of five other great cities, went to Downing Street to see the Prime Minister about these rate burdens and rate problems. The Prime Minister tells us that he listened sympathetically. He tells us that he promised urgent consideration. He emphasised to me at Question Time on 15th February that he appreciated the problem of falling population. He said: …the hon. Member's point becomes particularly relevant in those communities either cities or boroughs, where there is a decreasing population but where the authorities find themselves committed to almost the same expenditure on the services which they provide. That is one of the matters that we are examining."—[OFFICIAL REPORT, 15th February 1973; Vol. 850, c. 1440.] After those hopeful noises we got silence, total silence and weeks of silence, followed by two developments.

The first development, ludicrous and unpleasant at the same time, was this. In accordance with the Counter-Inflation (Temporary Provisions) Act, Manchester had supplied the Department of the Environment with details of its plans for the rates in plenty of time. It had Telexed the final details at lunchtime on Thursday, 1st March, eight days ago. On the Friday, one minute before the finance committee was due to meet, the Department of the Environment telephoned disputing £2 million worth of expenditure. The meeting was abandoned. Further information was sent.

As a result of that further information, the Department accepted the figures and telephoned on Monday of this week to say that it was completely satisfied and Telexed on Wednesday of this week to say that, in the light of the information provided, it had no specific comments to make; that is, on this disputed sum of £2 million. It backed down completely and accepted that the £2 million expenditure was valid and should not be cut from the city's budget. But at the end of the Telex message it added a politically motivated request: A further scrutiny with a view to making a reduction, however small, in the amount ratepayers will have to pay. Even this twelfth-hour request was complied with.

At the meeting of the finance committee, which was resumed on Wednesday of this week, the only suggestion for any cut in expenditure was made by one eagle-eyed Conservative member who, taking into account Manchester's total estimated expenditure of £140 million, suggested a cut of up to £100,000 in educational expenditure. The Labour-controlled corporation did not dismiss that. It set up a group specially to consider whether that £100,000 could be cut off education.

The second development was that after more than three weeks' delay the Chancellor of the Exchequer in his Budget on Tuesday announced aid, which can only be described as paltry, to reduce the impact of rate revaluation. Those proposals have been described by many organisations in pejorative terms. The Association of Municipal Corporations has described them as "inadequate, complicated and confusing". The Urban District Councils Association has described them as "modest".

Local authorities have not yet been informed exactly how the calculations on the basis of the Chancellor's proposals are to be made, but Manchester has done its best to make its own calculations on the basis of the Ministry announcement. It has chosen five actual properties on the valuation list and has found that the relief in these five cases is likely to be as follows: in a property whose rateable value has risen under the valuation from £182 to £647, multiplied by 3.6, the relief would be £34.37; for a property up from £54 to £158, multiplied by 2.93, the relief would be £2.01; for a property up from £69 to £202, multiplied by 2.93, the relief would be £2.59; for a property up from £66 to £198, multiplied by 3, the relief is £3.63; for a property up from £26 to £71, multiplied by 2.73, there is no relief whatever.

The corporation worked out that before one could get any relief under the Chancellor's proposal the valuation must be multiplied by 2.78 and even then the relief would amount only to pence—20p, 40p, or 50p. Although relief would be obtainable only if the valuation were multiplied by 2.78, the multiplier average on domestic properties in Manchester is only 2.62 and, on a preliminary estimate, out of 173,000 ratepayers, it is unlikely that more than 5,000 will qualify for any benefit, however paltry, under the Chancellor's proposals. This is not just a drop in the ocean; it is an insult.

The Government have not faced, let alone solved, the problem of the rates in the big cities. At a time of frozen wages, soaring food prices, the approach of VAT, and rents both for private and council tenants being raised on Government orders, next to nothing is being done, as I have shown from those figures, to shield the Manchester ratepayers against inflation. Even now I plead with the Government to come forward with meaningful and solid help. If they refuse, the only conclusion of the citizens of Manchester can be that the Government simply do not care.

4.29 p.m.

The Under Secretary of State for the Environment (Mr. Reginald Eyre)

This is the fourth time since last November that Manchester's rate problem has been discussed in the House. No one could accuse the hon Member for Manchester, Ardwick (Mr. Kaufman) or the other hon. Members for the city of neglecting their duties.

Since the last occasion my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for the Environment have announced that a further £10 million will be made available to assist individual ratepayers affected by the revaluation. I realise that this does not fully meet the points which have been made today and previously, but it represents the most that the Government feel able to do to meet the particular situation arising this year. I do not expect that the hon. Member is expecting me to announce any further new grants this afternoon.

My right hon. Friend's statement acknowledged that pressures on expenditure may well be higher in some areas than in others—although this problem is not limited to the present year, nor to Manchester and the other large cities, as for example the hon Member for Farnsworth (Mr. Roper) has pointed out on previous occasions.

But if the inner urban areas have problems—as both the hon. Member and I know they do—these must be looked at in the context of the review of local government finance as a whole, and the distribution of rate support grant in particular. We have already had discussions with the local authority associations at working level on this, and we shall be entering into further discussions shortly. Though I must emphasise that while it is easy to point to factors in general terms that may lead to increased expenditure—the hon. Member will know that, as a Birmingham Member, I have sympathy with him on this score—it is much more difficult to quantify them and say just how much greater a share of the available resources should be given to any particular authority.

For 1973–74 Manchester depends upon the existing formulae, which indeed provide the city with massive financial support. The first estimate of its rate support grants for 1973–74 is close to £30 million.

It is inherent in a situation in which over half the cost of local services is met from central sources, and in which local authorities can see endless scope for improvement to the social and environmental services they provide for the local community, that they should criticise the grants they are offered and ask for more. There are always more pressing human needs, individual and communal, than we or any Government can immediately meet.

I do not complain that Manchester should ask for more. It is no exception to the general rule in doing so. Indeed, with the high level of its rates, both as a rate poundage and in the amounts paid per household, it is almost inevitable that it should do so. That it has done so, however, by no means signifies that the Rate Support Grant Order 1972, which fixed the amount of grants for 1973–74, was less than generous. On the contrary, the forecast of relevant expenditure was made after the closest consultation with the representatives of local government, and most careful account was taken of the economic situation, with the result that the grant aggregate was fixed at the record level of 60 per cent. of relevant expenditure.

It is impossible to discuss the rates without mentioning inflation, both because of the contribution which inflation makes to pushing up the level of rates and because of the anxiety which the rising level of rates causes to all of us who are engaged, whether we like it or not, in the struggle to control inflation.

Both for 1972–73 in the Rate Support Grant (Increase) Order 1972 and for 1973–74 in the Rate Support Grant Order 1972 full account was taken, on figures agreed with the representatives of local government, of the increases in local government expenditure consequent upon the rise in the level of prices, costs and remuneration up to November 1972. The grant provision fully covers the effect of inflation as measured by these figures on the Exchequer share of local expenditure.

That does not mean that the Exchequer meets the cost of inflation on the share of local expenditure which falls to be paid for by the ratepayer; we cannot beat inflation merely by passing it on to somebody else or by pretending that the cost of inflation met by the Government will not have to be met by the taxpayer. In the rates, as in everything else, each of us both contributes to inflation and suffers from it.

It is not, of course, a problem peculiar to Manchester. The problem, in Manchester as elsewhere, is that it will be more of a problem for some people than for others. It is not a problem to be tackled by giving special Government rate aid to Manchester. It requires a wider approach, by tackling inflation itself, and at the same time a selective approach, by concentrating, as the Government are seeking to do during the painful process of tackling inflation, upon giving priority to those with smaller means.

Another part of the problem of rates, which has caused a great deal of anxiety, is the revaluation for rating which has effect for 1973–74. Revaluation is an essential process to ensure that rates fall more fairly on people. It is a pity that the Labour Government did not carry out a revaluation five years ago.

Since the last revaluation 10 years ago, some people have been paying more than their fair share of rates and others less. That must be put right; but putting it right will result in increases of rate payments by some ratepayers while others will pay less. My right hon. Friends the Chancellor of the Exchequer and the Secretary of State for the Environment announced to the House on 6th March the Government's intention to moderate the effect of revaluation upon domestic ratepayers by meeting half the cost of any increase above 10 per cent. in domestic rate bills in so far as this is attributable solely to the effects of revaluation. Again, the problem is not peculiar to Manchester. The domestic ratepayers in Manchester who are most seriously affected by it will benefit from this general provision by the Government.

If the figures are as small as those quoted by the hon. Gentleman, it suggests that the increase in the rate demand arising from revaluation is of much less significance than the increase in expenditure. I must remind the hon. Gentleman that incomes are not frozen as he suggested, during phase 2 of the counter-inflation policy. Indeed, increases up to 7 or 8 per cent. are permitted.

The hon. Gentleman raised the important question of declining population, which is a factor for other big cities as well as Manchester. It is one of the matters being studied in the review of local government finance which I have already mentioned. On the figures used for the first estimates of rate support grant for 1973–74, Manchester receives as part of its needs element grant £2½ million on account of declining population.

The kernel of the problem with regard to the level of expenditure is "How much can we afford to spend?" That is the central problem for us as individuals, as local authorities and as a Government. We had to face this problem with the representatives of local government in the rate support grant settlement contained in the Rate Support Grant Order 1972, and the figures in the White Paper Public Expenditure to 1976–77, Cmnd. 5178, show how far the rate of growth of local authority expenditure is running ahead of the rate of growth of public expenditure at large. There must be a limit to the rate of growth of local government spending which the Government can underwrite before expecting the local authorities, which take the expenditure decisions, to raise their share through the rates and to justify their spending to the local electorate.

I do not question the reality of the problems confronting the Manchester City Council, which is contemplating a substantial increase in its rates this year. But its rates also increased 30 per cent. last year as against the national average increase of 10.3 per cent. That must to some extent reflect local decision, particularly following the change of control of the council in 1971.

Mr. Kaufman

No, it was because the previous council had been so improvident. It left the cupboard bare to keep the rate down for political reasons when it went to the electorate in the May 1971 elections.

Mr. Eyre

I naturally understand that the hon. Gentleman would advance a political defence. I understand that there is some element which carries forward into this year, related to expenditure during the current year, under the present control. We had better not debate that. I cannot offer the hon. Member any further addition to the very substantial rate aid Manchester is already receiving.

Question put and agreed to

Adjourned accordingly at twenty-one minutes to Five o'clock.