HC Deb 11 April 1974 vol 872 cc719-33

3.48 p.m.

Mr. Richard Wainwright (Colne Valley)

I should like to raise with the Government an urgent question which boils down to value for money. It concerns the effect on the public services in the oldest power-driven industrial area in the world from the way in which the rate support grant is being administered.

Although I have no mandate from any other Members of Parliament representing constituencies in West Yorkshire, I am free to guess that hon. Members of all parties have received substantial numbers of well-argued letters from ratepayers in West Yorkshire who are indignant about the rate demands which are now dropping through their letter boxes. They are indignant not because of meanness—although there may be the odd mean-minded character even in Yorkshire—but mainly because they do not believe that they will get value for money.

At best they are optimistic enough to think that the public services may be maintained this coming year at about the same level as the past year. Many people in the area that I represent are suspicious that there will be a manifest drop in the level of certain public services that they used to receive from that remarkably strong body, the old West Riding County Council. That feeling has been fanned by the advertisements in the classified advertisement columns of the many West Yorkshire daily newspapers that have detailed the high salaries for new local government posts. Some of those posts have been taken up, to public knowledge, by people who have been doing similar work in recent years for half the money.

The feeling is that under the cover of a great mist of secrecy, which in the Yorkshire valleys we know as "Moor grime", the rate support grant has to some extent been wangled under the previous Conservative Government, who were dismissed at the end of February, and under the incoming Government, who I grant have had extremely little time in which to attend to these matters owing to the unfortunate date that was chosen by the former Prime Minister for the election—wangled in the interests of districts which respective Governments have wished to please. That is particularly so in respect of the benefits to big cities, and, above all, London.

Local ratepayers in the industrial districts of West Yorkshire outside Leeds are being made to cough up the difference between what they paid last year and what they are being required to pay this year, out of their savings or else by working excessive overtime. This is not a parochial matter that is confined to my constituency. Everything that I say applies, with some small adjustment in the figures, to a great city such as Bradford, for example, in which I would expect Government hon. Members to have a particular interest as it was at Bradford that the Independent Labour Party was born. That was to them one of the brightest events in Bradford's long history.

This is no longer a matter for county councils or town halls. One of the many regrettable results of the Local Government Act 1972, which I can never bring myself to describe as local government reform is that a great protection for ratepayers in the North of England has been lost. There were days when truly powerful bodies such as the former West Riding County Council and, on the other side of the Pennines, the great Lancashire County Council, had chief officers with vast authority, who had enormous public respect, who had long experience and great back-up staffs. When they went to Whitehall, no matter who might be in power, they were capable of making the top echelons of the Civil Service quake and tremble. That I have seen when, accompanied by the representatives of constituencies, I have been on deputations to Whitehall. The deference paid to the chief officers of great county councils as well as to hon. Members has been striking.

The chief officers were men who worked from a strong base which has now disappeared. The West Riding has been fragmented into no fewer than 14 separate authorities. The former clerks to the great authorities can be described as princes of the public service. They lived their working lives amongst the people whom they were serving. They lived away from the fevered and unreal atmosphere of central London. They did not work with half an eye on the future chairmanship of some big bank or insurance company. But they have gone with the fragmentation of local government which, as everybody knows, was done at the behest of the civil servants in London so as to make their life easier in controlling local government.

In areas such as West Yorkshire, we shall live very soon to regret the day when this change in the local government system came to pass as a result of a weak Government surrendering to pressure from the Civil Service. Instead of having the protection from Parliament which he has had up to now, the ratepayer has become a victim of panic manipulation of certain aspects of the rate support grant by Ministers who, in the present political atmosphere, must be seeking votes.

Speaking on behalf of my party, I condemn the form of domestic rate support system introduced by the Conservative Government last year and now seized upon by the Labour Government in the short time which they have had at their disposal. It enables the Secretary of State to make an order settling the amount of taxpayers' money which is to be doled out to each separate council individually, and to discriminate between one council and another throughout England.

The master of a Victorian workhouse at its worst did not have as much power over his victims as the Secretary of State has as a result of legislation passed by the Conservatives. It enables the Secretary of State to push £215 million of public money towards specific places. I think I need go no further than to draw the attention of the House to the political dangers involved, which I believe are now a regrettable feature of our system.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes)

Perhaps we can clear this matter up now. It is true that the Conservative Government favoured a variable domestic element. We preferred a fixed domestic element. The Liberal Party voted against our proposal that there should be a fixed domestic element for each authority rather than the variable amounts which the Conservatives proposed, which would lead to great disparity between authorities—the very situation about which the hon. Gentleman is now complaining. Why did the Liberals oppose us at that time?

Mr. Wainwright

I was not in this House at the time. My point is that any discrimination between one council and another should be done after debate in the House. It should not rest with the Secretary of State by order to be able to decide that everywhere, regardless of the enormous variations of need, shall receive the same domestic rate relief. Nor should it rest just with the Secretary of State to allocate, as Conservative Ministers did, vastly differing sums to different areas. There is an element of autocracy here which is wholly contrary to the country's democratic political traditions.

The rate support grant in toto, about which hon. Members have often spoken but about which very little has been done, needs completely redesigning. One cannot touch on this topic without reiterating regret that the Conservative Government got things in completely the wrong order. By the Local Government Act 1972 they reshaped the boundaries, reducing the number of local authorities, and then only at the very last minute, when all the framework had been set up, did they get round to some hotch-potch of financial arrangements.

I suppose, incidentally, that the Conservative Party is still in existence. One must give it the benefit of the doubt on that, but not a single Conservative Member is present. One would have supposed that some of them at least might be interested in their ratepayers. After all, it is only the middle of Thursday afternoon, and the weather is not quite as attractive and warm as it was earlier this week.

One would suppose that an administration who prided themselves on being comprised of business men—the party which is the self-styled party of administrative and managerial skills—might have accompanied their Local Government Bill of 1972 with financial provisions. But not a bit of it: the finance was thought up in haste, in a most ill-judged manner and at a very late stage after all the rest of the local government changes had been put into effect. That was the inheritance which the incoming Government found and which I agree has put them in a difficult position.

The system which resulted from this last-minute introduction of the financial arrangements for local government calls out for urgent re-examination, but it is to this point that I draw the Minister's special attention. In the Liberal view, he has a duty to try to clear up some of the mess that the Conservatives left.

I take briefly the three main elements of rate support. First, on the needs element, the Conservatives' White Paper of January 1974 said: For the present the Government consider that the best available indicator of spending need is the pattern of recent past expenditure. This does not mean that each authority's grant should be directly related to its own past expenditure. But authorities with similar population and other characteristics will have the need to spend the same amount per head. Have Governments, of any political colour, not heard of sudden local slumps, of sudden local difficulties and of sudden emergencies? The quotation is:

sudden local slumps, of sudden local difficulties and of sudden emergencies? The quotation is: …authorities with similar population and other characteristics will have the need to spend the same amount per head. This is reducing people to an index, to being plastic people who must be sup- posed, because they are "pollution units" living in "residential units", not to be real live people living in homes.

Then I come to the resources element. The White Paper of January 1974 said: The Government consider that the majority of rating authorities should qualify for the resources element next year, and under the Local Government Bill therefore —the Bill of 1973— the qualifying level is to be a national standard rateable value per head. That makes nonsense of the very title of "resources element". It is absurd to suggest that over this very disparate country where it is a comomnplace that for years resources have been grossly unevenly spread, mainly as between the South-East and parts of Cheshire, and the old industrial areas, the majority of rating authorities should qualify for the resources element.

As to the domestic element, I have referred already to the arbitrary power which the present law puts into the hands of Ministers.

I come then to the actual effects which are now becoming felt. The present system is seriously depriving some of our oldest and most important industrial areas, which still provide a great part of our solid and reliable export trade, of the public services which they badly need. On the other side it is heavily subsidising prestige projects which have become objects of public abhorrence, mainly in the big cities. I have in mind loss-making Olympic swimming baths which have been built where a network of smaller suburban swimming baths would have been more serviceable. I have in mind miles of inner urban motorway which I understand now costs £100 an inch to build, let alone to maintain. I have in mind the danger of attracting more people into the London area instead of encouraging them by economic means to spread out and to take their talents to other parts of the country which need them.

In return for all this inequity some of the hardest-working and least-strike-prone people in this country will this month face in some instances twice the amount of the rates bill that they paid a year ago. I hope that my fellow professional accountants working in the new local government offices have made large reserves for bad debts for rates which will be impossible to collect or will take a long time and great expense to collect. Larger reserves than have ever been put aside before will be needed for that purpose this year.

The finance officer of one of the districts in West Yorkshire in which I have a constituency interest, although it is not my only district council, has again gone over the ground this week. He said: The major item is that Kirklees has been very unfortunate in respect of its rate support grant and received much less than was expected on the basis of previous grants. This accounted for an increase in the rates of 8p. That statement was made without any reference to the alteration in the domestic rate relief which has further altered the domestic rate upwards by 7p compared with what had previously been expected. All this in Kirklees has been made much worse by the raising of false expectations.

A few months ago the ratepapers of Dewsbury, Huddersfield, Cleckheaton. Batley, Colne Valley and the rest received a free leaflet, Issue No. 1, "Your new council Kirklees." In the middle of that leaflet, made available free to the public, are these words: The new authority will now be 'masters in their own camp' and will have the financial and staffing resources available to cope with the expected demands for improved and extended services for the next hundred years. That was said to the ratepayers of Kirklees in the free brochure from their new authority.

They are already becoming very disappointed. Their former library service, which was one of the finest in the country, has been largely dispersed so far as Kirklees is concerned, but not so far as Wakefield is concerned. There are already increasing difficulties in getting home helps and there are great fears that the envy of the world, the West Riding county primary schools, will suffer a reduction in standards.

It is no wonder that the chief officer of the Bradford District Council, under the new system, Mr. Gordon Moore, has recently been quoted as saying that the new councils are unlikely to survive for more than 15 years. I submit that unless we in this House get down to a complete recasting of the whole system of raising local revenues, the prophecy of the chief officer of the Bradford District Council, that the new system will have a very short life, is likely to some true.

4.9 p.m.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes)

The House is obliged to the hon. Member for Cottle Valley (Mr. Wainwright) for raising what is certainly a most urgent matter in the minds of the electorate. I know from letters that I, as Minister specifically responsible for dealing with this problem, receive from hon. Members on both sides of the House, from the number of deputations that I have received—including two by the hon. Gentleman when he and some of my hon. Friends from the West Yorkshire area came to see me—and from discussions with hon. Members in the House, that it is of burning concern to the electorate.

I join the hon. Gentleman in expressing astonishment at the fact that throughout the debate, about which the House knew a considerable time ago, not one Conservative Member has been present. Some of my hon. Friends from Yorkshire are present in the Chamber. I see my hon. Friends the Members for Wakefield (Mr. Harrison), Sowerby (Mr. Madden) and Goole (Dr. Marshall), and my hon. Friend the Member for Edinburgh, Central (Mr. Cook) who is waiting for the next debate. I repeat that not one Conservative Member is present, yet it is the Conservative Opposition who have criticised us for one thing that we did when we found ourselves in the unenviable position of having to take over their system of grant at a moment's notice so that local authorities could get their money on 1st April 1974.

I agree with much of what was said by the hon. Gentleman. He attacked the reorganisation of local government, just as many people are doing. He looked nostalgically back to the days of the West Riding. As a North Country Member, I look nostalgically back at what used to be Lancashire, the hon. Gentleman's rival county. I now represent a constituency that is half in Merseyside and half in Cheshire. I think back to the days when I could say that I was a Lancashire Member and the hon. Gentleman was a Yorkshire Member. I can no longer say that.

The reorganisation of local government that was pushed through the House in 1972 by the Conservative Government was, in many respects, a complete hotchpotch, as I am sure the hon. Gentleman will agree.

Mr. Richard Wainwright


Mr. Oakes

Attempts were made by the Conservative Government to move away from the considered proposals of the Redcliffe-Maud Committee which had substantially been agreed to by the Liberal and Labour Parties. We took the view that those recommendations represented a considered judgment of how the framework for local government should be set up.

The Conservative Government introduced a Bill that was considerably amended in Committee, both from a large-scale and a small-scale point of view. As an example of what I mean by that, let me tell the House that the Isle of Wight—a tiny island—became a county in its own right. All sorts of peculiar things happened to the Bill during its passage through the House. Much of the hon. Gentleman's attack on the way in which the reorganisation was carried out is justified. The hon. Gentleman was not a member of the House at the time, but I remind him that we opposed the Bill.

The other matter which the hon. Gentleman rightly mentioned, and which many people who write to us about the rates do not fully appreciate, is that local authorities themselves are faced with the effects of inflation and are having to provide for essential services at greatly increased cost. Time and again local authorities write to say that they have pared their services to the bone—and this applies to Kirklees—and there is nothing further that can be cut, but still, having done that, their ratepayers have to find an enormous extra amount of money for rates. That complaint comes from local authorities of all political complexions.

Two things could be done. The level of rate support grant now covers just over 60 per cent. of all expenditure of local authorities. That figure could be increased, or ratepayers could be asked to bear the cost of inflation. Perhaps I should explain to the House and to the hon. Gentleman the difficult situation in which we found ourselves in connection with the total amount of money involved.

The hon. Gentleman said that one difficulty was the date that the then Prime Minister chose for the election. The difficulty was not the date; it was that the then Prime Minister ought to have tackled local government finance at the same time as he dealt with local government reorganisation, or perhaps even before then, but did not do so. The Conservatives did not do that. They did not even do it in the next year. They waited for the year after that, and their Bill came before the House in November. That is the Bill under which this rate structure is determined.

Because of the difficulties of rating authorities in fixing their rates, we, as the Opposition, were more than accommodating in Committee to get that Bill put down for discussion the first week in January, so that local authorities could make up their minds. The Government did not bring in the Bill that week. They left it for several weeks, with the result that it passed through the House on the very last day of the last Government's reign in power. Some of the orders under that Bill came after that date, and the General Election meant that no hon. Member could discuss them or even make representations about them. That was a shocking state of affairs. But it is not the date of the election that was relevant but the tardiness of the previous administration in not giving sufficient time for these vitally important matters to be discussed.

Mr. Richard Wainwright

I am obliged to the Minister for reminding the House so clearly of the facts. Does he agree that the very fact that the former Government were able to proceed by order on the last day of Parliament illustrates the disadvantages of being enabled to do these things by order?

Mr. Oakes

That may be so. Previously, these things were done at least by affirmative order under previous rate support grants. I cannot say that for certain, however. In fairness to the previous Government, they were dealing only with something that they had inherited. I would accept what the hon. Member says—that we should look at this aspect of the matter. This is a touchy subject for electors.

We have already had a full debate on the rate support grant settlement for this year. Many right hon. and hon. Members spoke in that debate—particularly my hon. Friend the Member for Dewsbury (Mr. Ginsburg) who discussed West Yorkshire. In that debate, unfortunately, we concentrated on the fact that my right hon. Friend decided to abandon the previous Government's proposals for a system of variable domestic rate relief in favour of pooling all the money and making one sum—13p—available to each authority.

I think that the hon. Gentleman accepts that that was a fairer way of dealing with the matter, in principle, than the situation which we had inherited, with some Cornish towns obtaining 40p and some inner cities obtaining 7p, with no rationale for the difference. We subsequently discovered that some of the figures had been worked out incorrectly.

Unfortunately, by concentrating on that matter in the debate, we omitted to deal with the fact that the domestic element of the grant is in fact only 14 per cent. of the total. A more important aspect is the resources element, but far more important than that is the needs element. That is the element that carries the bulk of the money, so it is the needs element that we must consider carefully when dealing with the resources, especially in areas like Colne Valley and Kirklees, which I know so well, representing a northern industrial seat myself.

As the hon. Member said, we were in an unenviable position, since we had inherited this global sum and this formula. The only thing that we could touch was the variable domestic element. On balance, I think that my right hon. Friend was absolutely right to make it a fixed amount, but it meant that some authorities, including that of the hon. Gentleman, were immediately affected by getting less than 14 per cent.—although they did not lose that element altogether.

Turning to the subject of our absentee Opposition friends, the right hon. Member for Bexley and Sidcup (Mr. Heath) told the House that the Government were gerrymandering with the rates. I find it difficult to resist mentioning that in a letter just before, which he sent to my right hon. Friend, the right hon. Member asked why Bexley was to get only 7p in the pound as against 14p for Bromley. So he himself was very concerned about the effect of the situation on his constituents—an effect that we then corrected for the inhabitants of Bexley. When one realises that at the same time Worcester received a high-cost weighting which was denied to Birmingham, and that Buckinghamshire got a bigger weighting than Barking, one has certain doubts about the way in which the previous Government had worked out this formula.

Be that as it may, I recognise that a serious effort was made by the previous Government to create a new formula. I do not think that they succeeded. I hope that we can do considerably better for 1975–76, but we must all recognise that perfect equity in this matter is an unobtainable ideal. There are over 400 local authorities, at district level and above, each with its separate problems. It would be a total impossibility to make 400 separate grant settlements each year. Indeed, if we did so we might be open to greater unfairness than exists at present. As the hon. Gentleman has said, it could then be the Government of the day making a special pleading for a special area, and that would be entirely wrong.

This means, however, that one is forced to rely on a national formula applied more or less uniformly across the board. Inevitably, this means that some authorities will receive a smaller grant than they would in an ideal world, and others would receive a higher one. I feel that we shall know when we have arrived at the limits of human ingenuity in the year when we receive complaints from every local authority in the land that its share of the grand total is insufficient. Those who are treated generously by the system are always strangely muted in their expressions of gratitude, to any Government.

I have mentioned the need for a manageable national formula as one constraint on the equity of the grant distribution. This, in turn, involves a further constraint. The formula must be related to data which are available on a consistent basis and without excessive time lags for local authority areas right across the country. There are all sorts of needs which are of demonstrable importance for local authority spending, and yet which are difficult to measure objectively. Environmental problems are a prime example. Indicators of social need are also in short supply, though here we hope to make real progress in the coming months.

Many of the factors which seem promising at first sight—such as unemployment levels—turn out to be very difficult to apply, because the data are available in an unsuitable form, or for the wrong areas, or show big seasonal variations in some places and not others. Improvement in the availability of statistics can only be a gradual process.

I want to mention one effect. I think that it applies to Kirklees; it certainly applies to Calderdale and many parts of West Yorkshire. That is what I call botanically the rhizome effect. That is a botanical thing which dies at one end and grows at the other. There are some local authorities which have one end that is dying and losing population and which are growing in population at the other end. But the statistics show no change. In such an authority, however, this involves a very high expenditure. Many northern authorities—indeed, authorities throughout the country—find that it is a difficult thing to measure, but I am hoping that we shall be able to look at it in the next rate grant support formula.

West Yorkshire may then have good grounds for feeling that the 1974–75 grant arrangements do not reflect adequately its particular problems. But frankly, until our review of the system is further advanced I am in no position to take a view on this. But I have an open mind.

On the one hand, comparing the grant per head payable for 1973–74 to authorities in the area without estimates of what is to be paid in 1974–75, West Yorkshire seems to be doing at least reasonably under the new arrangements. But I bear in mind the effects of inflation. Bradford, for example, was getting nearly £78 per head in 1973–74; Bradford district will receive nearly £90. This is per head of population, which is the only fair way of working it out because of the boundary changes. We have paid £54 per head to Wakefield for 1973–74; we shall be paying about £82 to Wake- field district for 1974–75. Huddersfield's £69 last year compares with Kirklee's £80 this year. In making this comparison it must be remembered that from this year local government will not be responsible for the local health or school health services and that 90 per cent. of the cost of mandatory student awards will be met by a new specific grant for education.

Mr. Richard Wainwright

Quite apart from inflation affecting the comparisons from year to year that the hon. Gentleman has quoted, is he not obliged to compare former authorities which were limited to the boundaries of the city of Bradford and the city of Wakefield—county boroughs—with the new districts which have different needs?

Mr. Oakes

I hesitate to give figures. That is why I have made the comparison on a head of population basis. Some small authorities had very differing rates from other authorities with which they have now been combined. Attempts were made to deal with that in differential rating, as my hon. Friend the Member for Wakefield (Mr. Harrison) knows to his cost. Things can go wrong with differential rating. The position with Wakefield is under active consideration by my right hon. Friend.

On the other hand, as the hon. Gentleman said, the local authorities can point to big increases in the rates that they are levying this year as evidence that the grant is still far from adequate. They may argue that they have all the social and environmental problems usually associated with population decline which features in this year's needs element formula, although in their case, with the exception of Calderdale, their population is on the increase. We have had to base that judgment on last known statistics because we do not know exactly what is going on on the ground. Further, the massive reorganisation of local government in the area will also have added to their costs.

At the kind invitation of my hon. Friend the Member for Huddersfield, West (Mr. Lomas), I shall be visiting West Yorkshire on 17th June to see something of the problems there at first hand, particularly in Kirklees and Calderdale, in response to their invitation to me so to do when they came on the delegation.

My hon. Friends the Members for Hudderfield, West and for Huddersfield, East (Mr. Mallalieu) present their apologies to the House. They are both in Huddersfield today fulfilling previous engagements.

Meanwhile, hon. Members will not expect me to be able to forecast the results of a review of rate support grant that has hardly yet begun. I promise the House that we intend to involve ourselves at Ministerial level in discussions with local authority interests at a very much earlier stage than has been customary hitherto. In our view, consultation should mean more than telling the other side what one has decided. It was no fault of ours that the circumstances of the 1974–75 settlement prevented us from realising this ideal.

We hope, therefore, to have our first member-level meeting with the associations next month, and we have it in mind to suggest to them also that there might be advantages in arranging for discussions on some of the issues to be held with a sample of individual authorities. This is one of the reasons I am going to Kirklees and Calderdale. That implies no diminution of the role of the associations. They are, and must always be, the representatives and spokesmen of local government as a whole in these negotiations. However, in my view it would help to bring home to us the particular problems and interests of local authorities if the associations were able to arrange for us to meet a small selection of their members for separate talks. This is what we hope to arrange.

The House will be very grateful to the hon. Member for Colne Valley for raising this matter, which is of urgent public concern in the area. I hope I have been able to satisfy the House that there was nothing this Government could do, because of the time factor when we came to office. However, for next year's rate support grant we shall work out a better, fairer, more sensible and more sensitive formula than that which we inherited from our predecessors.