RATE SUPPORT GRANT

HC Deb 25 March 1974 vol 871 cc49-199

4.19 p.m.

The Secretary of State for the Environment (Mr. Anthony Crosland)

I beg to move, That the Rate Support Grant Order 1974, a copy of which was laid before this House on 14th March, be approved. When I last spoke in a debate on a rate support grant order in 1970, Ministers were accused of attempting to send the House to sleep. That is a tactic not unknown to Ministers who find themselves on a sticky wicket. But if I induce any drowsiness in hon. Members this afternoon it will be an accidental byproduct of the technical complexity of the subject, and not an attempt to bore the House into submission.

The right hon. and learned Member for Hexham (Mr. Rippon), who was responsible for these matters under the previous administration, more than once observed that the only hope of securing an appropriate grant distribution would be to sacrifice a goat before programming the Department of the Environment computer. His right hon. Friend the Member for Crosby (Mr. Page) went further and argued that the most expeditious way of distributing rate support grant would be for him to fly over the country in a helicopter, dropping bags with the appropriate amount of money on local authorities as he passed. I am distressed to see that the right hon. Gentleman has retreated far into the back benches. I am sure that the right hon. Member for Finchley (Mrs. Thatcher), whom I welcome to her new responsibilities on the Opposition benches, will produce equally delightful suggestions for improving the system, using all the ingenuity which she displayed, though not always, in our view, with the right intentions, at the Department of Education and Science.

I should perhaps begin by explaining briefly the underlying basis of the order, which is the first to be made under the Local Government Act 1974. The formulae used for distributing Exchequer grants to local authorities in support of rates are extremely complicated—according to The Times, it is a task for an Einstein. But the broad workings of the system are clear—well, relatively clear.

Each year a forecast is made of local authority "relevant expenditure". That term now covers virtually all net local authority expenditure out of revenue. It is estimated in consultation with the local authority associations. Regard is paid to the evidence of performance in past years, to the probable fluctuations in demand for the different services, and to the best projections which can be made of factors such as the numbers requiring education at various stages, the likely recruitment of police, and so on. That is the starting point, but the Secretary of State is also required by the Act to take into account the extent to which it is reasonable to develop local authority services in the light of general economic conditions.

For 1974–75 local government reorganisation has led to a change in the composition of relevant expenditure. Certain services and their costs—namely, local health, the greater part of the school health service, sewerage and water expenditure—will be transferred to other bodies. On the other hand, certain other services will now come into relevant expenditure for the first time.

When the forecast of relevant expenditure is settled, Exchequer grant is fixed as a percentage of it. My predecessor had proposed a percentage of 60.5. I have no intention to alter that. About 10 per cent. of the grant is then deducted for specific grants towards particular services. The remaining 90 per cent. of the grant is then divided between three elements—namely, needs, resources and domestic.

The needs element is distributed to local authorities on a formula designed to reflect variations in their spending needs. The revised formula produced by my predecessor represents a considerable improvement on the previous formulae or any previous formula, but it is still far from perfect and I shall want to look closely at how it works out. The Secretary of State is required by the Act to prescribe various factors and sums which need to be taken into account in the formula. Many of the factors prescribed in the order are obviously right. However, I am not at all happy about the South-East and outer West Midlands factors. It would be too difficult to change them for 1974–75, but I shall certainly revise or, rather, review them for the following year. The needs element accounts for £1,907 million. That is about 60 per cent. of the total grant.

The resources element is intended to supplement the rate income of authorities whose rateable value per head is relatively low. It is paid when an authority's rateable value per head of population is less than a "national standard" prescribed for the year in the order. The Government, as it were, step in as a ratepayer to pay rates on the deficiency in rateable value. This year it will be paid to most rating authorities, and will take a larger share than usual of the total, increasing from £413 million to £723 million. That is about 25 per cent. of the total. This change, which was proposed by my predecessors and which I welcome, should go some way to removing part of the inequity of the previous system.

The domestic element is very different. Rating authorities are required to levy lower rates on domestic than on non-domestic properties. Every rating authority receives an amount of domestic element grant which matches as closely as possible the authority's loss of rate income from this domestic relief. Under this order it would be more than doubled to £446 million, about 15 per cent. of the total rate support grant. I shall return to the domestic element, which appears to be a subject of some slight controversy.

When on 5th March I arrived at No. 2 Marsham Street, that elegant adornment of London's environment—my right hon. Friend the Member for Deptford (Mr. Silkin) remarked that the one advantage of being in the building was that it was the only place in London from which one could not see it—the first decision I had to make was whether to confirm the package agreed by my predecessor and fully described in the White Paper, Cmnd. 5532. This proposed, to recapitulate, a total rate support grant for 1974–75 of £3,076 million at November 1973 prices, apportioned as to £1,907 million for the needs element, £723 million for the resources element and £446 million for the domestic element.

I decided that it would be wrong to reopen the question of the total amount of the grant. Certainly we in opposition had criticised some of the cuts which the previous Conservative Government had imposed on local authorities. But during the election I had resolutely refused to promise that we would at once rescind these, and I decided not to do so for two good reasons.

The first was a severely practical reason. The new grants become payable, at a rate of £60 million a week, in only six days from today. I was advised that today was the last possible day on which the order could be laid before the House if payment was to begin on time. If I had sought to reopen the whole question of the amount of grant—involving, as that would, lengthy discussions with the local authority associations, the Treasury and so on—we simply could not have been ready with the order today. The new authorities, already sufficiently confused by the previous Government's many changes of policy, would have found that utter financial chaos was superimposed on all the other stresses and strains which reorganisation has imposed. I regarded that as unacceptable.

Secondly, we must face the fact of the economic situation which we inherited. Here I must not anticipate tomorrow's Budget Statement.

As the House knows, I strongly believe that a Labour Government should give a high priority to an adequate rate of growth of desirable public expenditure when deciding how our national resources should be allocated. But, clearly, resources are at present limited. It is equally clear that the Government have to decide what are the priority claims on public expenditure. The current settlement still leaves room for a 2½ per cent. increase in local authority expenditure in real terms. I wish it could be more. During the last Labour Government it was about twice as great on average. In today's circumstances I thought it would be wrong for me to make any change in the total amount to be paid out.

For practical reasons I also ruled out any change in the distribution of the grant as between the needs, resources, and domestic elements, or in the formulae for the needs and resources elements. No such changes could have been made in the time available.

The one aspect of the package about which I had the gravest misgivings was also one that it was possible to change in the time available without serious consequences for the rate-fixing process—namely, the proposed distribution of the £446 million domestic element in the grant.

The previous administration, after a bewildering succession of policy changes which left the local government world dazed, came up with the device of variable domestic rate relief. The charitable explanation of what they had in mind was that they had decided to temper justice with mercy. The new formulae for the needs and resources elements—I give the previous Government credit for this—introduced some sense into the distribution of total grant so that areas with special problems received more help than they had done previously. Of course, giving more to those who had done badly under the old system meant that there was less left for those who had done well under the previous system. It was at that stage that the Conservative Government took fright.

The previous Government decided that there should be no redistribution to domestic ratepayers as a result of the altered formulae. What they had given the worse-off areas with one hand—through the needs and resources element—they took away with the other through the domestic element. Their aim was to legislate for a uniform rate of increase in domestic rates this year, irrespective of the ability to pay of different areas.

In the hope of achieving this aim, the last Government introduced a variable domestic rate relief. In areas which were losing grant, or where water and sewerage charges were likely to rise particularly steeply, the amount in the pound of domestic rate relief would have been very high—as much as 40p in the pound in one well-known instance. But for an area gaining grant the amount in the pound would have been as low as 7p.

This would have taken benefit away from householders in those inner urban areas which were entitled, and, indeed, intended, to gain under the new distribution formulae. The policy of helping the inner cities was surely right and justifiable. But the last Government flinched from the consequences for some of the counties and introduced the variable domestic element. I believe that this was wrong.

Quite apart from the principle involved, the proposed system of variable domestic relief was complicated, cumbersome and difficult to understand. It was, as The Times commented, a wildly uncertain exercise, based on speculative arithmetic which produced some peculiar results. Moreover, there was never the slightest chance that as a result of this policy, to quote my predecessor's words in the House on 22nd January, The average national increase"— in rates— should accordingly be about 3 per cent"—[OFFICIAL REPORT, 22nd January 1974; Vol. 867. c. 1469.] There was not the slightest chance of that, or that in the hardest-pressed areas rate increases for domestic ratepayers would be limited to the 9 per cent. which he claimed he had in mind. There was no chance at all of achieving that under the last Government's policy.

On the information so far available from the authorities which have fixed their rates, it is clear that under the last Government's proposals, which I am altering, domestic rate increases would have averaged at least 20 per cent. and in some cases might well have been as high as 60 per cent. So much for the 9 per cent. ceiling on rate increases.

Mrs. Elaine Kellett-Bowman (Lancaster)

rose—

Mr. Crosland

I am reluctant to give way because Mr. Speaker admonished us before we started to be as brief as possible. However, I will do so to the hon. Lady.

Mrs. Kellett-Bowman

Is the right hon. Gentleman aware of the serious effect on the domestic rate of the reduction in domestic relief in Lancaster and many other constituencies in the North-West?

Mr. Crosland

I am in the middle of trying to make the case to the House. If anyone thinks that I am not aware of the strong feelings in a large number of constituencies, I can assure them that they are wrong. I am fully aware of those feelings.

The Conservative proposals would have failed to achieve what was in any case the wrong objective. The variable domestic element was thus highly unsatisfactory in many ways. Given the shortage of time, there was only one practicable change which I could make, and that was to replace the variable relief altogether by a uniform flat-rate relief. This was not an easy decision, but I concluded that on balance—and it was only on balance—it would be right to make the change, because it helps the hard-pressed inner cities where so many of our social problems come together, and it has long been Labour policy—and a policy to which I personally have been deeply committed—to give these inner city areas more assistance.

The Labour Party's election manifesto said: Our cities desperately need and must get better services which are properly manned, and the resources to make this possible. I myself wrote in a book published last week which I warmly commend to the whole House: The environmental crisis of the inner cities, affecting the poor much more than the rich, continues unabated. I see considerable merit in both parties and individuals acting when in Government on the principles they enunciated when in Opposition. So I decided to replace the variable domestic relief by a flat-rate domestic relief of 13p in England. In Wales, where there are special problems, to which my right hon. and learned Friend the Secretary of State for Wales will be referring later, we settled on a flat rate of 33½p.

The result of this decision, I fully concede, is very rough justice, with a strong element of the capricious about it. I could have wished to have a more carefully worked-out proposal. But no one should doubt that the results overall are socially equitable and just.

I will quote some figures as examples. The change gives an extra £2.7 million to Greater Manchester, £3.3 million to Merseyside, £2.6 million to Tyne and Wear, £400,000 to South Yorkshire, £80,000 to the West Midlands and about £25 million to London. Not all districts in these areas benefit, but without exception it is the inner areas of the conurbations which will have relief. As such, on an admittedly rough and ready approach, we have gone back to something nearer the objective approach which the Conservative Government so altered during their last months of office.

Mrs. Sally Oppenheim (Gloucester)

rose—

Mr. Churchill (Stretford)

rose—

Mr. Crosland

I shall not give way any more, because if 40 right hon. and hon. Members want to speak in the debate one must be brief.

The decision I took was given a welcome, albeit a cautious one, in the Press. The Times—which does not agree with the actions of the Labour Party as much as it does with those of the Conservative Party—said that I had wisely decided not to make any far-reaching changes in the distribution formulae or in the total amount of Exchequer grant distributed. To have done so at this stage might have been the final undoing of local authorities struggling to get a grip on their new areas and functions. In relation to the variable domestic element, The Times said that the decision by the last Government had a general tendency to take away from householders in inner city areas the benefits which other changes in the formulae had been intended to bring them. Mr. Crosland is replacing the variable element by a straight increase in the flat rate element. It should broadly support the egalitarian purposes which he said would be entertained by the Department of the Environment so long as he is in charge. The Economist, I think understating the position, wrote: Mr. Crosland's system is probably slightly fairer than the Tories' proposal. I remind the House, therefore, particularly some of my hon. Friends, that I am making a proposal described both as egalitarian and as fair.

Given the redistributive nature of the change, I find the attitude of the Liberal Party towards the order extremely curious. In their manifesto the Liberals called for a radical redistribution of income". They do not seem to realise that one does not redistribute income simply by writing about it. One has to do something about it, and, of course, if one does do something about it some people must lose, and I accept that some Liberal constituencies will lose as a result of the order.

I may add that my own constituency of Grimsby will lose also as a result of what I propose. That is an ironic result of the change, especially as the constituency of the right hon. Member for Finchley gains substantially as part of Barnet. One penny in the pound is the loss which will be suffered by the areas represented by a large number of hon. Members, including one or two of my hon. Friends, who have written angry complaints to me.

Grimsby is, naturally, dear to my heart, and the first thing which my officials told me when I proposed to make this change was that Grimsby would be one of the sufferers. Whether they pointed this out to me in a spirit of tender compassion or in an attempt to dissuade me is not for me to decide. I greatly regret that Grimsby should suffer. I am prepared to face up to that in the interests of general fairness. Like many of my hon. Friends who are in trouble, I met my constituency Labour Party on Friday to explain and defend my position. It was not best pleased, of course, but it comprises good Socialists and loyal Labour Party members, and they accepted the broad justice of what I have done.

I fully recognise that the course I am recommending is far from perfect. There are some authorities which have been unfortunate over the distribution of the needs and resources elements, where householders will now face additional burdens as a result of my decision. I am very much aware of the concern of hon. Members, including some of my colleagues, who represent such areas, and I greatly sympathise with them. I am most grateful to them, and here I think particularly of my hon. Friends the Members for Norwich, South (Mr. Garrett), Keighley (Mr. Cryer), Meriden (Mr. Tomlinson), Sowerby (Mr. Madden), and Gloucestershire, West (Mr. Loughlin)—and others of all parties—who have rightly drawn attention to particular rate problems arising in their constituencies from this settlement. I regret that I cannot offer to meet their individual cases this year.

Looking ahead to next year, I intend over the coming months to make a thorough review of the whole grant distribution system and the way in which it is distributed between the three elements. We shall have the representations of all hon. Members and of local authorities very much in mind in seeing how we can improve the fairness of the system for 1975–76. This is without prejudice to any wider changes we may make in the longer run to the rating system as a whole.

I must remind the House of two points which have been rather lost to view in the course of the recent outcry. First, and broadly speaking, those areas where the percentage rise in rates this year will be somewhat higher as a result of our proposal to abolish variable domestic relief are those areas which have in the past often enjoyed a low domestic rate burden. For example, in Cornwall the average rate payment for each domestic household in 1973–74 was £40 a year. In County Durham it was about £45, in Norfolk it was £47 and in many of the West Yorkshire areas, where increases will be substantial, the figure was similarly low.

By contrast, in the areas which will benefit from the changes I am making the rates have been very much higher. In Newcastle in 1973–74 they averaged £73 per domestic household, in Birmingham £77, in Manchester £94 and in the GLC area as a whole £91. All of this strongly reinforces my view that we should concentrate our help, as we are seeking to do, on areas where the burden of rates is already a particularly onerous one.

Mr. John Pardoe (Cornwall, North)

Will the right hon. Gentleman give way? He mentioned Cornwall.

Mr. Crosland

I imagine it is possible that the hon. Member will be called. I rather hope not, but it is possible.

Secondly, the total increase in rates in the country as a whole, although it would not be guessed from some of the representations made to me, is part of the legacy which Labour has inherited from the previous Tory Government. The national rate burden remains precisely the same under this order as it was under the proposals of the previous administration. What I have done is to redistribute £200 million of grant out of £3,000 million—7 per cent. of the total rate support grant—back to the areas which needed it. As a result some people in other areas will pay more but by and large, with notable exceptions, these are the areas which have less pressing claims for central Government help.

Mr. Churchill

rose—

Mr. Crosland

My reason for not giving way is quite simply that there are 40 hon. Members waiting to speak. I have vivid recollections of being a backbencher, unable to be called because there was not enough time.

Mr. Churchill

Can the right hon. Gentleman explain, since he has said that by abolishing the variable domestic element he will be helping inner city areas, why this move is benefiting areas such as Sussex and Westminster, while my constituents in part of the metropolitan district of Trafford within Greater Manchester will lose more than £8 million in grant this year, which represents an increase in the domestic rate in excess of 60 per cent.? They will be worse off.

Mr. Crosland

I have already dealt with this. I have explained that Greater Manchester as a whole gains a large sum from the change I am making. I said clearly that not all districts in the metropolitan counties would gain.

Of course, there are anomalies in what I have done, but there were grotesque anomalies in the system I have superseded. A large number of Labour Members were complaining bitterly about the system I have altered.

I am sure that the whole House will wish to join me in paying tribute to the work of local and central Government officials who have jointly collected the information and prepared the analyses which formed the basis for the discussions leading to this settlement. The past year has been exceptionally difficult—indeed, quite awful—for everyone concerned with local government. They have had to cope with the preparations for local government reorganisation, a new grant system and numerous other changes.

This year—a quite unprecedented event—there have been three statutory meetings between the Secretary of State and the associations to determine the settlement, two with my predecessor and one with me. The uncertainty has been greater than ever before, as have the agonies. There must have been many moments when local authorities wondered whether there would ever be a rate support grant at all. On behalf of both sides of the House I express our appreciation for the spirit in which this year's highly complicated consultations have been carried out.

In presenting this order to the House I find myself in a unique position. Never before has a Minister responsible for the rate support grant settlement brought before the House a measure which represents in part the work of his predecessor and in part his own. Perhaps this may make the order more acceptable to the House. I hope so, for I must warn the House that if this order were not to be carried tonight local government would be plunged into utter chaos. Authorities would not get their money by 2nd April, and would then have to start borrowing £60 million a week in the short-term money market at interest rates of 15 per cent. or higher. This would be a wholly unjustified additional burden on the ratepayers, and we should be thought most irresponsible if by our action tonight we were to impose it.

Furthermore, no one should think that by rejecting this order more money will be available for local government from the Exchequer. Those who vote against the order are asking that money should be taken away from inner urban areas and paid elsewhere. All that they will ensure if they succeed in the vote is that no local authority receives any Exchequer assistance for some weeks until we have relaid the order and argued it all out again.

The changes I have made represent a definite move in the right direction towards the goal of greater fairness and equality to which the Government are committed. I commend the order to the House.

4.50 p.m.

Mrs. Margaret Thatcher (Finchley)

The Secretary of State claims that his is an equitable solution. We claim that he has abandoned equity and substituted an arbitrary decision. He claims rough justice. We say that he has abandoned any semblance of justice in what he is doing in the Rate Support Grant Order. I must, however, congratulate him on one aspect. No other Minister in his Government has invoked so much opposition from his own back benchers within such a short time.

The right hon. Gentleman claims that he has partly inherited the order, and he hopes that that will make it the more acceptable. It may result in making it unacceptable to both sides of the House. The right hon. Gentleman claims that there is variation of rate burden from one part of the country to another, from some rural areas to some centres of cities. Yes, there is. There is, too, a variation of services. Even if there is a variation of burden, one cannot go from a position of considerable variation to the position which he wants to get to without making many transitional steps to protect ratepayers from the considerable increases which he would thereby impose upon them.

I agree with the right hon. Gentleman that the debate on the Rate Support Grant Order tends to be a technical debate—although, because of his action, this will probably be the liveliest debate we have had for many years—but our constituents do not come to us with technical points. It is no good trying to explain to them an increase in rates by reference to the resources element, the domestic element, the needs element, the relevant expenditure, and so on. They say "I still have to bear a certain percentage of the increase in rates, and what are you going to do about that?" That is what many constituents and many hon. Members will be saying to the right hon. Gentleman today.

The letters received by hon. Members are pathetic. My hon. Friend the Member for Honiton (Mr. Emery) tried to intervene in the right hon. Gentleman's speech, and I have a letter in these terms from one of his constituents who moved to Honiton: Comfortably settled as I am in this small flat, I carefully worked out provision for my few remaining years only to find now the Labour Government proposing such an increase in the rates that thousands like me will not be able to survive.

Hon. Members

"Rubbish."

Mrs. Thatcher

I am interested to hear that Government supporters say that increases sometimes amounting to between 80 per cent. and 90 per cent. in the domestic rate are nonsense. They are saying that they are not prepared to do anything about it and are displaying callous indifference to the requirements and needs of the constituents concerned.

I agree with the right hon. Gentleman that we come to this year's rate support settlement against an unusual background. There can scarcely have been more changes in local government structure and financing than we have to cope with this year. That is common ground. The inquiries about reorganisation were set in train not by the previous Government but by the Government before that. There is little point in either Government or Opposition blaming the previous Government wholly for the difficulties caused by the reorganisation of local government or for the fundamental difficulties in local government finance which we have had for many years and which are likely to continue for many years to come.

This year, the biggest local government reorganisation since the nineteenth century, with different boundaries, different powers, a change of formula for the grant, changes in the organisation for water and sewerage and a miscellany of other factors affecting individual ratepayers, it seemed likely at the outset that there would be a number of sharp increases across the country as a whole in the rate burden from the domestic ratepayer. This increase might not go in any particular geographical pattern but have a random distribution. Unless something was done, it seemed that some ratepayers would face considerable increases. The system adopted by the Conservative Government set out to mitigate those increases wherever they occurred, whether in urban areas like Wolverhampton, Barnsley or Sandwell, or in rural areas in the counties. The variable domestic relief was designed to mitigate certain large increases in rates to a tolerable level. We claim that to be an equitable way of doing it.

The Minister for Housing and Construction (Mr. Freeson)

Political.

Mrs. Thatcher

If it is political to reduce sharp rate increases wherever they occur, it was political, but it was equitable as well. But the right hon. Gentleman is doing nothing about the sharp increases in rates which his decisions have produced. He prefers a blanket derating for the domestic ratepayer.

There are other reasons for increases in rates in addition to those I have mentioned. There could be extravagance by local authorities. I have many complaints of extravagance in some cities—Leeds and Sheffield—and some examples where reorganisation occurred enormous increases in the number of staff and in the salaries which they were being offered. That is a matter for the local government authority itself to cope with, and it is not one of the special factors to which I referred earlier. There is, of course, an inflation element, but there is normally a rate support grant (increase) order at the end of the year to take account of inflation. Our proposals were designed to mitigate the sharp increases in rates which came from the reorganisation, the change in formula and the change in organisation of the water and sewerage element in the local authority rates—

Mr. A. J. Beith (Berwick-on-Tweed)

Will the right hon. Lady confirm—

Mr. T. W. Urwin (Houghton-le-Spring)

Will the right hon. Lady—

Mrs. Thatcher

I give way to the hon. Member for Berwick-on-Tweed (Mr. Beith).

Mr. Urwin

rose—

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. Perhaps the right hon. Lady might defer afterwards to the hon. Member for Houghton-le-Spring (Mr. Urwin).

Mrs. Thatcher

I will give way to the hon. Member for Houghton-le-Spring (Mr. Urwin) after the hon. Member for Berwick-on-Tweed.

Mr. Beith

I thank the extraordinarily gracious right hon. Lady, and you, Mr. Deputy Speaker. Will the right hon. Lady confirm that among the sharp increases to which she referred were the special negotiations which took place between the Department of the Environment and those authorities that incurred expenditure under the Local Employment Acts, and that part of the domestic element was used to cushion large expenditure of that sort? I have a case in Berwick-on-Tweed which accounts for 5p in the domestic element. Does the right hon. Lady agree that specific negotiations took place in which figures were produced and incorporated in the domestic element because of expenditure on such things as sewerage schemes under the Local Employment Acts?

Mrs. Thatcher

I cannot confirm it because it was not my responsibility at the time—I hope that one day it will be. Perhaps the hon. Gentleman will have a word with my right hon. Friend. I give way to the hon. Member for Houghton-le-Spring.

Mr. Urwin

When the right hon. Lady was dealing with the generosity of the previous administration she tended completely to overlook that in Durham, which is one of the poorer counties and which is badly affected by unemployment, the problems of industrial dereliction and so on, the decision of her Government to reorganise local government cost £4 million in rateable value. Because of her Government's decision to redistribute domestic rate burdens, Durham loses a further £2 million. Durham is absolutely seething with anger against my right hon. Friend for taking away £840,000, but by far the greater responsibility for the massive increase in rates rests with the right hon. Lady's administration, not with my right hon. Friend.

Mrs. Thatcher

Of course, I disagree with the hon. Member. He knows full well that, whatever the problem with rates in Durham, it has been made infinitely worse by the actions of the right hon. Gentleman and his right hon. Friends.

I was talking about the variable domestic relief. I shall not go over the factors on which we are agreed—the separation of the relief into the needs, resources and domestic elements. The purpose of variable domestic relief was described in a circular from my right hon. Friend's Department, as it was then, on 4th February 1974. The object of the variable component is to protect domestic ratepayers against the increases in rate burdens that might otherwise occur because of the effect of changes in rate support grant under the new RSG arrangements and because of the effects of local government boundary changes and water and sewerage reorganisation.

The right hon. Gentleman has wholly abandoned that formula and with it that approach and with it the essential equity of the approach. He claims that we did not benefit the cities, but in his statement to the House on 22nd January my right hon. Friend pointed out that the distribution of the needs element had been designed to help—and did help—the cities. Indeed, he came up against criticism from hon. Members on both sides of the House because, by virtue of the needs and resources element, he had already paid too much attention to the cities and too little to the rural areas. It was not surprising after that that he should attempt to bring some equity to the rural areas, too, but not limit it to that. If some urban areas were badly hit by rate increases, they, too, got the benefit. It is not just a difference in figures; it is an essential difference in approach.

Mr. Robert Adley (Christchurch and Lymington)

Is not my right hon. Friend saying that on the whole the previous arrangements were designed to benefit low income areas, for instance, East Anglia and the far West, and that what is happening now is that those areas with lots of people on low incomes and a lot of people on small fixed incomes are being disadvantaged, so that we have the better off in the cities being subsidised by the worse off in the low income areas.

Mrs. Thatcher

I believe that the formula was designed to mitigate severe increases in the rate burden, wherever they occurred, and to reduce them to tolerable levels this year. [Interruption.] There was a formula to calculate the increases and the advice available to us in the arithmetic connected with that formula was the same as is now available to the right hon. Gentlemen and his hon. Friends.

Certainly there were some difficulties in calculating the relief due because first one had to take the amounts of rates payable this year and compare that figure with the amounts payable under all of the new factors next year. There are a number of problematical factors in getting from the existing position to next years position, and I believe that a number of borough treasurers now have different ideas about how it could have been done. In fact, for all areas the projections were made on an average rate of growth, and I think that we might have taken some variable factors into account. Undoubtedly we should have liked to wait until all of the budgets were made up, and then we could have seen exactly how to apply the relief.

But the right hon. Gentleman now has the budgets made up, and if he really wishes to be equitable, he could apply the relief to the actual figures, not on the basis of the theory which we had to operate.

Like the right hon. Gentleman we know that the local authorities need all the available information to make up their rate demands, and some of them have already made them up and sent them out and are in great difficulty because of the right hon. Gentleman's instant action.

There were some problems in calculation of relief, but those problems would now have been smoothed out if the right hon. Gentleman wished to adopt that approach, because he has the actual figures.

Just to show that it was not an urban versus a rural battle, the Press notice of the Department of the Environment on 20th February gave the variable domestic relief calculated for each area under the system my right hon. and learned Friend used. It showed that the benefit went to areas as different as Barnsley, Sandwell, Calderdale, Havering, Mid-Bedfordshire, Buckinghamshire, Cambridgeshire, Oxfordshire, Cheshire, Cornwall, Cumbria, Derbyshire, including Bolsover, Devon, including Plymouth, Dorset, Durham, Gloucester, Portsmouth—I cannot mention them all—Hereford, Worcestershire, Boothferry, Hull, Rossendale, Norfolk and Leicester. If any city has problems, Leicester certainly has, as anyone in the education world knows. Northampton, Shropshire and the Wrekin benefited but are very badly hit under the right hon Gentleman's edict. Newcastle-under-Lyme, Nuneaton and Rugby were to benefit, but all of those places will now lose. I understood from the Association of District Councils that of the 296 new district councils in the non-metropolitan counties 234 will lose relief. That relief had previously been notified to them and used to make up their rate demand. Other districts may gain.

This change was made without consultation. A statutory meeting was called and told. I quote from the CCA note on 14th March 1974: The Secretary of State informed representatives of the change…No prior notice of the Government's intention had been given to the Association. Having made the point, I make no further observations. I know what these statutory meetings are like, but it appeared that there were no prior consultations. We know full well that in the time available the right hon. Gentleman and his friends could give the subject only the most cursory examination. On the basis of that cursory examination they were prepared to put many ratepayers in many authorities in difficulties and lead to rate increases of up to 90 per cent. Some of the details I have received from some of the separate authorities make it quite clear that that is the order of increase that will bear upon the domestic ratepayers.

Mr. David Mudd (Falmouth and Camborne)

Would my right hon. Friend go along with me in underlining that one of the effects of this mandatory action will be homelessness and squalor in counties such as Cornwall? Cornwall has been mentioned particularly in the debate. In Cornwall rent is traditionally low. It is on a rent plus rates basis. Therefore, if rates go up, because of the rent freeze the landlord cannot recoup this money. He will be left with less money to carry out modernisation and important repairs to the house. He will be left with no alternative other than to begin an endless trek through the county court for repossession.

Mrs. Thatcher

If one lives in a house which the right hon. Gentleman calls of comparatively low rateable value and budgets to pay rates of about £50 a year this year and is then faced with a demand to pay £75 this year, that is an extremely large increase for many people compared with what they had budgeted for. Some retired people will not be able to meet it. They will have to rely upon the Tory rate rebate provision which is being very well advertised. However, that will not benefit everyone who suffers severe increases under this Act.

I have had details from a number of areas—Somerset in particular, which was the subject of a short debate in the House the other evening. Somerset has done everything asked of it. It has exercised the most stringent economies so that it has only 2 per cent. growth, although it has had a bigger increase than that in population. It has budgeted for less than the 9 per cent. inflation, as my right hon. Friend asked. It has implemented all the December cuts. Having done all that, some of its ratepayers have an increase in domestic rates of up to 85 per cent.

The authority does not think much of a Government who say that its ratepayers must pay bigger increases than those paid in some of the cities which have a higher rate of service. In Norfolk, amounts of up to 70 per cent. on the domestic ratepayer are involved. In Portsmouth—an example of an urban area—only one in five will qualify for the rate rebate and four-fifths will have their rates increased by up to 37½ per cent.

A large part of this situation has been brought about by the Secretary of State's action. I have a note from Lincoln, which, referring to the right hon. Gentleman's decision, says: This one act of 'instant government' has worsened an unhappy position—because no local authority likes to increase the rates—into a devastating one. In one part of the county the increase is going to be of the order of 80 per cent. This is caused by the right hon. Gentleman's action.

Increases in rates are always unpopular, and rates are always a very sensitive issue in the House. The right hon Gentleman has abandoned the object of protecting ratepayers against big increases. He has abandoned the flexible approach which would have enabled him to do it. He is relying wholly on our rate rebate scheme. He has worsened, in particular, the position of owner-occupiers, who are already having to bear other increases without protection. In addition to those other increases, they will have to bear the consequence of the rent freeze as it affects the rates. Even if one gets a rate support grant (increase) order—and the right hon. Gentleman has given no such undertaking—a proportion of the increase will fall upon the local ratepayers.

Mr. Crosland

With respect to the right hon. Lady, any deficit is met by the Government to the extent of 80 per cent. in any case, so we are simply talking about the remaining 20 per cent. If there is an increase order, it would cover the 20 per cent.

Mrs. Thatcher

In that case, will there be an increase order to cover this?

Mr. Crosland

In what was a rather longer discussion than perhaps the right hon. Lady implied, I told the local authority associations that I would await proposals from them as to how we dealt with the remaining 20 per cent., whether by an increase order or in some other way.

Mrs. Thatcher

So the right hon. Gentleman has not undertaken to meet the increase. Why? If it is so simple to pay 100 per cent., why does he not give an undertaking that there will be a full rate support grant (increase) order?

The Conservative Government were faced with rate increases due to a similar situation; namely the situation occurring after rating revaluation at this time last year, something which we had to undertake because it had been left aside by the Labour Government and, therefore, there had been a period of 10 years without any revaluation. That, too, threw up unexpectedly severe rate increases on some domestic ratepayers. The difference between the present Government and the Conservative Government is that we did something about mitigating the increases.

We did something of a kind which is still open to the present Government. On 6th March last year, in the Budget Statement, my right hon. Friend the then Chancellor of the Exchequer said: the Government therefore propose to phase the effects for those hardest hit by meeting half the cost above 10 per cent. of any increases in domestic rate bills in 1973–74 which are attributable solely to the effects of revaluation".—[OFFICIAL REPORT, 6th March 1973; Vol. 851, c. 268.] In fact, we were prepared to meet half the cost of the increases.

Mr. Charles Loughlin (Gloucestershire, West)

It never worked.

Mrs. Thatcher

We were prepared to do that and allocated money for that purpose. That solution is still open to the Government tomorrow, but if it is likely to come about tomorrow there is little point in our debating the Rate Support Grant Order today. One would have thought that he could have announced some such system of mitigation today.

If the Government, knowing that rate increases of up to 90 per cent. will fall on some ratepayers partly because of the Secretary of State's hasty decisions, pro- pose to take no action to relieve the burden, many of my hon. and right hon. Friends will feel that the only way they can protest about the Minister's callous indifference is to vote against the order tonight.

5.15 p.m.

Mrs. Renee Short (Wolverhampton, North-East)

I welcome the right hon. Lady the Member for Finchley (Mrs. Thatcher) back on the Opposition benches. She gave us a good piece of stuff typical of what we enjoyed from her when we were in Government before, and a good deal of what she has said will be taken with several pinches of salt—certainly on this side of the House.

The right hon. Lady referred to Somerset and the situation there. I understand that, in 1973, the flat-rate domestic relief was 6p, which, under this order, has been increased to 13p—an increase of over 100 per cent. In the January 1974 proposal it was 21p—an increase of 250 per cent.—but to offset that Manchester, Birmingham, Newcastle, Sheffield and a large number of other large towns and cities, and parts of central London, were to get only a 7p domestic rate relief. So it seems that there is a good deal of unfairness in both directions.

I want to be slightly parochial today, and I hope that the House will excuse me, because my authority is one of a considerable number which will lose rather seriously under my right hon. Friend's proposals. The successor body to the Association of Municipal Corporations, the Association of Metropolitan Authorities, has made its comments on my right hon. Friend's proposals, and it makes clear at the outset that it clearly understands—my right hon. Friend should really have made more mileage out of this—that a good deal of the present situation stems directly from the actions of the previous Government in the reorganisation of local government, which was generally not welcomed in many parts of the country and has proved to be extremely expensive to carry out, from the enormous rate of inflation which has proceeded in the last three and a half years under that Government, from the changes under the Housing Finance Act, which are the direct responsibility of the previous Government, and from the changes in the water reorganisation, which also is the direct responsibility of that Government. That is plenty to be going on with, all of which has created the situation in which we now finds ourselves.

My right hon. Friend the Secretary of State has made clear that, in the circumstances he found when he took office, he had to do something. I do not agree with what he has done, because, as I have said, my authority suffers, and we must battle for our own authority. The hon. Member for Ipswich (Mr. Money) seems a little disturbed. Does he want me to give way? Given the circumstances which he inherited, and the shortage of time before the need to start paying out money to the local authorities, my right hon. Friend felt he had to do something, and the Association of Metropolitan Authorities makes clear that it accepts this and understands the difficulties.

Mr. Ernie Money (Ipswich)

The hon. Lady invited me to intervene.

Mrs. Short

The hon. Gentleman does not have to take advantage of my leniency.

Mr. Money

I never take advantage of the hon. Lady, as she knows. Does not she agree that there are many areas in the older cities and boroughs which need rate support grants as much as the conurbations, and are not getting it?

Mrs. Short

I am not denying that. I said that many authorities were concerned about the effect of this decision of my right hon. Friend. They would have been equally concerned about some of the decisions the hon. Gentleman's Government would have carried out if their proposals had gone through.

The previous Secretary of State was given to making announcements and pronouncements attempting to allay concern. When he was responsible for Common Market negotiations he said precisely the same things, and when he was Secretary of State for the Environment he said the same things. That is why he attracted the name given to him by some hon. Members and which perhaps I ought not to mention. He is very prone to rosy statements, and this was no exception.

On 14th January, when the right hon. and learned Gentleman had a meeting with the local authority associations, he said that the level of Government support should be kept to single figures, subject to any exceptional local circumstances, and this should result in there being only a small increase in the rate due. However, the associations made it absolutely clear that a general rate increase in the region of 20 per cent. to 25 per cent. was much more likely than the single figure the right hon. and learned Gentleman had in mind.

This is an extremely difficult situation. We find that some areas have been given an additional weighting which, again, militates against areas like West Midlands authorities. I cannot understand why authorities like Berkshire, Buckinghamshire and Hertfordshire should get an addition of £5.99 per head, whereas the West Midlands counties—Hereford, Worcester, Shropshire, Staffordshire and Warwickshire—get an addition of £1.44 per head. There is no mention, in the West Midlands counties, of Wolverhampton. Why should Wolverhampton be worse off than Warwickshire, Staffordshire or Worcestershire?

Mr. Leslie Huckfield (Nuneaton)

The district of Nuneaton, which is in Warwickshire, loses 12½p.

Mrs. Short

I am coming to what Wolverhampton will lose. Wolverhampton is concerned that it has to face this situation.

I come to the reasons for the increases in my constituency. There has been an overall increase of 50 per cent. in the rate compared with that in 1973. It runs from 41p for domestic properties to 54p for general properties, making an overall increase of 50 per cent. Then local government reorganisation adds about 8p to the rates bill. Inflation adds a considerable amount. The contributions we have to make to the reorganisation of water also add a considerable amount—4.4pto the general rate that has to be met, an increase of 1.5p. The total net expenditure that has to be met by Wolverhampton is almost £20 million, an increase of over £7½ million. This amount has been added to by the reduction in the needs element of about £2¼ million, which is a considerable burden on the ratepayers in my constituency.

I hope that my right hon. Friend, when he is in a position to look at the provisions he has made, will bear in mind that there are areas that will have a reduction in the help given by the Government and where the ability to pay does not necessarily overtake that reduction. The increase in the rate will, therefore, be a serious burden to my constituents.

I understand from the local Press that in my constituency an organisation is being formed proposing that people hit by the increased rate demand should decide to withhold the additional rate—that is, the excess charged over last year's rate demand. [HON. MEMBERS: "Why not?"] Hon. Members were not saying that when local authorities were trying to offset the increase in rents imposed upon them by the actions of their own Government.

We, being law-abiding people, do not want to encourage local authorities or individuals to stand against the Government and withhold money in that way, but I urge my right hon. Friend to exercise his ingenuity and quickly give close attention to the matter. I ask him to examine the possibility of a completely new system of financing local authority expenditure being brought about soon. I consider that to be the most urgent need facing us in local government today.

My right hon. Friend, with some of us in the House and outside, has tried to devise a more equitable method of raising local authority finance. The problem is not easy and is not a subject that can be dealt with at a few meetings, nor is it one to which a solution can be produced overnight. It is highly complicated, and the difficulties that have arisen through the previous Government's proposals in the matter, and because of my right hon. Friend's changes, indicate clearly that the solution is not easy to find. There are many different demands in various parts of the country. The ability to pay and the total resources differ in different areas.

Over the next few months, however, I suggest that my right hon. Friend should devote time to resolving the problem so that we may look forward to more equitable proposals next time we have the opportunity to address the House on the subject.

5.27 p.m.

Sir John Hall (Wycombe)

The hon. Lady the Member for Wolverhampton, North-East (Mrs. Short) referred to the need for a new look at the rating system, and for examination of the possibility of reorganising rating as we know it. I wholeheartedly agree with that. There is no doubt that increases in rates arouse much more feeling than an increase in income tax or other forms of taxation, largely because they fall unevenly in different parts of the country. People living in one county or area, although they occupy similar types of premises, may be carrying a different rate burden from that carried by people across the boundary in another area. This creates a sense of injustice.

Furthermore, the rating system as now operated pays no attention to ability to pay. That creates considerable hardship among many people who find themselves faced with swingeing rate increases for which they have not budgeted, and which they are incapable of meeting.

I am sure that the House will understand if I, like the hon. Lady, become parochial in my remarks, because I want to concentrate on the problem which has arisen in Buckinghamshire, particularly in my own constituency of Wycombe. I was interested to hear the Secretary of State say that his own constituency of Grimsby had been adversely affected and that he had got into trouble with the members of his local Labour association when he went to talk to them. I am sorry that he did not go and talk to the people of Grimsby, not just to the members of the Labour Party there. I know Grimsby well, as the right hon. Gentleman is aware. If he had talked to the people as a whole, he would have heard some straight talking. If they are as badly affected as the people in my constituency are, the right hon. Gentleman might not have emerged entirely unscathed from his interview.

Mr. Jeffrey Archer (Louth)

On Saturday I attended a football match with the Secretary of State, and he only just remained unscathed.

Sir J. Hall

All kinds of odd things happen at football matches.

As a result of local government reorganisation Buckinghamshire was severely mutilated. It lost, amongst other things, Slough, which was a source of considerable rating revenue, far in excess of any expenditure it imposed on the county. Additionally, it must meet the costs related to the development of the new town of Milton Keynes, which plans to have a population of nearly a quarter of a million people.

The cost to the county of the initial development of a new town and of providing the infrastructure is considerable. These two factors alone—the loss of Slough and the cost of Milton Keynes—have imposed a considerable burden. Furthermore, as we know, Buckinghamshire is one of the fastest-growing counties in the country, and the rating burden placed upon a county faced with rapid population growth with all the attendant social services—particularly educational facilities—is severe.

The county has faced considerable difficulty in trying to keep expenditure within limits, particularly to keep within the previous administration's suggested limit of 9p in the pound. After considerable pruning, in some cases in areas which many people thought inadvisable, the county rate emerged as nearly 40p in the pound. That meant that for Wycombe the county rate element increased by 42 per cent.

Because representations made to the Secretary of State by all the Members for Buckinghamshire highlighted the burdens which the county had to carry, the domestic relief given to Buckinghamshire took account of these special circumstances and reduced the county's expected burden. Under the old system we would have been faced with an increase which we considered unacceptable. The domestic relief given by the previous administration, which was received with great pleasure, meant that the domestic ratepayer would bear an increase of between 4½ per cent. and 15 per cent. That averaged out at about 10 per cent., which was reasonably acceptable, although high in relation to other increases.

The present proposal for a flat-rate domestic element relief means that the increase for the domestic ratepayer in Buckinghamshire will vary between 17 per cent. and 43 per cent.—an average of approximately 30 per cent. for the county. I appreciate that that rate of increase is much less than for other countries, notably Cornwall, and others may face a higher increase. Nevertheless, it is high, and in Wycombe it means that the rates will rise by 31.3 per cent. and in the rural areas by 33 per cent.

I cannot understand why it is normally assumed that county areas are inhabited by extremely wealthy people who can carry rate increases without being concerned. Take, for example, my area, Wycombe, which has developed rapidly over recent years with new estates of small private houses, where people are only just making ends meet and must plan their budgets extremely carefully. A sudden increase of this kind puts their budget calculations out and imposes severe hardship.

I do not understand why the Secretary of State, who has been in office a comparatively short time, should suddenly upset all the discussions and negotiations that have taken place over many months to ensure some reasonable fairness, some mitigation of the severe burdens that certain areas have to bear, and should jettison them on the principle that there should be a flat increase because the former system was imperfect.

Of course the old system was not perfect. As the Secretary of State himself said, and as the hon. Lady said, the rating system is full of anomalies. It is a very difficult system to operate. It requires complete review and reorganisation. Nevertheless, to throw the whole of the rating system into chaos in the matter of a few days and to create confusion in the minds of the authorities which are already late in the preparation of rating demands, to put them back to square one, to deny them the relief which has been negotiated so patiently and carefully by local authorities and by Members of Parliament acting on their behalf, is extreme folly. I find it extremely difficult to understand the reasoning behind it.

I am sure that there are a number of speakers who wish to draw the attention of the House to the problems in their own constituencies. I appreciate the difficulty in which the House has been placed by the fact that we have been told that if we do not pass this motion tonight, local authorities somehow will be denied the money they need a week from now, at the rate of £60 million a week.

I find it difficult to believe that it is outside the ingenuity of the Government to deal with this problem if the motion is defeated tonight. I cannot see why we cannot revert to the previous arrangement. We could table another motion quickly. Although there might be some slight delay, it would be far better to accept that and have justice done and for justice to be seen to be done than to proceed with this order.

5.35 p.m.

Mr. Ian Wrigglesworth (Thornaby)

I hope that the House will bear with me in my maiden speech if I seem somewhat parochial. I am deeply honoured to have this opportunity to address the House as the new Member for the Teesside constituency of Thornaby, particularly as I was born and bred in that area.

As the constituency has a new name, I should explain that it has almost the same boundaries as the old constituency of Middlesbrough, West, which was represented most diligently by my predecessor, Mr. John Sutcliffe, from 1970 until the General Election and prior to that by Dr. Jeremy Bray, a former Parliamentary Secretary at the Ministry of Technology, who is, I know, remembered with respect for his great ability both in the House and in the constituency.

I should point out that, despite the description of my constituency as Teesside, Thornaby, two-thirds of the constituents I have the honour to represent live in Middlesbrough and one-third in Thomaby itself. It is a comprehensive constituency in that it contains a wide range of different types of housing, both old and new, a new town centre, and the old decaying centre of industrial housing. It contains light and heavy engineering, an industrial estate, a racecourse, and various leisure facilities on a comprehensive scale.

I should mention, although I am not happy to do so, that Thornaby has not been able to avoid that plague of modem urban areas which has hit so many parts of the country; namely, planning blight. There are three particular areas in the constituency where I intend to devote a considerable amount of my time and energy to help alleviate the hardship and distress caused by developments.

The first is where the constituency is being carved in half by the new North-South trunk road, the A19. That has had a disastrous effect on the residents in the Ayresome Ward in the constituency. The second is in the middle of Middlesbrough, where the polytechnic is being redeveloped. The third is in the old part of Thornaby, where terrible uncertainty and insecurity are being caused and dreadful housing conditions have resulted from the lack of a decision on the future route of the A66.

As the House will no doubt realise, this last weekend has been one of great rejoicing on Teesside, particularly in my constituency, because it is the home of Middlesbrough Football Club at Ayresome Park. As a result of Saturday's victory, Middlesbrough will be returning to the First Division of the Football League after an absence of 20 years. As a long-standing supporter. I am delighted It is a great pleasure to congratulate the first team squad on its magnificent performance. For Jackie Charlton in his first season of management it is a great achievement. He has won the respect and admiration of all Teessiders and footballers throughout the country for the tremendous progress that he has been able to achieve in one season.

But it has not been all good news for my constituents over the past few weeks. I should like to turn for a moment to the Draconian increases in the rates that have been recently thrust upon them, and to plead for action to relieve them. There is intense anger at the size of the increases announced on Teesside. I have on the bench beside me five petitions containing the signatures of approximately 10,000 constituents.

They were brought together in a few days after the announcement of the rate increase. In Thornaby rates are going up from 47.7p to 76p; in the Middlesbrough area from 47.7p to 74.2p, an increase of about 60 per cent. I must express our gratitude to the Secretary of State on his decision to change the basis of the rate support grant, because we are one of the areas to have benefited—Thornaby by 2p and Middlesbrough by 4p. However, like Oliver Twist, I must ask for more.

Teesside is in a unique situation. Most of my constituents regard the reorganisation of local government on Teesside as a complete waste of time and money forced upon an unwilling electorate by the previous Government. Teesside County Borough Council is being split into three district councils and a new county council. In other words, the administrative cost of local government in the area is being increased, because three councils have to administer local government. This follows reorganisation in the opposite direction in 1968, when we had a Middlesbrough Council, Stockton Council, and Eston Council, and so on. They were brought together into one Teesside Borough Council. Now it is being split and forced to go back to three district councils and a new county council.

My constituents say, and I say with them, that if Whitehall wants reorganisation, Whitehall can pay for it. On top of the massive cost of reorganisation, other massive increases have brought about the overall 60 per cent. increase in the rates—rising debt charges, the rising costs of services and supplies, and rising staff charges. I hope that during the course of the debate somebody will point out who is responsible for some of the increases that local government has had to bear.

There is intense anger on Teesside that some local government officers are being awarded salary increases way outside anything that residents themselves can receive. I hope that such decisions, which have been taken nationally, and the costs incurred by the local authority but over which it has no control, will be considered by the Secretary of State, and that careful consideration will be given to the case that we shall put to him.

The Minister of State has agreed to meet a deputation of my hon. Friends and representatives of the local councils from Teesside.

After that meeting, I hope that our councils will consider the progress that they have made and any action necessary to ensure that the rate burden is not levied at its present intolerable level. In one way or another the ratepayers of Teesside must be given relief.

5.44 p.m.

Mr. Peter Temple-Morris (Leominster)

In this, my first speech to the House, I should like to begin with a tribute to Sir Clive Bossom, who represented the Leominster constituency very well, not only in the House but as a very diligent and hardworking constituency Member from 1959 until one month ago. I thank him not only for the way in which he greeted me when I arrived in the constituency but for the friendship that he bestowed upon me.

In asking for the indulgence of the House, I gather that I should not be controversial. I make no such pledge, but if I am at all controversial my target is not hon. Members opposite but the measure itself. The many words spoken on both sides of the House show that an attack is rapidly developing on this order by hon. Members of both parties. I shall be controversial in terms of the measure itself.

Many hon. Members on both sides of the House are affected by the order. I understand government to be the art of drawing the line, and it is sometimes an effort to get the line in the right place. However, this is about the clumsiest way of drawing the line that I, in my primitive and humble experience, have ever seen. The main theme of the right hon. Member for Grimsby (Mr. Crosland) seemed to be one of apology. I wrote down what he said. He said that it was "on balance right to make the change". He said that it was "rough justice", and added, "I would wish to have more thoroughly worked out my proposals." He said, "It is far from perfect." He said also that there was to be a thorough review of the whole system.

If there is to be such a review, one wonders why we could not have retained the system worked out by my party when in office and left any change until after the review. The Secretary of State ended by saying that of course there were anomalies. If the opening speech is on those lines, I quiver to think how the Secretary of State for Wales will conclude the debate.

Coming from an intensely rural area, I want to point out that the effect of the order will not be confined to rural areas. The areas affected include not just places like Hereford and Worcester but also Stoke—which is represented by hon. Members on the Government benches—which will lose 6p, Portsmouth, which will lose 4.5p and Leicester, which will lose 4p. Leicester has already been mentioned in the context of education, but it has also one of the worst immigration problems. If this is not a clumsy way of dealing with things I do not know what is.

My constituency is rural—600 square miles, in which until recently there was not one traffic light. In perhaps their worst fit of progress, the last Government constructed the area's first traffic light, which will start operation in a month. The effect on us will be dire. There is a "league table" among the Hereford and Worcester MP's. Leominster, in my constituency, at one stroke will have a domestic relief cut imposed of 14.5p, Malvern Hills, an area whose representation I share with the hon. Member for Kidderminster (Mr. Bulmer) will lose 10p, Worcester, which is represented by the right hon. Member for Worcester (Mr. Walker) will lose 8p and will face a rate rise of 87 per cent., South Herefordshire, represented by my hon. Friend the Member for Hereford (Mr. Gibson-Watt) who is in his place, will lose 16p, and as such is top of our local "league table". The area of Redditch and Bromsgrove, represented by the hon. Member for Bromsgrove and Redditch (Mr. Miller) who is sitting behind me, as is the hon. Member for Kidderminster, is near Birmingham. This area and Kidderminster are invited to take people from Birmingham under the county development plan, to give them homes and to provide them with services, and then they are expected to pour money into the areas from which they take these people.

I obviously have to justify my claim that the order is bad and anomalous. Coming from an area on the border of Wales, I am particularly glad that my right hon. and learned Friend the Secretary of State for Wales will be concluding the debate. As he knows, on the proposal of the last Government, agreed in principle by his right hon. Friend the Member for Cardiff, West (Mr. Thomas) when in office, a water authority for Wales was implemented in such a way that we in Hereford were drawn in. One reason for our domestic relief was to counteract the immense increase in the water rate. Now, our relief is driven down to 13p, the standard norm, whereas throughout the borders of Wales, many parts of which are prosperous—I say this as someone who was born in Wales, although I represent an English constituency—where many areas have the same problems that we have, there will be rate support of 33.5p.

As if that were not enough, across the border, Montgomeryshire, our neighbouring county, has the inestimable advantage of belonging to the Severn-Trent Water Authority, which is much less expensive—its water rate is only 3.6p, whereas ours, under the Welsh Water Authority, is 13.8p. Also, in Montgomeryshire, rate support of 33.5p is still to be given. If the Secretary of State intends to contend that that is fair, he is even a more skilful advocate than I have known him to be.

It is our aim in areas like mine to develop; we have a small population. My electorate is only about 43,000. We are adjacent to Wales, which gets all the benefits of being a development area. We were succeeding. There will soon be a small and thriving industrial estate in Leominster. Kington, sitting on the Welsh border, is desperate for industry and commerce. If once we get depopulation and our young people leave, our area could become some sort of "geriatric ward", with a large influx of retired people. I say that in the full knowledge that those coming in would tend to vote my way. We ask the Government to deal with depopulation more rationally.

I should like to say a word for the dear old middle class. I represent an area which has a large number of retired people who have saved throughout their lives and perhaps have a pension of £1,000 or £2,000 a year. They have been hit silly by inflation. They are particularly defenceless and a word should be said about them from this side.

This leads to something perhaps more serious. Here I want to break out of talking about constituency problems. Many sensible words have been said by the hon. Member for Wolverhampton, North-East (Mrs. Short) about what is happening in the country over the rating system. The Government are contributing to a lack of faith in a system which is no good anyway. The rural areas are already losing faith. I shall not move off the subject by talking about agriculture, but perhaps I could say that what has happened in recent months has not helped. That is not a party point; if anything, it is a criticism of my own party.

Someone going through areas like mine might think how prosperous they were—"Gorgeous Tory countryside". Herefordshire, however, has the lowest employment income in the West Midlands, and the average income is below that of Wales. Over 3,000 of these attractive houses do not have baths and 3,437 have no inside lavatory. It is people like this whom the order will harm. Rate-financed services in rural areas are nothing compared with those in towns.

I compliment my right hon. Friend the Member for Finchley (Mrs. Thatcher) on her speech, since she dealt with the question of services and I do not want to repeat this. There is a particular problem in rural areas and a considerable need for money to extend services. I wish to emphasise the need to improve transport facilities. The situation has been complicated by the increased price of petrol in a situation of deterioration in bus services. Discussions are now taking place in the new authorities to find ways of improving transport facilities, and we all know that their task will not be easy.

I suppose it can be truly said that we have had something of a reorganisation trauma. Local authorities have gone in for extra expenditure and balances have been run down by constituent authorities, which last year held down the rates. In other words, balances have been spent in trying to keep the situation in control. Many authorities have gone in with flags flying and have no money left in the new kitty. We in the rural areas are suffering and no doubt many others are, too.

The worst effects are being felt by the ordinary people in my constituency who are losing sympathy with the rating system. It is an unjust system, and I accept the share of the responsibility of right hon. and hon. Members on my side of the House. Any system which can virtually double the rates and increase the burden on small businesses—among small shopkeepers and small firms—must be wrong. I do not put the blame on my right hon. Friends; I am merely emphasising that any system that produces such a result must be wrong. Any new system will bristle with difficulties, since it will involve site value taxes, local taxa- tion and all the rest of it. In the long term, if there is a will there must be a way. But in the short term, it would appear that we have to live with this system because successive Governments have not had the will to abandon it. This applies to my hon. Friends on the Conservative benches as well as to hon. Members on the Labour benches. But if we must live with the system, we must make it as dignified as possible. I am sure that all hon. Members, in whatever part of the House they sit, will agree with that view.

The worst feature of this proposal is that the hon. Members are placed in an impossible situation by this proposal. We all know that many Labour Members—"good Socialists" we have heard it said—will go through the Lobbies in support of Labour's proposals. Indeed, many Conservative Members will abstain because they come from the large cities, and it is more than their political life is worth to do otherwise. This is not a question of overthrowing Governments; it is a question for hon. Members to consider for themselves. I regard this order as a shoddy piece of legislation. Therefore, we should be brave enough—this would be a worthy thing for the House to do—to vote against the order.

6.0 p.m.

Mr. Charles Loughlin (Gloucestershire, West)

It gives me considerable pleasure to be called to speak following the maiden speech made by the hon. Member for Leominster (Mr. Temple-Morris). I know that it is customary for one who follows such a contribution to congratulate the hon. Member who made it. Indeed, it has almost become axiomatic to congratulate a maiden speaker in the most fulsome way. I would normally have congratulated the hon. Gentleman, even though I would have been somewhat hypocrytical, but I know that in this particular instance everybody in the House will agree that the hon. Gentleman's speech was first-class, not only in its content but in the way in which it was delivered. The hon. Gentleman need not worry about the fact that his speech was a little controversial, because the idea that one should never make a controversial maiden speech went out of the window on the day that I made mine. I hope that we shall hear the hon. Gentleman speak often in the House because he obviously has a great contribution to make to our debates.

As one of the older guard in the House perhaps I may explain to him the difference between "right hon. Gentlemen" and "right hon. Friends". One says "Friends" only when referring to one's own party Members; they are only "Friends" to the hon. Gentleman if they are on his side of the House. On the Government side we are just "right hon. Gentlemen" or "hon. Gentlemen".

Mrs. Thatcher

Are there no "Friends" among hon. Members on the Labour benches?

Mr. Loughlin

I am sorry if I did not make my explanation clear.

I also understand that a Labour Member—the hon. Member for Thornaby (Mr. Wrigglesworth) made a maiden speech. Although I did not hear it, I am told that it was an excellent speech, and I extend my congratulations to him. I understand that he referred to Middlesbrough and Jackie Charlton. It is a good job he does not have to refer to Coleford United because they are not doing as well as they should. [An HON. MEMBER: "What about Leeds?"] Please let us not mention Leeds.

I should like to make my position clear on this order. I know that it is customary for those who speak in opposition to an order of this nature to follow their voice with their vote. There are two reasons why, although I oppose the order, I shall vote for the Government tonight. Nobody on the Labour benches wishes to see the return of the sort of administration that we have just successfully got rid of. Secondly, I understand that there will be confusion unless the order is carried, and that local authorities will find difficulty in securing money at a low rate of interest.

Mr. Jeffrey Archer

Is the hon. Gentleman really saying that if there is brought before the House a subject which he believes to be totally wrong he will vote with his own side, just to keep them in power?

Mr. Loughlin

No. I am not. If the hon. Gentleman had been here long enough he would have known that there is no reason whatever for him to pose that kind of question to me.

I am afraid that my right hon. Friend the Secretary of State for the Environ- ment is guilty of instant government. In the final part of his speech he said that this year he would be undertaking a thorough review of the grant system. If that is the situation, and if there has not been time to collect all the information required to make an objective appreciation of the position, then surely there is no reason why he should not have applied the system proposed by the Conservative administration.

It is not good enough simply to look at the receipts in various areas. I appreciate that as a result of this revision some urban areas will be substantial losers. In the rural areas we must relate the rates payable in respect of services to the people living in an area.

As a result of the revaluation in my constituency, particularly in the Forest of Dean, there has been an increase of 30 per cent. in the rate burden. I notice the right hon. Member for Crosby (Mr. Page) on the back bench. Why he should be there I do not know. It was he who answered my Adjournment debate on the rating system and rating revaluation and who admitted that the Forest of Dean was harder hit than most other areas in the country. As a result of the revision almost all my constituency will have to pay a substantial increase over and above that which would have been due had the system remained unchanged. Householders in the Forest of Dean are having to pay a rates increase of 70 per cent. in addition to the increase of 30 per cent. due under revaluation, and they will be not only resentful of the revision but in some instances on a borderline.

The cost of housing in the area has gone up enormously. It may be that a substantial number of people will not be entitled to rate rebate but will have committed themselves almost to the hilt with mortgage repayments and they may find themselves near to insolvency.

I want a complete review of the whole rating system. It may have been all very well in old Elizabethan days to have a rating system based upon a notional rent, but today it is a complete and utter nonsense.

May I remind the Minister of some of the problems of the rural areas? My house has the septic tank system because there is no sewerage in the village. In urban areas the cost of sewerage is borne by the rates. If I lived in an urban area I should automatically get my sewerage provided out of the rates, but because I live in a rural area I have to pay to have my septic tank emptied. It costs £7.70—admittedly, only once a year. I get a £2 rebate from my local authority and I have to pay the balance. [Interruption.] My hon. Friend the Members for Islington, South and Finsbury (Mr. Cunningham) may think it is funny. I am using myself as an example, but my constituents also have to pay this sum.

Mr. George Cunningham (Islington, South and Finsbury)

Does my hon. Friend not realise that it would cost more than the amount he has referred to to have sewerage provided out of the rates?

Mr. Loughlin

No. I am afraid my hon. Friend has not the slightest knowledge of the economics of these matters.

Part of my constituency borders on Wales. The fantastic situation arises that Wales will benefit from a substantial rates grant and yet people living just over the border in my constituency will be liable to pay much more.

There is something wrong with the situation created by this revision. I charge my right hon. Friend with failing to face up to his full responsibility of taking his time in examining the rating system. It is no use saying that a review is under way this year when rates have to be paid within the next two months. If he is having a review it should be comprehensive, not concerned merely with the grant system. It should deal with the whole principle of the notional rent.

6.11 p.m.

Mr. Joseph Godber (Grantham)

It is some years since I had the privilege of addressing this House from the back benches. I welcome the opportunity of doing so today particularly since we are discussing a matter on which I feel very strongly. I shall endeavour to be brief in view of the large number of hon. Members who wish to speak. I found myself much in agreement with the words of the hon. Member for Gloucestershire, West (Mr. Loughlin) but I shall not be in agreement with his actions later this evening. I shall be going to the other Lobby, and I invite him to join me. I add my congratulations to those offered to my hon. Friend the Member for Leominster (Mr. Temple-Morris) and say how much I enjoyed his speech. I had the privilege of hearing both maiden speeches and I congratulate the hon. Member for Thornaby (Mr. Wrigglesworth) on an excellent speech. I hope we shall hear him again many times.

I listened with great care to the Minister when he opened the debate. I agree with the comment already made by my hon. Friend the Member for Wycombe (Sir J. Hall) that it was an apologia of a speech. The right hon. Gentleman was obviously in grave discomfort in making his speech. He was also extremely unconvincing. I am not surprised because it is extraordinary for a Minister within a few days of taking office to take a decision of this kind. He could not have been motivated by a full understanding of the issues. He could have been motivated only by prejudice or by an unfortunate degree of intellectual arrogance. It is only when one understands the full effect of decisions of this kind that one can take such a decision and I do not believe that the new Minister had had the opportunity of assessing the full implications. His speech strengthened my view about that.

The right hon. Gentleman is rightly concerned about the inner urban areas on which he laid much stress, but he must understand that there are other areas where the need is just as great and where the cost is even greater. Those are the more sparsely populated rural areas which have suffered considerably in the past and will continue to suffer because of his decision. The right hon. Gentleman seems to have a fixed idea about rural areas which does not coincide with the examples so graphically outlined by the hon. Member for Gloucestershire, West. My charge against the Secretary of State is that he was not fully aware of the circumstances before reaching important decisions. His action was described by him as rough justice and it was certainly rough, but I have yet to find an element of justice in it.

My speech is related specifically to the county of Lincolnshire and my constituency, which will be as hard hit as most areas by the decisions of the Secretary of State. Much information has been provided for me from various local authorities in Lincolnshire. I shall not weary the House with a recitation of it all. It is sufficient to refer to what I have been told by the chief executive of the new Lincolnshire County Council, which will embrace the areas of three previous county councils, plus the city of Lincoln. This authority will have to carry out a large number of new duties and will have some heavy burdens regarding sewerage and water rates. These burdens have all to be borne. As a result of the decisions of my right hon. and learned Friend the Member for Hexham (Mr. Rippon), when Secretary of State for the Environment, there would have been much amelioration of the problem through variable domestic relief. Now that this has been removed there is a most savage increase for Lincolnshire, which narrowly misses the sparcity grant of £2¾ million. The variable domestic relief which should have given some compensation has been taken away. Lincolnshire domestic ratepayers will lose £2.86 million by reason of the decision of the Secretary of State.

Mr. Dick Taverne (Lincoln)

Does the right hon. Gentleman not admit that a sum almost as large as that was lost by Lincolnshire because of the way in which the needs element was calculated under the previous Secretary of State's formula—particularly the abandonment of the road mileage system and the substitution of the average system, costing in the region of £2¾ million.

Mr. Godber

I was making precisely that point. I used the figure of £2¾ million. I agree that there would have been a loss due to the decisions of my right hon. and learned Friend. I was not making a party point on the matter, but the present position would have been ameliorated but for the decision of the Secretary of State, which has given Lincolnshire a double blow.

I am told that whereas householders' rate increases would have ranged, under my right hon. and learned Friend's proposal, between 10 per cent. and 43 per cent., under the flat rate they will now range between 35 per cent. and 83 per cent. I am sure all hon. Members will agree that this is an intolerable increase.

My constituency will be hit particularly hard. It will face rate increases of between 61 per cent. and 79 per cent. in North Kesteven and between 65 per cent. and 74 per cent. in South Kesteven. In each case even the lowest increase will be over 60 per cent., which is enormous, whereas previously it would have been between 20 per cent. and 35 per cent. Now the removal of the variable grant more than doubles this, and the burden is intolerable in various parts of Lincolnshire.

The chief executive of the new Lincolnshire County Council has told me that the position is regarded as so patently unjust as to warrant some reconsideration. Bearing in mind the figures I have quoted these are modest words, and I hope that the Secretary of State will reconsider this matter.

I presume that in what he said at the end of his speech the Secretary of State was appealing to his own colleagues not to help defeat the order. He said that if the order were not approved local authorities would not get their money, but that is not true. What the Secretary of State said was an intolerable threat.

Mr. Kenneth Marks (Manchester Gorton)

During the Committee proceedings on the Local Government Bill in December we were told that the Committee stage would have to be completed by December, otherwise local authorities would not get their money.

Mr. Godber

It is one thing to get a Bill completed and quite another thing to pass this order, which could be reintroduced relatively simply. It is not as easy to bring in another Bill as it is to reintroduce an order, and it seems that the hon. Gentleman still has a little to learn on this point.

We are dealing here with an order which could be quickly reintroduced if there was a will to do so. I hope that hon. Members on the Government side will not accept the threat implied towards the end of the Secretary of State's speech.

I believe that hon. Members on both sides feel that their constituents are being treated grossly unfairly and I hope that they will not hesitate to show their feelings in the Lobbies.

This is a matter in which local interests are strong and in which people are being unfairly treated as a result of an arbitrary decision taken by the Secretary of State—newly come to office—without first taking the opportunity to consider the question fully and deeply. It is our duty to give him the opportunity to think again. If we give him that opportunity he may appreciate it in later years, he may become a wiser man, and we may get a more satisfactory order later.

I would have liked to have said much more, but I realise that there are a number of other hon. Members wishing to speak. The essential point is that this order is iniquitous, unjust, improperly considered, and should be rejected.

6.21 p.m.

Mr. Peter Snape (West Bromwich, East)

It is always an ordeal for a new hon. Member to make a maiden speech, and I hope that right hon. and hon. Members will be tolerant with me.

I represent the new constituency of West Bromwich, East which is directionally rather confusing, to say the least, and perhaps indicates that the Boundary Commission had a sense of humour. We felt that West Bromwich, North and South would sound rather more sensible, but I admit that that would also have created two safe Labour seats. However, impartiality prevailed and we worked doubly hard to ensure that this new West Bromwich constituency continued the town's long tradition of Labour representation.

The people of my constituency earn their living mainly in industry in factories, foundries and rolling mills making components for motor cars and aircraft and a wide variety of engineering products. They are a special brand of men and women, forthright and honest, with a down-to-earth sense of humour. Although I am not a Black Country man, they have accepted me and my family with warmth and sincerity. They are my kind of people and it is an honour and a privilege to represent them in the House.

The matter under discussion is an emotive subject. If there is one topic which will make hackles rise and tempers flare it is money, or the lack of it—or the extraction of it from the pockets of the ratepayers into the coffers of the local authority. Since my right hon. Friend's announcement regarding the rate support grant I have received two delegations and a considerable increase in my post bag from irate ratepayers about the tremendously increased burden which they will be asked to bear in the new Sandwell metropolitan district.

My constituents are facing increases in domestic rates of 89 per cent. and in industrial rates of 95 per cent. I deliberately mention industrial rates because one would think, judging from some of the comments of the Opposition—particularly from the Opposition Front Bench—that the only reason for this tremendous increase was the action of my right hon. Friend. We on the Government side know different. I have had to tell my constituents that they are over two years too late with their protests.

The seeds of the increase and the forthcoming increases in other parts of the country were sown when the previous Government decided on a form of reorganisation totally against the recommendations of a Royal Commission. A more expensive strangulation of local democracy could not have been devised. The redistribution of services into the newly-created authorities has meant wasteful and unnecessary duplication,—which, coupled with the effects of inflation—for which the previous Government have a degree of guilt—have brought about the present horrific financial situation.

The county precept in my constituency for 1974–75 represents an increase of 105 per cent. over the amount required in the current financial year for the services now transferred to the new county. The amount required by the regional water authority, a bureaucratic and undemocratic monster sprawling across the Midlands, has risen by 64 per cent. over the rate- and grant-borne expenditure of the constituent authorities in the current year. For my constituents, local government reorganisation will be a bitter financial experience, the responsibilty for which lies with the Conservative Party.

The decision of my right hon. Friend the Secretary of State for the Environment to amend the previous Government's rate support grant proposals adds a further 6p in the pound to the domestic rate within my constituency. I accept, however, that given the limited time available only the variable domestic relief arrangement was susceptible to change.

However, nationally, rate support grant amounts to about 54 per cent. of the relevant expenditure of local authorities. For the new Sandwell it will be only 44½ per cent. of district and county expenditure.

The problems of the new Sandwell are many and varied, and in some cases unique. In accordance with the previous Government's requirements, the council has reduced its outlay locally-determined capital schemes by 20 per cent. and cut back its revenue expenditure by about £1.29 million.

There are those who call for further cuts. We on the Government side, at least, know on whose backs those cuts in expenditure fall most heavily. The council has been asked by various people to cut its social services. In fact, it is expanding its social services, and I believe that it is right to do so. It will not cut back spending on the poor, the sick and the disabled, and it should not be asked to do so by this or any other Government.

The county boroughs of West Bromwich and Warley, soon to be combined as the new Sandwell district, are not rich in rateable assets. Their financial problems alone make them worthy of special consideration. I ask my right hon. Friend to give them further assistance or substantial help in the near future under the Increase Order.

For the future, I hope that the Government will consult individual authorities, particularly my own, to reduce the inequalities and anomalies that reorganisation has produced, for truly in my constituency local government reorganisation has been a financial disaster.

I thank the House for its courtesy in listening to me.

6.29 p.m.

Mr. Stephen Ross (Isle of Wight)

As a very new boy myself, I congratulate the hon. Member for West Bromwich, East (Mr. Snape) on his maiden speech. I made my own maiden speech only a few days ago.

I very much agree with what the hon. Gentleman said about industry. We are always increasing the burdens on industry—not only the rate burden but other kinds of burden.

Those of us who serve on local authorities or have experience in matters relating to their finance—I had the honour, recently, to make the budget speech for my own authority—must agree that whatever else we do we cannot have a repeat of this year's experience. Decisions have been taken very late in the day which have put the whole future of some of our local government services in jeopardy, and have given near heart attacks to both county and district treasurers.

We on the Liberal bench fully appreciate the difficulties faced by many of our larger urban areas. The point was accepted, albeit reluctantly, when the formula fixing the rate support grant was finally announced towards the end of January by the previous Government. In its needs element that formula takes no account of above-average population growth. This afternoon the Secretary of State for the Environment made a commitment to reconsider that matter, and I welcome his commitment.

I believe that my constituency has the third largest population in the country. Such areas, with a rapidly expanding population putting greater pressures on their social services and education provision, have already suffered particularly badly.

We are also one of the lower income areas. I doubt whether our average wage is more than about £25 a week. By the rate support formula alone we lost about £600,000 from the previous year's allowance. That is a small figure for some areas, no doubt, but for us it was a considerable blow, particularly in view of all the difficulties of inflation.

That inevitably meant that the rate increase would go above the 9 per cent. figure, unless we were to have a complete breakdown in the provision of services. Moreover, as a county authority we honoured every request by the previous Government to make cuts—something that I am not so sure was done throughout the country.

We were, however, somewhat mollified by the stated intention to introduce a variable rate of domestic relief, which would, we were told, take into account the circumstances of individual authorities. I should say in fairness that when it was announced on 20th February that proved to be the case.

We have two district councils in my constituency. I am not sure that we really need two. For a population of 110,000 that seems to me to be a luxury we could do without.

The South Wight District Council received an extra 4p to cover the high cost of current sewerage schemes and the inflated demands of that expensive luxury, the Southern Water Authority, making a total allowance of 17p.

In the far west, relief varied from as much as 40p down to 29½p. On those figures, rate demands were prepared. Several had actually been printed when the Minister upset the whole apple cart by his announcement of 14th March. As it happened, my authority had only set the type for its demand notices. A few hours later and we should have been even more embarrassed, because we should have had no paper left to work with if they had had to be reprinted. I wonder how many other authorities found themselves in that position.

The water and sewerage element is now completely removed. Water does not even qualify for rate rebate. Some of the hardest-hit face rate increases of 90 per cent. or more, which makes a nonsense of the rate freeze for council tenants and others.

I repeat that we are well aware of the pressures which many of our inner urban areas face, but there are plenty of problems in the non-metropolitan counties as well. Many people of very limited means live in both our rural and our urban areas. We also have enormous housing difficulties, even in places like the Isle of Wight, where we have about 3,000 on our housing list. My postbag is full of letters about such difficulties every day. We have a high proportion of the older population, and our social services are understaffed. We have a rapidly rising school population, and our schools are under increasing pressure.

If the revised proposals had been more flexible towards the worst-hit areas, such as Cornwall, they might have been acceptable, but no such gesture has been made. I am told that ratepayers in the Caradon district in the far West, for example, face an increase of as much as 27p in the pound, and that in the county of Cornwall itself the average increase is about 65 per cent. No wonder my colleagues are receiving telegrams such as the one which I have before me, which reads: Please help. No public transport. No direct waste collection. No electricity. No flush toilet system. No bathroom. No street lights, No streets, just mud. I will not pay any increased rates. The telegram was sent by Mr. C. A. Stovell from a place in Cornwall which I cannot pronounce.

Mr. George Cunningham

How much does he pay?

Mr. Ross

I cannot tell the hon. Gentleman. I have only the telegram. I shall find out. That telegram represents rough justice. From Berwick to the Needles the cry is much the same.

I listened with intense interest to the Minister. I was hoping that even at this late hour we would receive a promise of future help. Indeed, my colleagues were encouraged to believe that such would be the case. In this morning's edition of the Western Morning News there is a report of a speech which the Secretary of State for Industry made in Exeter. He is quoted as saying: While the re-distribution formula in the rate support grant has given enormous aid to the large cities of this country, I am conscious that it has brought disadvantages to cities like Exeter. I am authorised to tell you that this Government will at an early stage be introducing a rate relief measure precisely to aid areas like Exeter which have been disadvantaged by that altered rate support grant formula. That seems to be at variance with what we heard this afternoon.

Mr. Eldon Griffiths (Bury St. Edmunds)

I wonder whether the hon. Member for Isle of Wight (Mr. Ross) would like to request the Minister to confirm his colleague's statement that an adjustment is to be made to the rates to take care of such problems?

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

I think that what my right hon. Friend was talking about in Exeter was the rate rebate order. He was not speaking about any measure other than that.

Mr. Ross

Perhaps that matter will be elucidated when the Minister concludes the debate. Meanwhile, I refer hon. Members to today's copy of the Western Morning News. We are entitled also to ask why it is that the Principality has been so favoured whilst its neighbours across the Bristol Channel seem to have received the cold shoulder. Perhaps it has something to do with the famous try which was denied to the Principality the other day—or it may be another example of the wizardry of the Secretary of State for Employment. If the Secretary of State for Wales is to conclude the debate, perhaps he will enlighten us.

Whatever the outcome of the debate, surely the time has arrived to look at the whole question of the finance of local government. I am delighted to hear so much agreement on both sides of the House. The present rating system is nonsense, and it becomes annually more incomprehensible. I say that as one who has earned considerable fees in the past trying to work the system. The sooner that it is replaced by another more equitable method based on site values, or a form of local income tax, the better.

That is the sort of radical re-distribution which the Liberal Party called for in its election manifesto, which was referred to by the Minister. I ask him to look anew at some of the suggestions in our manifesto. In the meantime, unless he can give a firm undertaking that further relief will be forthcoming we shall have to vote against the order before us.

6.40 p.m.

Mr. Kenneth Marks (Manchester, Gorton)

I was glad to learn that the hon. Member for Isle of Wight (Mr. Ross) was speaking on behalf of the Liberal Party as well as making a constituency speech. I gather that the Liberal Party has made a crucial decision to vote against the order. It has decided to turn its back on the cities about which it has shed such crocodile tears in the past. No doubt it will be telling the citizens of the flats in Hulme, Manchester that they are not paying enough rates and that they will not be paying enough rates next year. No doubt it will be telling the citizens of Liverpool, Newcastle, Sheffield, Manchester and London that they are not paying enough rates and that it voted against this order.

Mr. Stephen Ross

My last comment was about the needs element. That is an element which is already in the rate support grant which gives aid to inner urban areas. We supported that through- out. My authority and many other authorities made the cuts which were requested. We call on the Minister to help areas such as Cornwall. We support the idea that there is a need to give support to such areas. Many authorities have not made the cuts which they should have done and which my local authority has done.

Mr. Marks

I shall go into some of the cuts which the authorities have made. It seems that after all its crocodile tears the Liberal Party has turned its back on the cities. I am wondering whether before they made their decision they consulted Jones the Vote.

I add my tribute to the maiden speeches made by my hon. Friends the Members for Thornaby (Mr. Wrigglesworth), West Bromwich, East (Mr. Snape) and the hon. Member for Leominster (Mr. Temple-Morris). My hon. Friend the Member for Thornaby reminded us that Middlesbrough will be going into the First Division next season. I must hope against hope that they will be meeting Manchester United when they get there.

I must declare an interest. A third of the electorate in my constituency comes into the city of Manchester. It will benefit from my right hon. Friend's proposals. Two-thirds of the electorate live outside the city and they will lose by the same proposals. I believe that the problems of those people making up the third of the constituency which is in the city of Manchester far outweigh the problems of the others. My reason for saying that is that their incomes are, in general, lower. I believe that they should receive any benefit that is available.

I am glad that it has been mentioned that industrial rates in one area are going up by 95 per cent. There is an attempt to blame my right hon. Friend for all the rate increases when in fact his amendment to the previous proposals amount to only a small part of the resulting increases.

On a number of occasions in the 1972–73 Session I raised the question of the financial and social problems of the great cities and the older industrial areas. The bias against them in the previous rate support grant order was obvious and it was getting worse. Much sympathy was expressed. It was the hon. Member for Bury St. Edmunds (Mr. Griffiiths) who replied to most of the debates which I raised during Consolidated Fund Bills and on Adjournments. The hon. Gentleman expressed great sympathy. The problem was recognised. It was true that there were people in the cities who paid higher rates and lived under worse conditions than those who lived in the outer suburbs, and many of those living in the country.

The people in the cities have a lot more for which they have to pay. For example, what is paid to the disabled? Last week the National Fund for Research into Crippling Diseases gave the figures for 1973. Manchester provided telephones for 206 disabled per 100.000 of the population, whilst Cornwall provided nine. Manchester provided 330 aids per 100,000 of the population, whilst Cornwall provided 180. Manchester made 280 adaptations to homes per 100,000 of the population, whilst Cornwall made 11.

Those figures may represent some of the extravagances that the right hon. Member for Finchley (Mrs. Thatcher) was talking about. If so, we shall continue with them. It may be as a result of the meanness of the Cornwall County Council, or it may be because there are more disabled—the industrially disabled, those disabled in accidents, and those who are congenitally disabled—in the great cities than in other areas, that the figures apply which I have quoted. The situation was so serious that the former Prime Minister met the leaders of the great cities to consider their problem. He sympathised with them, but nothing was done in the 1972–73 Session.

A new local government finance Bill was promised in the Queen's Speech of 1972, but it never appeared in that Session. That may have been because of delays and the ineptitude of the previous Government. I am not blaming Ministers who were in the Department of the Environment. I think that decisions were made but that ineptitude made the task of the new councils in the reorganisation scheme much more difficult.

In November 1973 the Conservative Government produced their Local Government Bill. It was not only about finance. It was a hotch-potch Bill. It included an ombudsman and referred to a number of other matters. It was des- scribed as four Bills in one. The Standing Committee was threatened that if it did not complete its work by 10th December the local authorities would not or might not get their grants. The Standing Committee delivered the Bill in time, and we expected the Report stage to be taken before Christmas—indeed, we almost expected that the Lords would be considering the Bill by Christmas. But the Bill did not reach Third Reading in this House until towards the end of January, and was pushed through the House of Lords on the day on which the General Election was announced.

The measure brought some improvement to the big cities, and not before time. For the first time, some of them got some benefit from the resources grant, and the needs element recognised actual spending on social services, in which the cities have particular problems. We welcome that.

Then the last Government started to whittle away these benefits, with the variable domestic grant. That grant was to be 10p for cities and up to 20p for other places. No mention was made of its being up to 40p for other places or towns, or of being down to 7p for cities. This was to temper the shock of large rate increases to the countryside and the suburbs. But it was not enough to satisfy the Conservative Party as the election approached. The already unfair 10p to 20p variable element was made even more unfair. The subsidy for domestic ratepayers in the cities was reduced to 7p while other people gained as much as 40p. On 29th January the Financial Times commented: It is totally indefensible except on grounds of political expediency. On that day the Financial Times did not know that there was to be an election on 28th February.

There is no logic in this variable domestic subsidy. It is grossly unfair. The occupier of a flat or house in a city will be subsidised to a much less extent than the better-off owner of a second home. Not everyone in Cornwall lives in a rented cottage and on a very low income. Many houses in rural areas and seaside towns are second homes, and they were going to be subsidised up to seven times as much as the dwellings of the slum dweller in our cities.

Mr. Beith

Will the hon. Gentleman impress on the Government the desirability of removing the domestic rate relief from second homes? That would receive support from the Liberal Party.

Mr. Marks

I shall be pressing on the Government a lot more reforms of the rating system, as I have done in the past.

The change in the subsidy to 13p to all domestic ratepayers is a brave decision. It may be somewhat unpopular among hon. Members on the Government side of the House as well as to hon. Members opposite, but it is the right decision if we mean what we say about creating a fairer society. The right hon. Member for Grantham (Mr. Godber) suggested that we should alter the decision and have the old system back in an order tomorrow. If we did that, we should see a different group in this Chamber; the Conservative Members for London, Birmingham and other cities might appear and oppose such a change. At the moment we have no way of knowing how many hon. Members would favour that suggestion.

I want to mention a group of authorities of metropolitan areas, which have particular problems. The problems of local Government reorganisation are difficult enough for a new metropolitan district, but Trafford and Tameside, in the Greater Manchester area, and Knowsley, on Merseyside, have particular difficulties in that they have no county borough base. Tameside consists of nine former non-county borough and urban districts. It includes part of my constituency and the constituencies of Stalybridge and Hyde and Ashton-under-Lyne. It has had the immensely difficult task of bringing together nine local authorities, none of which had experience of larger aspects of local government. It is an expensive as well as a complicated task, and no allowance has been made for this fact in the rate support grant or in locally determined schemes capital allocations.

I hope that my right hon. Friend will consider this matter not only in the rate support grant negotiations but in future capital schemes. For example, the sewerage charge is 30 per cent. above what it was expected to be. The locally determined scheme capital allocation is £400,000 for a population of 223,000. The method of distribution of the needs element in the local social service units has particularly affected these three new authorities and no doubt others as well. The chief executive officer of Tameside wrote to the Department on 7th February—perhaps not the best of dates on which to do it—and again on 20th February, but has still received no reply.

Another question concerns the balances left by the old Lancashire County Council, totalling £13 million. They have been handed to the Greater Manchester County Council. They ought eventually to reach those sections of the Greater Manchester County Council that were in the former Lancashire County Council area.

I agree with what the hon. Member for the Isle of Wight said about the rating system. I have long held the view that it is nonsense. Attempts to make it less regressive as it stands usually end in controversy and disaster. The fault is in the system itself, and all the scrambling about with resources grants, needs elements, and domestic grants does not alter the fact that it is a bad tax, by which the people who are worse off pay a larger proportion of their income than those who are well off. It is time we got rid of it.

6.53 p.m.

Mr. Tony Durant (Reading, North)

I welcome this opportunity to make my maiden speech on so vital a subject for my constituents.

There has not been a Member of Parliament for Reading, North since 1955, when the seat last existed. There have been famous Members of Parliament for Reading. For example, the hon. Member for Bethnal Green and Bow (Mr. Mikardo) was a Reading Member for 14 years before leaving us and going east to his new Tower Hamlets constituency. I understand that he has just been elected Chairman of the Parliamentary Labour Party. I wish him well, and I am sure that he will keep the conscience of the Left. Another famous Member was my hon. Friend the Member for Torbay (Sir F. Bennett). He sat for the old Reading, North for four years before moving to Torbay. Another distinguished Member from Reading was my hon. Friend who is now Member for Honiton (Mr. Emery). My hon. Friend the Member for Reading, South (Dr. Vaughan) was Member for Reading constituency in the last Parliament, and I thank him very much for the help he has given me and for the work he did for the Reading constituency as a whole.

Reading is an historic town and has a famous abbey, which between the twelfth and sixteenth centuries sent out its brethren all over the south of England. It is interesting that in this modern age hon. Members who have in the past represented Reading or parts of it and have since left have gone their various ways north, east, south and west just as the old brethren of the abbey did.

Reading is situated 30 miles from London. It is a busy place. Most of its people work locally but a few commute to London. We go in for specialised products, and Reading is the headquarters of a number of national and international companies. The population includes large numbers of Irish, West Indians and Sikhs and we welcome them into our community. Reading is famous for biscuits, bulbs and beer, but the sad thing about it is that its biscuits, bulbs and beer are all moving. We are now becoming known as a town famous for railways, rivers and rates. This brings me to the purpose of my speech tonight.

There is a serious rating situation in Reading, where there has been a rise of 80 per cent. in two years. This is very worrying for the people there. It is not a rich town in the sense that there are a lot of affluent people living there. There are a lot of ordinary people working in the community, many on fixed incomes. There are many young married couples who bought their homes, worked out their finances, and are now finding it difficult to survive because the rate increase has hit them.

It is a great tragedy for the small shopkeeper, for whom I particularly wish to plead. I visited a shopkeeper during the election and returned to see him last Saturday to obtain some figures. He owns a small gift shop in a shopping precinct. Over the past two years his rates have risen from £403 to £785, a rise of £382. He tells me that he makes such a small profit on the business that he sometimes wonders whether it would not be better to quit and do something else. This is a serious matter for the community, particularly in areas such as Reading where there are lots of shopping precincts spread around the town. These precincts contain newsagents', small haberdashers', and similar shops providing useful services. The owners of such shops are worried about the rate situation.

It is partly a national picture but not entirely. In Reading we have debts of £51 million; that is £340 for every man, woman and child in the area. The council is taking short-term loans at 13½ per cent. A total of 3 million people borrowed at that rate last year. The council is spending money and paying interest rates before paying out money upon necessary services. It has gone in for extravagant land purchases to build more council housing and has spent money on administration. All leisure activities are running at an enormous loss. There is a national element which comes into this.

When I visited my shoe repairer on the street corner and picked up two pairs of shoes which needed mending after I had walked 200 miles during the election my cobbler said to me, "What will your maiden speech be about?" I said, "Rates." He said, "I am glad. I absorbed the last rise, but, frankly, I do not know whether I can absorb this one. I am not sure if I can go on."

There are great pressures upon all authorities. This pressure comes from the interest rates, from the demand for improved services such as sewerage and water supply. The increased costs of these schemes work against local authorities. There is great public disquiet.

The change in rating policy, made so quickly after the Government came into office, aided our area, but I still believe that it was right to have a formula rather than a blanket increase. Account has to be taken of local circumstances, which the previous proposals did. A number of people have spoken about other methods of raising local finance. This is certainly something we must examine together. Rates are unjust. They work against those on fixed incomes and against young people with large families. There is also the unfairness of the young person who lives at home and uses local authority services without contributing to them.

We should examine the idea that national services ought to be paid for from the national Exchequer. Education is a good example. The Green Paper produced in 1971 was an interesting document. I was chairman of a committee which dealt with it. I was disappointed in that nothing resulted from it. There were many ideas but no proposals. Many countries have moved to local taxation, including the United States and Denmark. There are other possibilities, such as a poll tax.

Another suggestion involves a payment for planning applications. Frequently, people who live outside a district will forward a planning application to develop a certain area within it. This costs the local authority a great deal in administration costs, yet there is no revenue. In the local area with which I have been involved, with a population of 76,000, there were 2,500 applications over a period. There could be a great deal of useful income there.

The idea of holding lotteries to help the rates ought to be examined. Two local authorities tried to introduce lotteries, Greater London and Manchester. They were turned down. In Quebec lotteries have raised $133½ million since 1968. In Manitoba they have produced ½3.75 million since 1971. This is money which could well be used to develop local services.

National Government must help local government. In the past six years I have been greatly bamboozled by the flow of White Papers, circulars and edicts from on high. It is a complete nightmare trying to administer a district. There are great difficulties for local government officials. We should seriously examine the idea of a court of appeal for ratepayers. If I want to build a garage I put in an application and if it is turned down I can appeal to the Minister. If a thousand of us do not like the rate increases there is not much we can do about it. It seems wrong that we cannot make some kind of appeal. I know that the Minister can intervene but perhaps there could be an appeal on the local collective rate.

We ought to examine the whole question and work together to find better ways of raising local government revenue because of the injustice and anxiety created by the present system. At present people are deciding not to pay them. That is a terrible situation. I am glad to have had this opportunity of addressing the House upon a subject on which I feel so deeply.

7.2 p.m.

Mr. David Ginsburg (Dewsbury)

The House has listened with great interest to the comments of the hon. Member for Reading, North (Mr. Durant) on the rating system. His knowledge extends far beyond this country. Unhappily, the situation in Manitoba will not get the Government or the House off the hook that they are on tonight.

The hon. Gentleman told us some interesting things about his constituency and about some of his predecessors. He mentioned my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). I do not think he mentioned Mr. Mackay, who was also a member for Reading. My hon. Friend and Mr. Mackay between them evolved an electoral campaigning system called "the Reading system", which the Labour Party has from time to time used to great advantage. It is a matter of note that that system was obviously not used so efficiently in Reading on the last occasion, because the hon. Member is here.

I hope that what I say will also reflect the views of my hon. Friends the Members for Huddersfield, East (Mr. Mallalieu), Huddersfield, West (Mr. Lomas), Batley and Morley (Sir A. Broughton) and Brighouse and Spenborough (Mr. Jackson), all of whom have constituents in the Kirklees authority, and also to some extent my other colleagues with constituents in the Wakefield metropolitan district who are adversely affected by the order, although in a lesser way.

It is a matter of sadness to me that my first speech in this new Parliament cannot be one of thanks to the Government. They have made a brave start in discharging their responsibilities. Before criticising them I ought briefly to put their achievements on the record. There has been the solution of the miners' strike, the return to full employment, the rents freeze, the bread subsidy and the attack on supermarket prices. Nevertheless, the action of the Secretary of State over the rate support grant is most regrettable.

My constituents and those of other hon. Members are being severely penalised at the initiative of the Minister after the local rate had been published. That is the gravamen of our charge. A particularly deplorable aspect of this—here my comments apply to the Opposition, too—is the mockery which the Department has made of parliamentary accountability. Indeed, the previous Government are even more blameworthy than the present one. I draw to the attention of the House the fact that the previous Government slipped a differential rating and precepting order in for Thursday 7th February as hon. Members left for their constituencies. The order was not available until we had all gone to our constituencies. It was contrary to the promise that the then Minister made at a meeting held near my constituency. It means that the rates in Dewsbury, for example, and in some other parts of Kirklees go up by 2p in the £, which people can ill afford. The order could not be prayed against until this Parliament met. That in itself is an argument against the Opposition criticising my right hon. Friend for doing at short notice something that has to be done. The Conservative Government did something that cannot be undone by this Parliament.

The former Secretary of State for the Environment announced his plans for the rate support grant during the election campaign, and in the light of that, the local authorities were left to decide their rates. Meanwhile, Parliament had no opportunity to consider the matter until after the election. In effect, the former Minister was seeking to bind his successors. To cap it all, the present Secretary of State in a rush brings in a scheme which cannot be amended and must be passed tonight, otherwise there will be no money for the local authorities.

The record of the two Front Benches in their handling of this matter by the present order, the draft proposal issued during the election and the differential rating and precepting proposals which have not yet been discussed, taken together, make a mockery of parliamentary accountability. Therefore, I ask the Secretary of State, if not tonight then during the next few weeks, to see whether something more can be done.

I am speaking not merely for Dewsbury but for Batley and Morley, which, in comparison with Grimsby, is a low-wage area. One would have to travel a long way before finding a lower wage area. An addition of 6p on the rates means more to us than it does to people who live in London or Leeds. From the point of view of some authorities—and Kirk-lees is a classic case—the cost of the reorganisation of local government imposed by the Conservative scheme is a heavy enough burden to bear. The public should not be asked to carry additional burdens. The rates were already to go up sufficiently this year.

Metropolitan districts like Kirklees and Wakefield have to cope with problems similar to those that arise in the big cities—urban renewal, dereliction, the slums and the immigrant problem. We are not allowed to have differential rating within the metropolitan county. So I ask both the Government and the Opposition spokesmen: what is the logic of compelling differential rating within districts—which presumably the Minister will continue—if differential rating within the metropolitan counties is not permitted? The logic surely is that if there is differential rating it should apply to all. Differential rating within metropolitan counties would provide substantial relief for Kirklees, and I should be interested to hear the comments of the Secretary of State on the policy of his administration and his predecessor's administration on that subject.

My constituents are reasonable people, but they cannot understand the logic of the sacrifices they are being asked to make. In a sense one is taking from the less well-off and giving to the better-off. I am sorry to have to do this, but I must quote a comment which appears in The Reporter of Dewsbury: Before anyone contests that too strongly, would they care, please, just to…tell its residents over a loudspeaker that they must pay an extra 6p in the £ to help the poor ratepayers of Leeds? For that, nothing more and nothing less, is what Mr. Crosland is saying—from a safe distance. That is the political reality of what my right hon. Friend has done. I appreciate that he cannot recast his entire scheme, but cannot there be some early relief for metropolitan districts which are worse off? If that, financially, is too wide a request, cannot relief be extended to intermediate and development areas which are adversely affected by the Secretary of State's actions?

The eve of Budget day is a bad time for concessions, but I ask my right hon. Friend to do something more positive in areas like ours. Instant Government is not always good Government, and the righting of injustice should not mean the creation of new injustices.

7.11 p.m.

Mr. Graham Page (Crosby)

I congratulate the four hon. Members who have made maiden speeches. The hon. Member for Thornaby (Mr. Wriggles-worth) kept our attention by referring to topical matters. My hon. Friend the Member for Leominster (Mr. Temple-Morris) was forceful and logical, and dealt in an interesting way with previous speeches. The sincerity of the hon. Member for West Bromwich, East (Mr. Snape) was obvious, and my hon. Friend the Member for Reading, North (Mr. Durant) put forward a factual case which appealed to the House. We look forward to hearing all of them again.

I should not have had such an easy passage at the Dispatch Box on the local government reorganisation legislation if the hon. Members for Thornaby and West Bromwich, East had been on the benches opposite. My hon. Friends the Members for Leominster and Reading, North, referred to the rating system as a whole and hoped that the Secretary of State in his review would look more deeply at the rating system as a whole rather than at any new formula for distribution.

The rate support grant system seeks to recognise that the job of governing the country is carved up between central and local government, and that local government needs a subsidy from central government. But the job of government is not carved up into clean slices. As my hon. Friend for Reading, North said, there is education, to which I would add law enforcement and fire fighting. Those services are set out in Cmnd. 5532 on which the Rate Support Grant Order is based. The Minister has 80 per cent., 90 per cent., or perhaps 100 per cent. responsibility for those services, but the work is done by local councils and their employees. We make little or no effort to recognise this in financing local government. We estimate the expenditure of local authorities on all matters which they administer, and the items are set out in Annex B to the Command Paper. We make that estimate regardless of the decision-making power in any of those matters.

Next year the expenditure will be £5,671 million and we say to the taxpayer, "You will subsidise that by a payment of £3,431 million". We do not say to the ratepayer in this or that local government service, "The council you elect has the responsibility, the discretion, the decision-making power, so you pay for that out of your rates". But in this or that so-called local government service a Minister has the decision-making power, the discretion and the responsibility, and therefore the taxpayer should pay for that in full.

The interesting point is that if we were to say that the taxpayer will pay in full for those matters which I have mentioned—education, law enforcement, fire fighting and so on, which are really central Government services—the taxpayer would contribute to local government almost exactly the same amount as this year's 60.5 per cent. of the aggregate Exchequer grant—roughly £3,400 million.

If the Exchequer were to pay that £3,400 million, how wonderfully simple everything would be. We could let the taxpayer pay for those central Government jobs, we could then cancel the whole rate support grant, and we need not argue about this order at all. We would leave the local authorities to raise finance for the remaining jobs, only £2,240 million—no more than that, and compared to the whole expenditure of local government, it is not a large figure—which they could raise, by local rates or a revised local government finance system.

We have reorganised local government; we have created local government units with the potential resources to meet the responsibilities of truly local government. Can we not now get away from the idea that all local government services need to be subsidised by the central Government?

I am aware that the major purpose—or a major purpose—of the rate support grant is, by its distribution, to iron out the creases between one local authority and another. That is what we hope to do. There are authorities rich in rateable value and there are authorities poor in rateable value, so we have a resources element. There is £723 million to divide up and level that out. There are some local authorities whose obligations are much more expensive than others, so we have the needs element—£1,907 million to level that out. Then, we do not want the householder to pay as high a rate as does the occupier of an office, a shop or a factory, so we have the domestic element—£446 million this year.

I wonder whether we need to juggle about with these figures in the rate support grant. If we were to remove from local government the cost of national services to the amount of the rate support grant at present proposed, we could leave local government itself to iron out the creases, on a county basis, perhaps. After all, the Londoner has had an equalisation scheme for 106 years and has done very well with it.

At this stage—perhaps I was going a little wide of the mark on this order in suggesting such massive reform—the Secretary of State has taken over the rate support grant system at a time when, I agree, it was impossible, without some chaos, to abandon it and adopt some other system of financing local government. He has, therefore, stuck to the figure for the total amount of rate support grant which was proposed by the previous Government. Perhaps he will have to take a course in tactics on how to tackle the Treasury.

The right hon. Gentleman has stuck to the figures for the distribution of that total amount between the three elements—needs, resources and domestic. Let us be clear about this. He is not offering to local government one penny more than was being offered by the previous Government.

Mr. Crosland

Or one penny less.

Mr. Page

Or a penny less. But where he wants to shuffle the pack and deal again, that is, in the domestic element, the pack remains exactly the same size—£446 million.

The purpose of the rate support grant distribution formula which was devised by the previous Government was, first, by means of the resources element, to benefit those areas which are low in rateable value. In defining rateable value we did not take the national average. We put a figure far above the national average—£154 per head. To the extent that the rateable value in any district falls below that figure, the Government come in as a ratepayer at the rate poundage fixed by the local authority. What is important is whether the local authority can make the figure on that resources element.

Assuming, for example, a rate poundage of 50p—that is quite low in city areas—Leeds could obtain from the taxpayer next year £18 million; Sheffield, £12½ million; Liverpool, £9 million; Birmingham, £6 million; Manchester, £5 million; and Newcastle, £4½ million, which in every case is much more than they had in the current year. They are fairly large figures compared to those mentioned by the right hon. Gentleman. The counties covering the districts which I have mentioned would benefit by the right hon. Gentleman's formula.

To produce the kinds of results which I have quoted, the proportion of rate support grant devoted to the resources element had to be increased substantially. It was increased from about 11 per cent. this year to 27½ per cent. next year. This greatly benefited the cities and the conurbations.

However, the amounts which I have mentioned are small compared with the needs element figures. The previous Government introduced new factors, clearly set out in the White Paper, to reflect the real needs of the urban areas—for example, the new social services unit. I shall not go through it in detail, but it helps the inner cities.

The results for the cities from the new formula for the needs element—I take again the big cities—are: Birmingham, £50 million; Liverpool and Manchester, £32 million; Leeds, £27 million; Sheffield, £21 million; and Newcastle, £14 million. They are substantial compared to the figures mentioned by the Secretary of State. So, out of our formula we are obtaining figures in the range of £20 million, £30 million, £40 million and £50 million, as compared with the flat-rate adjustment pulled out of the air by the Secretary of State to help them further.

These payments, generally speaking, will be made at the expense of what I would call the not-so-urban areas. I believe that that is right while we are still saddled with the rating and rate support grant system. However, the immediate effect of the switch of grant to the inner cities in that way on the not-so-urban areas and the domestic ratepapers in those areas would be very severe without a transition stage. Furthermore, the severity would not be evenly spread. We turned to the domestic element to achieve an alleviation of that immediate situation which would otherwise face many domestic ratepayers.

We devised a formula for cushioning that blow transitionally. We took the main items that would oblige councils to increase their rate poundage next year. That was the reduction in the amount to be received next year by a district by way of resources element as compared to this year—the effects of local government reorganisation and the effects of water and sewerage reorganisation. For each rating authority we made this calculation. By how much will the rate poundage have to be increased as a result of those factors? If the increase over this year's rate poundage is more than 9 per cent., that excess, translated into pence in the pound, should be the domestic relief for ratepayers in that rating authority's area. If the difference were 9 per cent. or less—or even as much as 20 per cent. the other way, as it was in Manchester—the relief would not drop below 7p in the pound. The taxpayer comes in again, of course, as a ratepayer for the amount of domestic relief at the rate poundage fixed by the rating authority.

What could be more fair and just than that? Discover how the formula designed to help the urban areas will disappoint authorities in other areas and then compensate each of them for that disappointment. It was a careful calculation to apply to each authority and to compensate it for the transitional period when we were helping the inner cities.

The right hon. Gentleman has cast aside that justice and fairness to each district authority, plucked an arbitrary figure out of the air, and applied it right across the board. He calls it a flat rate—I call it a flat-foot Government—and the reason he gives is that he wants those areas which benefit under our formula by receiving a greater proportion of the needs and resources elements not to be, to use his words, unjustly deprived of much of that benefit.

Let us look at that. We wanted the conurbations to benefit. The right hon. Gentleman cited a number of the metro- politan counties as a whole and took the figure as a whole. Under his crude fixed domestic relief formula as compared with our fixed relief plus variable domestic relief formula, he is doing fairly well for Merseyside and for Tyne and Wear. Out of five districts in each of those, four will gain and one will lose. It is not quite so good in Greater Manchester, where, out of 10 districts, five will gain and five will lose. It is a draw there. In the West Midlands, only two of the districts gain out of the right hon. Gentleman's formula and five lose. In South Yorkshire, only one district gains and three lose. In West Yorkshire, one gains and four lose.

That is the evening out which the right hon. Gentleman says he wants to give to the urban areas—the inner cities. He gave some figures on this, and I notice that he left out West Yorkshire. The hon. Member for Dewsbury (Mr. Ginsburg) may be interested to hear this. In West Yorkshire, Leeds will gain about £1¾ million, but the other four—Bradford, Calderdale, Kirklees and Wakefield—will together lose well over £2 million. So that conurbation loses through the right hon. Gentleman's formula.

The right hon. Gentleman is not, therefore, even achieving the result he wants. Of course, he is not. It is just a hit-or-miss effort, instead of dealing with each case individually. It is government by guesswork which the right hon. Gentleman is asking the House to accept.

I should not dream of claiming that our formula was perfect. Indeed, we said in the circular that one could not get complete equity without full knowledge of the figures. But I claim that our scheme was 100 times more equitable than the scheme which the right hon. Gentleman is asking the House to accept.

I am sure that the conclusion which everyone must draw is that no formula scheme for distribution of rate support grant can ever be satisfactorily equitable. The application of formulae to the distribution of rate support grant is a failure, whether it be the right hon. Gentleman's flat-rate one or our variable one. From this, the further conclusion follows that, if we cannot find a formula for making the rate support grant do its job of ironing out the creases created by the rating system itself, the rate support grant system is itself a failure and ought to be abolished. The subsidy which it provides for ratepayers, as I have said, could be provided in a much simpler way.

Therefore, I submit that the two purposes of the rate support grant are gone. It is not needed as a subsidy. It can be dealt with in a much simpler way, and it is a failure as an equaliser. So I would abolish it. But that leaves us with the injustice between householders in different areas and between local authorities themselves, caused by and inherent in the rating system itself. So I say "Abolish it", at least in relation to domestic ratepayers and residential property.

In his Press statement the right hon. Gentleman said, as he said again today, that there would be a thorough review of the grant distribution system. I urge him to be bolder than that. The walls of the Department of the Environment are papered with reviews of rates—green paper, mostly. The floors are carpeted with consultative documents about rates. He has all the information he needs in his own mind. For heaven's sake, let him be brave and relieve local authorities of the duty to finance any part of those central Government services like education, law enforcement and fire fighting, which now account for 60 per cent. of local government expenditure. He would thereby make the rate support grant and all its complications unnecessary.

The Secretary of State can leave the commercial and industrial occupier liable for rates, but he must abolish rates on householders eventually and replace the £1,100 million to be raised by a local income tax coupled with a county equalisation scheme, supplemented by a few other forms of revenue such as were mentioned by my hon. Friend the Member for Reading, North—local lotteries, tourist tax, and planning application fees. I am sure that none of these proposals gives rise to anything like the administrative difficulties in bringing about justice and fairness in local taxation that are involved in the system of residential rates and rate support grant. While we are saddled with the rate support grant it must be distributed in a just and fair manner. This order is grossly unjust.

Mr. Crosland

I find a great deal of what the right hon. Gentleman says absolutely fascinating. But the fact is—I say this without disrespect to him, because he knows more about these issues than most people in the House—that we had from the Government of which he was an ornament both a Green Paper and a White Paper on local government finance which, in effect, rejected everything which he is now proposing to the House.

Mr. Page

The Green Paper did not reject it. As for the White Paper, because we were engaged in the reorganisation of local government—this is exactly why the present Secretary of State does not want to make great alterations at present—we did not seek to reorganise local government finance entirely. When in office one learns the difficulties of rating systems, the rate support grant and all the formulae. I was trying to impart to the House what I learned when in office.

7.33 p.m.

Mr. James Boyden (Bishop Auckland)

The right hon. Member for Crosby (Mr. Page) said that the present proposal by my right hon. Friend was government by guesswork. Let me tell him what government by design was going to cost County Durham—the cost of the Tory local government reorganisation to Durham.

First, the revised rate support grant distribution formula was to cost £2.33 million. Then there was the extra burden arising out of local government reorganisation. Durham was losing 25 per cent. of its population and had to maintain a considerable amount of overheads, far more than that 25 per cent. compensates for. The county treasurer reckons that this additional burden will cost the county £3.99 million.

The piece of government by guesswork that the right hon. Member mentioned—that is, the new rate support arrangement that my right hon. Friend is introducing within three weeks of taking office—costs £800,000. What the Tories did by design was to cost Durham well over £6 million. That is the difference between the two methods.

That does not excuse my right hon. Friend. He knows perfectly well, as everybody else in the House does, that Durham is a poor county. It has unemployment problems, dereliction problems, and problems concerning movement of the population. Yet the total effect of the Tories' extra £6 million and my right hon. Friend's £800,000 is to push the percentage of the rate precept up by 65 per cent.

Looking at these figures, I noticed that Dorset, Durham and East Sussex came together in the same column. I know all those counties extremely well. If ever there was a cloud-cuckoo-land, it is in comparing the increase in rates that these three counties have to make.

Dorset is by no means a wealthy county. When I was at the Ministry of Public Building and Works I had a lot to do with Dorset's stone industry and, incidentally, with some of its industrial problems. It is as poor a county as there is in the South; yet it has to increase its rate by 73 per cent. Durham has to increase its rate by 65 per cent. But East Sussex, with every kind of luxury flat on the coast that can be imagined, a thick stockbroker commuter belt, and where country estates jostle each other in luxury, has to increase its rates by 37 per cent. Where is the sense in that?

I am sure that my right hon. Friend will devote his considerable energies and talent in the next few weeks to finding a solution to the problem with which he has been landed. The steps that he has taken are, I suppose, those that were forced upon him, or he could have done nothing. I suggest to him that the right hon. Gentleman has some good ideas. I should like to put to him one or two other ideas, some of which have come from County Durham.

County Durham was extremely annoyed with the previous Government because, when it was considering the rate propositions put to it by that Government, Durham County made some alternative suggestions and asked to see Ministers, but it was unsuccessful. For example, it had a proposition—my hon. Friend the Member for Dewsbury (Mr. Ginsburg) put it forward—that local unemployment should be taken into consideration; in other words, that the development and intermediate areas had a special call for special rate assistance. Durham also wanted—this, too, is a viable proposition—compensation for truncation in local government reorgani- sation to be considered in rate support grant calculations.

There is much to be said for going back to the simpler system of Exchequer equalisation on a number of key factors and percentage specific grants. In that way, the Government, elected by the people, could dictate the tone and speed of local government, and the rates a local authority produces could be dealt with fairly.

Whatever this debate has produced today, there is no doubt that everybody who has spoken is of the opinion that local government finance is in a mess and needs radical reform. I am sure that my right hon. Friend will apply his mind diligently to this subject and that when we have the next debate on this subject he will come forward with constructive proposals.

Domestic ratepayers in all the constituent authorities in my constituency—the new Sedgefield authority, the Wear Valley authority, the new Teesdale authority, Darlington RDC, part of my constituency, and the county council—are facing considerable increases. In the new Sedge-field district the ratepayers must pay an additional 7p as a result of what the Secretary of State has recently announced.

I urge my right hon. Friend to meet the Durham County Council—the Tory Secretary of State refused to do so—to hear the views of county councillors and understand how an area such as Durham has been affected by the new rate arrangement and by local government reorganisation. I hope that he will then put their ideas into the melting pot for new proposals.

I believe that there will have to be a new supplementary order. The Treasury must find money to deal with this serious situation in Durham. It is, frankly, unfair. Durham has nothing against the conurbations, against Newcastle, Birmingham or Liverpool, but it expects to be treated fairly. It has all the problems of the urban authorities in different degrees and has had those problems for many years.

It is most discouraging for a progressive and enterprising county council, which is always making progress, to be faced with these enormous bills out of the clouds. Durham has always tackled its problems with a great deal of financial responsibility. I served on its finance committee and as chairman of the education committee for a number of years, and I can tell the House that its estimates were always carefully considered and pruned. It is an authority that needs to be supported as it tackles the problems of poverty, dereliction and unemployment.

So, if I criticise my right hon. Friend now, I am sure that my criticism will be only temporary. I am sure that in the course of a fairly short time he will come out with measures that will satisfy the people of Durham and enable us to go forward as we want. I hope that, as one of the intermediate steps, my right hon. Friend will resume what I am sure has been a quarrel with the Treasury and emerge successfully.

7.41 p.m.

Mr. R. J. Maxwell-Hyslop (Tiverton)

I am glad to be called while the Secretary of State is here, because I have an important question to put to him. An hour before the debate began, I was telephoned by the chief executive of the new second-tier Tiverton authority, which is an amalgamation of the old Tiverton rural and urban districts, and the old Crediton rural and urban districts. He read out to me a report in today's Western Morning News. It is headed "State help for rate-hit areas" and says: State help is being planned for areas hit by the changes in rate support grants, Mr. Michael Meacher, Under-Secretary for Industry, said when speaking as guest of honour at Exeter Labour Party's annual dinner and dance at the week-end…'I am authorised to tell you that this Government will at an early stage be introducing a rate relief measure precisely to aid areas like Exeter which have been disadvantaged by that altered rate support grant formula'. As that was an authorised statement by a Minister—he said specifically, "I am authorised to tell you"—the chief executive telephoned the Secretary of State's Department this morning and, referring to that specific quotation, asked when that measure would come into effect. He asked, too, whether it would apply to the new Tiverton areas or only to Exeter. The Secretary of State's Department replied that it had no knowledge of any such statement, let alone of its having been authorised. The Department knew of no such measures and it was unable to give the clerk any information.

The clerk was concerned because the council had to strike a rate in two days' time, and the rate fixed would depend upon the nature of this measure, which the Under-Secretary of State for Industry was authorised to announce in Exeter on Saturday night. Naturally, the clerk wishes to know whether the Government will be giving details before Wednesday so that, due account can be taken when fixing the new rate.

Mr. Michael Latham (Melton)

Does my hon. Friend agree that many people like those in my constituency who are threatened by 80 per cent. increases in rates will expect a full statement from the Minister tonight?

Mr. Maxwell-Hyslop

Naturally. Indeed, it would have been helpful if the Minister had intervened before, because, as we are within 48 hours of fixing the rate, and the authorised statement was made by a Minister in Exeter on Saturday night, we naturally want full details of it this evening so that all local authorities can take this measure of relief that was publicly promised and accurately quoted.

Mr. John Hannam (Exeter)

If I may correct my hon. Friend, it was on Friday night that the Under-Secretary spoke. I quote his words, which were printed in my local newspaper: I am authorised to tell you that this Government will at an early stage be introducing a rate relief measure precisely to aid areas like Exeter, which have been disadvantaged by that altered rate support grant formula.

Mr. Maxwell-Hyslop

I am most grateful. I read out that quotation, but I am glad that my hon. Friend has put it on the record again because he has read from a different newspaper. The fact that identical words appear in two newspapers adds weight to the quotation.

The chief executive of the Tiverton area is particularly concerned, because, although this includes part of a development area, the increase in rate as a result of the Government's announcement is no less than 15½p in the pound. This dramatic increase makes complete nonsense of the council's plans.

I have also had representations from the new second-tier authority at the south end of my constituency—Teignbridge. This area also covers part of the area of my hon. Friend the Member for Totnes (Mr. Mawby), where there are many elderly people living on fixed incomes who have no means of increasing their income when faced with totally unexpected rate increases.

Apart from the shattering effect that this will have on individuals and businesses, and on the prospects for attracting new employment, which is needed if we are to retain our young people in the South-West, there is a principle involved. If the Secretary of State announced that next year he would, if his Government were still in office, alter the basis of local government finance in the manner he has done, I would disagree with his judgment, but I would not say that he was not entitled to make that judgment.

There must be a degree of consistency in local government. Once the Government have announced, within a few weeks of the effective date, what the allocation of funds from central Government is to be, it is quite wrong, as a result of a General Election, that the incoming Minister should completely upset the basis on which the local government finances have been worked out, particularly when he knows that the local government officers concerned are overloaded with work because of the transition from the old structure of local government to the new one. In a case of which I have heard the new local authority is in trouble because it literally cannot get enough paper on which to print the new rate demands, having already sent them to press and printed them on the basis of the circular issued by the previous Minister.

This is an issue of principle as well as of judgment; namely, that the public do not want, and it is disadvantageous to good local government to have, a violent swing of public policy without prior notice. During the last election many people in council houses, for instance, allowed their judgment to be affected by the statement of the Labour Party that the rent increases that they were about to have to pay were to be cancelled. Had they known that the same amount of money would be taken from them by increased rates, that would have completely negated the incentives that they were offered to vote Labour. If ever there was a case of false pretences, it was that. It was a matter of disclosing a benefit without disclosing the intention to cancel that benefit by imposing an equivalent increase in rates.

One of two things must be true: either the Secretary of State knew during the election what he intended to do but did not disclose it for reasons which hardly do him credit, or it was an inspiration which he had after 1st March. I hope the latter was the case, but if it was merely an inspiration which he had after 1st March he should have postponed it for another year. My objection would then have been one of judgment and not of principle. I hope we can achieve a greater degree of consistency in local government so that when national Governments change the basis on which local government planning is necessarily made is not disrupted so dramatically and avoidably as that.

This is an even greater issue than the hardship being caused in some areas, particularly in my constituency, by the effect of this dramatic change. It is possible that that harm will last for many more years than the increase in rates, because I hope that with a change in electoral fortunes in the not-too-distant future the Conservative Party will be returned to office to restore the situation which it announced in terms of grants from the central Government.

This must be a day when those who voted Liberal or Labour—it does not matter which since the result was to defeat the Conservative Government—will have cause to reflect on the wisdom of their action.

7.53 p.m.

Mr. Arthur Blenkinsop (South Shields)

I do not blame the hon. Member for Tiverton (Mr. Maxwell-Hyslop) and other hon. Members for quite properly raising the problems of their constituencies—problems which are faced by every constituency. All are facing rate increases of a quite exceptional character. Moreover, they are facing these increases after a period of extraordinary muddle and incoherence.

We are debating the rate support grant for the first time, only a matter of days before the operation starts. I do not believe there has ever been quite such an extraordinary situation before.

I welcome the right hon. Member for Crosby (Mr. Page) in his new rôle, but he must share responsibility for the fact that the House has not been given an opportunity of discussing the matter in a way that could have had any possible effect. As he knows perfectly well, the then Opposition facilitated his Government in getting the necessary Bills through the House on the clear understanding that sufficient time would be available to the local authorities to deal with the changes. Now we are presented with this extraordinary situation. Although I welcome the interesting comments of the right hon. Member for Crosby, which were missing from the earlier Green Paper, it would have been fair and reasonable for the right hon. Gentleman to refer to the unacceptable delays for which the previous administration were responsible.

I come to the question we all face—whether we benefit or lose by the action of my right hon. Friend. My authority benefits modestly, but that does not mean that we do not have to face a heavy rate increase, for we do. Indeed, we face a heavier rate increase than do many hon. Gentlemen opposite who talked of intolerable burdens. My own authority faces an increase of between 50 per cent. and 60 per cent. over last year.

Let us not have any more hypocritical talk from right hon. and hon. Gentlemen opposite, as if the situation in some of our constituencies had suddenly been dramatically improved and all the difficulties overcome. That is far from true. If the situation had been allowed to remain as it was, constituencies like mine would have been in a more intolerable situation. Instead an increase of between 50 per cent. and 60 per cent., it would have been nearer 80 per cent. In a poor area with relatively low rateable values it was intolerable to see such a situation continue.

There has already been plenty of evidence to suggest that talk of gerrymandering is far from being true, in view of the criticisms of my right hon. Friend and certain notable absences from the Opposition benches in the debate so far. There are some hon. Members opposite who share in the benefits. The right hon. Member for Finchley (Mrs. Thatcher), who opened the debate for the Opposition, after a vigorous and vitriolic attack said that many of her hon. Friends would vote against the order. She did not suggest that there was any unanimity on the Opposition benches. The right hon. Lady delivered the philippic, but it was not very effective when it tailed to the end, to say that it was, after all, affecting only some Members.

It is right to call attention to some of the other factors that have not been pressed so far and that are bitterly objected to by bodies such as the Association of Municipal Corporations, of which I am the vice-president. They object not only to the specific domestic element—favouritism they felt that to be—now corrected by my right hon. Friend—but to some of the provisions about the needs element They thought it inexplicable that the Conservative Government had worked out a weighting formula for grants providing exceptional benefits for the outer South-East counties like East and West Sussex—those notable poverty-striken areas—the Isle of Wight, Hampshire, Oxfordshire and Hertfordshire, as well as the inner South-East counties of Kent, Essex, Surrey, Buckinghamshire and Berkshire—not the first examples of extreme poverty that spring to mind. They objected to what they regarded as an unfair weighting of the needs element.

My right hon. Friend has not disturbed this situation. We have to accept it, not because we like it but because it is now too late to make any changes that will be truly fair. But if allegations are to be thrown across the Chamber about the action which my right hon. Friend, I think rightly, took—rough and ready as it inevitably had to be—one is entitled to refer to provisions that we still do not like but which we have not disturbed. In any longer-term review, these matters will have to be considered.

The Conservative Party has to accept a large responsibility for the intolerable timing, the offence of this matter not having been discussed in the time of the last Government, and for the factors that have forced on the whole country a scale of rates increases which have hit nearly every constituency hard.

Local government reorganisation was carried out in a form to which many of us strongly objected. The two-tier system, which in my area created many authorities which we did not want, has forced enormous duplication, particularly in planning. This is the responsibility of the Conservative Party. We all face the enormous burden of inflation and of interest rates up from even 10 per cent. to about 16 per cent.—what someone in The Times the other day seemed to imagine was a 6 per cent. increase but is in fact a 60 per cent. increase. These are burdens for which the Conservative Party must accept some if not all responsibility.

Last year the Conservatives urged local authorities to use up balances so as to hold down rate increases. Many of them did so, and those balances are gone. They also imposed many administrative charges on housing. So let us have no more nonsense—the mess we are in was caused largely by the Conservative Party.

I can offer no hope of an easy early solution to this situation. Many of us who have considered the matter have not found an alternative to rating which is not just as divisive. I wish the Government good luck in this terrific job. Meanwhile let us place responsibility where is clearly belongs—on the Conservative Party.

8.5 p.m.

Mr. Churchill (Stretford)

Perhaps even the hon. Member for South Shields (Mr. Blenkinsop) will recognise that many areas, including inner city areas like that which falls within my constituency, will face a substantial increase in their rates burden as a direct result of the Secretary of State's decision and actions. The level of increase is utterly disastrous and comes on top of the injustice of the present rating system which has already been mentioned. Perhaps one good thing will come out of this debate; it must make inevitable an early review and, more than that, a radical reform of local government finance.

Despite a reduction of £1.4 million in expenditure this year compared to last by the constituent authorities of the Trafford district in my constituency, the ratepayers are to be faced with a colossal increase. In 1973–74 those authorities received £16.8 million in rate support grant. This year they are due to receive less than £8 million—a drop of £8.9 million. So where is all the help that the inner city areas are to supposedly get? It certainly is not going to our area of Manchester.

In the short time that the Secretary of State has been sitting in those ghastly buildings over the way he has had little chance to consider the matter but he has nevertheless made some swift decisions which have added enormously to the burden. The freezing of rent increases for council tenants will add to that burden. His abolition of the variable domestic element will also add to it in my constituency and many others.

This move does not benefit all those inner city areas for which the Secretary of State professes so much concern. Under the order the domestic rate is due to rise from 34p and 35.75p in the pound to 60.25p—an increase of between 68 per cent and 77 per cent. To keep the increases even within 17½ per cent. will mean massive cuts in local authority services.

Mr. Huckfield

Will the hon. Gentleman tell the truth to both sides of the House? Will he admit that all he will lose in terms of domestic rate relief is 1½p?

Mr. Churchill

That is the case in regard to the variable element, 1½p, which will mean over £½ million. That involves some 10 per cent. of increase.

The choice facing the Chief Executive and the Council of Trafford District is whether to face ratepayers with an increase of from 68 per cent. to 77 per cent., or to cut £5½7 million—nearly 25 per cent.—from their expenditure. This would still involve an increase cost of 17½ per cent. The Secretary of State for the Environment, who is a fair man, will agree that in present circumstances, when the Labour Government are seeking to contain inflation, the imposition of 17½ per cent. is a crippling burden.

I am sure the right hon. Gentleman would wish to know the effect of that burden on this part of Greater Manchester. I quote from the Chief Executive of Trafford: The general implications of these reductions would be to reduce the services of the council below an acceptable level: there would be immediate default in complying with certain areas of statute. I am sorry that the Secretary of State for the Environment is leaving the Chamber at this point for I particularly wanted his advice on whether my authority will be allowed to default on its requirement to keep within certain areas of statute. The Chief Executive says: There would be redundancies of staff, including professional staff; replacement and maintenance provision would have to be reduced to levels which would result in forced deterioration of property and impose a crippling burden on the authority in future years; it would not be reasonably practicable to maintain essential minimum standards to comply with statutory requirements particularly in the fields of education and social services.

Mr. Marks

Will the hon. Gentleman give way?

Mr. Churchill

I have already given way to the hon. Member for Nuneaton (Mr. Huckfield) and I know that there are many other hon. Members who wish to take part in this debate. I am only reading a brief extract outlining some of the cuts that may have to be made in my area: The maintenance of buildings and grounds would have to be reduced to absurd levels, with various long-term effects. The school library service would have to be withdrawn. St. Bride's School would be closed. It would be impossible to admit handicapped children to schools outside the area of the authority and the vast majority of handicapped children are placed in schools outside the area at the present time.

Mr. Marks

rose—

Mr. Churchill

The hon. Member for Manchester, Gorton (Mr. Marks) did not give way during his speech, so I am sure he will understand if I continue. Furthermore, there would have to be a reduction in the quantity and quality of school meals. We all know from experience how lamentable the quality can be, and to suffer any further reduction would be damaging. All discretionary awards in further education would-have to be abolished; there would be no grants to voluntary bodies. One of the two teaching centres would have to be closed. The teaching staff would have to be reduced by 370 teachers, representing a 15 per cent. reduction in the teaching establishment. On the question of housing"—

Mr. Tomlinson

rose—

Mr. Churchill

I appreciate that the hon. Member for Meriden (Mr. Tomlinson) does not like to hear this. However, he must bear with me. In housing there would have to be a £175,000 reduction in the repairs fund, representing a one-third reduction. Furthermore, the planning department would become effec- tively non-operational, apart from providing an advisory service. In the public health service, reductions would involve significant staff vacancies, including five public health inspectors, which must have a serious impact on the level of service now being provided. Public conveniences would be cleaned less often; economies in the refuse collection service would have a serious effect, resulting in an erratic service, a cumulative deterioration in the collection of refuse and possibly failure to comply with the requirements of Section 72 of the Public Health Act 1936 relating to collection of household refuse.

Mr. Crosland

rose—

Mr. Churchill

Perhaps the right hon. Gentleman will tell me how my local authority can be expected to comply with the statutory requirements when it has not the money to do so.

Mr. Crosland

Is the hon. Gentleman seriously blaming this on the 1½p? Is not 98 per cent. of the cost of all he is describing due to the rate support grant order introduced by the Conservative Government and nothing to do with the 1½p which we are discussing today?

Mr. Churchill

The right hon. Gentleman's figures are not correct. The right hon. Gentleman seeks to laugh off an additional increase of £557,000. This is a substantial increase—and this is apart from the additional burden imposed by the freezing of council house rents. That burden is being directly imposed because the right hon. Gentleman has abolished the variable domestic element.

Mr. Tomlinson

Will the hon. Gentleman give way?

Mr. Churchill

No. I have given way enough. With regard to the social services"— and I know that many Labour Members are most concerned about this aspect— the Order would mean drastic reductions in staff, equipment, maintenance costs, vehicles and research expenditure. The opening of the children's home at Davyhulme would be delayed; the opening of a family group home would also be delayed. Furthermore, the number of children accommodated in remand homes would be reduced, the number of physically and mentally handicapped children admitted to homes would be reduced, and the rehabilitative unit for mentally handicapped persons at Ashwood would be deleted from the programme. A home for mentally ill persons at Altrincham would be closed. Three day nurseries would be closed; a new day centre for physically handicapped persons at Sale would not be opened; there would be a reduction in the number of places for employees in sheltered workshops, and a home for the elderly would be closed. This report has been given to me by the chief executive of my local authority.

I should like to know what is the Secretary of State's advice to my local authority. Does he suggest the authorities contain the level of increase within 17½ per cent. and make the cuts which I have itemised, or that they impose a 68 per cent. to 77 per cent. increase on the domestic ratepayers? Why is it that no additional help is being accorded to my constituents? Indeed, it is clear that help is being removed by the Secretary of State for the Environment. In 1968 the previous Labour Government introduced their Fair Rents Act, and, even though they did not provide the generous rebates which the Conservative Government provided when they, in turn, introduced their Fair Rents Act in the public sector, it can be said that at least the Labour Government introduced some form of staging in raising the rents. Is it unreasonable for the right hon. Gentleman and the Labour Government to consider introducing, even at this late stage, special provision to help those ratepayers who are faced with increases of 20 per cent. or 30 per cent.—or, as in the case of my constituents, increases of 65 per cent. or 75 per cent.—so that this burden may be eased?

What has been the Government's motivation in changing the variable domestic element? We have heard much about the benefit to inner city areas. I am arguing that this is not the case in Manchester. There is great suspicion in parts of the country that this is not just a question of taking more from the prosperous rural areas and giving it to the cities. The hon. Member for South Shields mentioned wealthy people living in the stockbroker belt of East Sussex—one or two, I must say, spring to mind, such as the right hon. Gentleman the Foreign Secretary and his right hon. Friend the Chancellor of the Exchequer, who will open his Budget tomorrow. Those people are finding that their rates are being reduced. Those of us who have a home within the vicinity of Westminster are finding that our rates are being reduced. Yet in many other parts of the country, particularly in the great cities outside the London area, the rate burden is being enormously increased. I repeat that there is a great deal of suspicion about the situation. It is known that there are many Labour seats in the Greater London area and it is bound to be seen as a partisan sop to the London area to keep those constituencies sweet for the Greater London Council elections. This measure strikes directly at the interests of the Manchester area and of many other parts of the country.

On the more general question of rate reform it is noteworthy that out of the £26 million budget of the Trafford district of Manchester, £16½6 million is for education. Therefore, the rate support grant does not even cover 50 per cent. of the cost of education in the area, let alone anything else.

Surely there can be nothing more conclusive in support of radical reform of local government finance? An urgent and thoroughgoing reform is required. Even more urgent is the need for an assurance from the Government that some provision will be made for domestic ratepayers faced with increases of over 20 per cent., and especially over 50 per cent.

8.20 p.m.

Mr. John Tomlinson (Meriden)

I do not want to take up the heart-rending tales about the effects of a reduction of 1½p on the constituency of Stechford. Some of us have real problems arising from the effects of the rate support order. I want to deal with the effect on the local authorities within my constituency.

Mr. Churchill

On a point of order, Mr. Deputy Speaker. The hon. Member for Meriden (Mr. Tomlinson) inadvertently referred to my constituency as Stechford, which is in fact represented by the Home Secretary. My constituency is Stretford.

Mr. Tomlinson

I am sorry. I take the point—

Mr. Deputy Speaker (Mr. George Thomas)

That was not a point of order; it was an interruption.

Mr. Tomlinson

The interruption was about as relevant to my constituents as the hon. Member's 15-minute speech. The effect of the rate support grant order on my constituents who live in the Solihull district council area is that they will lose 11½p. That is a problem which makes the problems of the hon. Member for Stretford (Mr. Churchill) look like solutions.

We are faced with an increase of no less than 92 per cent. Of that 92 per cent. a substantial proportion—well over half—is due to the actions of the previous administration. However, that does not lessen the anxiety about the 11½p which is being lost under the order. We are losing £1,445,000, which is placing a heavy burden on the shoulders of the ratepayers, coming as it does after such a short period. In the North Warwickshire district area my constituents face increases of the order of 86 per cent., resulting from the loss of 11p in the rate support grant. The rate in North Warwickshire, as a result of the rate support order, will be 24 per cent. higher than in any other part of Warwickshire, and Warwickshire is one of the worst affected areas in the country.

Therefore, while I support my right hon. Friend's long-term aim, to get a more egalitarian basis for the finance of local government, he must realise that it cannot be done by playing about with the present rating system. It is wrong to play about with the system in the name of egalitarianism while at the same time creating a crisis of local government which will have calamitous consequences for my constituents. That is no way to deal with the long-term problem.

In order to overcome the short-term effects of the order, my right hon. Friend must do something to mitigate difficulties in the transitional period. Increases of the scale of 92 per cent. are completely unacceptable. I ask my right hon. Friend to put himself in the position of my constituents who went to the polls at the election on the basis of the need to curtail inflation. One of the first things they received from my right hon. Friend is a rate support order which will create governmentally-induced inflationary pressures of the order of £1 per week for some of my constituents. Only a couple of days ago my constituents were expressing their pleasure that the Labour Government had managed to freeze rent increases this year. However, within a few days of that announcement they find the money is being taken away from them at compound interest by increased rates. These same council house tenants will have to bear the burden like anyone else in the community, and that situation is totally unacceptable.

I hope that before the vote tonight we may receive certain assurances from my right hon. Friend, assurances which are eagerly awaited by other hon. Members. My first point was covered to some extent by my right hon. Friend. May we have an assurance that a fundamental review of the rating system will produce something more than a White Paper or a Green Paper? For once can it not be followed by action to deal with the inequalities created and perpetuated by the present system? Will the order which we would expect to see later in the year take special account of the problems of the authorities which are suffering most from the effects of the rate support order? Or will the later order merely continue the pattern created by tonight's order?

Will such action as is possible after tomorrow's Budget be taken to mitigate the effects of the application of what my right hon. Friend has already called "rough justice"? I ask my right hon. Friend to ensure that with such funds as his Department will have available after the Budget he mitigates the worst effects of this poor application of rough justice. Will my right hon. Friend assure the House that the special problems of areas like Warwickshire will be taken into account when a review of the rate support grant domestic element takes place?

Without the assurances which I seek, as well as a further gesture in the direction of those in our community who are suffering the most, some hon. Members on the Government side will find it difficult to support my right hon. Friend tonight. We support the general trend towards an egalitarian system of finance in local government. We accept that inner areas have special problems, but we do not support the idea that the best way to solve the problems of inner areas is to transfer them to some of the rural areas, which have their own problems as well as people with low incomes. I ask my right hon. Friend to take into account the special problems of areas such as I have mentioned, and I look forward to hearing the Government's views before the vote this evening.

8.31 p.m.

Mr. Michael Morris (Northampton, South)

I am grateful for the opportunity to make my maiden speech as the first hon. Member for Northampton, South. I do so in the knowledge that this Parliament and previous Parliaments have listened to many interesting contributions by hon. Members from Northampton. Not least among those contributions were those over the past 28½ years from a person who, on many occasions, had feelings towards the Conservatives, although he voted reasonably consistently with the Labour Party. He served the people of Northampton loyally and honestly, and the thanks of the people go to him.

The name of my constituency confuses the electorate. Although called Northampton, South it stretches from west to east. On its western boundary is the village of Duston, a prosperous and growing community, with a long history and tradition. The community is centred on the fortunes of the ball bearing industry, through the firm British Timken. The town also had a castle, but because of Northampton's support of the parliamentary cause it was demolished by Charles II. The town also has a number of great shoe companies, known across the world—firms like Church, Hawkins, Allinson and others, which are household names.

To the east is the grammar school, founded in 1541, at which thousands of Northamptonians were educated, including one senior hon. Member on the other side of the House. Today there is a cloud over that school because certain misguided local officials and elected persons wish to destroy it. They may try, but they shall not succeed.

Far to the east, beyond the residential areas of Weston Faye11, is the development area. In 1968 Northampton was designated for expansion and it is this expansion of the town that brings me to the matter under debate. Our expansion is the fastest in England. Northamptonshire is the fastest growing county in England and we hope that Northampton will live up to Defoe's description as the handsomest and best built town in England.

When the decision was taken to expand the town it was on the basis of a partnership agreement between the old county borough and the development cor- poration. It was taken on the understanding that there should be no financial burden on the town. It was felt that the town was doing its duty in accepting people from London and Birmingham. The town made these people feel happy and at home, but it was always understood that there would be no financial burden arising from this.

However, I already see signs of the Treasury this year beginning to wriggle out of this understanding a little, and the financial burden is starting to arise. I also see signs from the Government that no extra provision has been made to help Northampton over this burden.

In standing here, I have the unique advantage of being at one and the same time an alderman of one of the poorest of the London boroughs—Islington—and representative of one of the growing towns in the centre of England. I hope that this depth of experience gives me a unique understanding of the dual problems.

We all know and well understand the philosophy of the rate support grant, which is to give particular help to the inner urban areas that need so much help. But there seems to be no allowance in any element of the grant for those towns, such as Northampton, that are playing their part in alleviating that burden. I plead with the Government to ensure that in these days of largesse, of which there seems to be an abundance, the people of Northampton are not financially exploited. I believe that the Treasury could and would, if instructed, look more sympathetically on us and other new towns. I hope that the rate burden on the new towns will be borne in mind in the promised review which was mentioned earlier this afternoon.

I turn to the computing of the rate support grant. For reasons best known to successive Governments, it has always been based on past population—in the case under consideration, on the population at mid-1972. But do hon. Members realise that in expanding areas—to take only the example of education—5,000 extra children go to school each year, at an average cost of £200 a head? That means that in just the two years since that base was formed the people of Northampton have lost the best part of £2 million.

In the past there were adjustments, which helped the end-year balances, but this year there is to be nothing. However, we believe that there is to be an interim award. If so, is it to be made across the board or where the shoe pinches?

In theory, the needs element reflects the needs of an area, yet the criteria are based on such things as children in care. It would pay my local authority and others to put more children in care, so as to receive more rate support. There is no consideration of the dynamic element or the preventive situation.

Next, I turn to the announcement of the flat rate 13p for domestic ratepayers, which has caused such controversy today—an announcement made, so it is said, after full and frank consultation with the local authority representatives. I am told, however, that the Press release was issued within seconds afterwards. I believe that the time it took to get out that Press release has set a record for any administration in post-war history.

It is a question not just of the cavalier approach to the consultation, or lack of it, but of the total failure of the incoming Government to understand how local authorities are run. Local government has been reorganised throughout the country. New members and officers have spent hours and days going through their estimates, cutting them back when requested and replanning and rephasing them. They had them all tailored to await the rate support grant. They were prepared to wait until the election for the grant, and then they prepared the rate demands all ready to be sent out.

Did the Labour Party say anything about this matter in the election campaign? It did not say a word. No warning was given, so the demands were prepared. Then, like a bolt from the blue—or perhaps one should say "a flash of inspiration"—came the Government's extraordinary announcement.

Why was that announcement necessary? Was it that the cities or the London boroughs faced insurmountable problems? By any objective assessment, they did not. Indeed, when we compare the level of assistance that the previous Government gave to inner urban areas with the paltry sum that we were offered in 1968–70, we know that the inner urban areas were treated very well and were well looked after. No, it must be something else, something so important that the whole of local government had to be turned upside down at this delicate time in its history. I hope that we shall learn from the Minister who is to conclude the debate what it was that was so important.

The Government will have to make clear why these changes had to take place so late in the day. Do they know of the number of hours of work which have been thrown out of the window? Do they appreciate the enormous problems which they have created throughout the country? Do they realise just how much the rates will now rise? In my town, which will not suffer the highest rise, the increase will be 54 per cent. Little wonder that people in towns like mine are saying, "Forget about the bread subsidy and look to the rates, because that is the burden that will hit us." Damage will be done unless hon. Members on both sides of the Chamber think about the problem enough to reject what has been put before us, or the Government are prepared to table an amendment. It is not too late to move such an amendment.

I make a series of pleas for the future. I make them for all expanding towns in general and for Northampton in particular. Incidentally, I understand that it has been graciously accepted to receive a deputation from Northampton on Wednesday. My plea is, first, to ensure that any interim award goes to those who make a case rather than an across-the-board award. My second plea is that the Treasury is instructed to look generously towards towns which are doing their part in helping the inner urban areas. My third plea—and this is the crux—is to ask that we move to a more dynamic model, with an allowance for known increases, such as those of schoolchildren, so that the proper level of rate support goes where needed. It should not be beyond the bounds of possibility to produce a system that works simply.

My fourth plea is that if there is a shortage of resources we should consider the regional water authorities. Let us look at their budgeting. I have it on good authority that they asked every district to decide what it would like to do, to add 15 per cent. for inflation, then to add another amount for contingencies and then to add whatever else an authority thinks it might have to do. The net result, taking the Anglian Water Authority as an example, is an increased precept of 62 per cent. Here is a tree that needs pruning.

British local government is justly thought throughout the world to be one of the very best. It can be if Ministers will let it and if central Government will understand it. I make no apologies for frequently mentioning the town of Northampton, South and Northamptonshire in general.

Mr. Eldon Griffiths

On a point of order, Mr. Deputy Speaker. Will you kindly ask the Government Chief Whip to cease browbeating his hon. Friends so that those who are following the debate may be able to hear what my hon. Friend the Member for Northampton, South (Mr. Morris) is saying?

Mr. Deputy Speaker

There are many things that I should like to do. Evidently order is restored. Mr. Morris.

Mr. Morris

I make no apologies for frequently referring to Northampton, South and Northamptonshire in general. We are at the heart of England. We hope that we are doing our part to help the poorer inner areas of the cities of London and Birmingham. We can do that only with hard cash and not just with good will and nice words.

My town supported the Parliamentary cause in the Civil War. It supplied 1,500 pairs of shoes for that war. The town was short-changed on that occasion, in that nobody paid for the shoes. I believe that we now have a fine opportunity for at least those memories to be wiped out by a little more cash.

8.44 p.m.

Mr. Dick Taverne (Lincoln)

I congratulate the hon. Member for Northampton, South (Mr. Morris) on his maiden speech, which was as eloquently phrased as it was confidently delivered. His predecessor, Mr. Reginald Paget, was also a great master of phrases. I am sure that the hon. Gentleman is a worthy successor. I also hope that he shows the same independence of mind as his predecessor showed, to which the hon. Gentleman referred. I believe that the hon. Gentleman's predecessor often carried his inde- pendence into the Lobby, or, rather, kept himself out of the Lobby. I hope that the hon. Gentleman will do the same when he feels that the occasion so requires. I congratulate him warmly, and I shall listen again, if I can, on every occasion when he speaks.

I shall be very brief. A great many points have already been made and I do not wish to repeat them unnecessarily. I do not disagree with the overall aim of the Secretary of State of seeking to redress the balance very much in favour of the urban areas. I also agree with him when he agrees with his predecessor that in many ways the new rate support grant contains features which are an improvement on the last system.

But the Secretary of State is wrong on two counts. He has failed to see that this very rapid change is working major injustices in a number of cases and that it was reasonable to provide for a more gradual transition, and he has failed by his concept of rough justice to realise or to give sufficient attention to the fact that he is causing considerable injustice to urban areas with problems very similar to those of large conurbations.

Lincoln, too, has the problem of urban decline and decay. It has areas of slum housing. It has problems of homelessness, with people in the centre of the city being displaced by office developments and having nowhere to go. Lincoln has the further burden of being an historic city, in that it is in the national interest that we should preserve our heritage. But, while it is in the national interest, there is no subsidy from public funds. There are, then, a number of reasons why such situations, which can be repeated in our cities, should not be worsened by the Secretary of State's announcement.

A city like Lincoln also suffers from being part of an overwhelmingly rural county which has been adversely affected by a series of factors, the most serious of which is the way in which the needs element is now calculated. The low density element now consists of a payment of 1.22p per acre if the acreage is between 1.5 and 3 per head of population, and then jumps right up to 3.12p per acre where the acreage exceeds 3 per head. There is no tapering off for marginal cases, and the most marginal case is Lincolnshire.

In Cumbria, Northumberland and North Yorkshire the higher rate of grant applies, but in Lincolnshire, which is the closest non-qualifier, the acreage per head is 2.84. Thus, there is the curious position that if we had had in the county 29,000 fewer inhabitants or an acreage 85,000 larger the county would be entitled to additional needs element grant exceeding £2,750,000. This is absurd, and I hope that it is one of the elements which the Secretary of State will bear in mind when he comes to his long-term review.

There are further elements which are perhaps of less significance. Again, the distribution formula does not allow any flexibility in the burden of local government reorganisation, which has been far more fundamental in Lincolnshire than in a number of other counties. But the result is that in Lincoln itself we are having to face an extra rate of 7p, which means that on average each householder will have to pay close on an extra £10 a year.

I recognise that the Secretary of State was in a dilemma. He had no time to consult because of the need to produce the order in a hurry. He wants a more rational system. He is proposing a review, which eminently sensible. However, it is not good enough for him to come and tell the House that all the same he will act now even if his action produces an element of rough justice. There is not just an element of rough justice; there is a large quantity of it. The cursory examination, which is all that he was able to carry out, is not good enough. The anomalies and injustices are too glaring. I believe he is mistaken.

The hon. Member for Gloucestershire, West (Mr. Loughlin) said earlier that though he was opposed to the action taken by the Secretary of State he would, nevertheless, vote for the Government because he did not wish to see the Government brought down. If a vote on this order adverse to the Government could bring them down, that would give many people cause for thought. It would give me cause for thought since it would be a great mistake to achieve such a result at present. The life of the Government is not at stake, and I shall therefore have no hesitation in voting against this order.

8.51 p.m.

Sir John Eden (Bournemouth, West)

At the outset I would say how glad I am that I was present in the Chamber to hear the speech of my hon. Friend the Member for Northampton, South (Mr. Morris). I had the privilege of speaking in support of him at his adoption meeting at the beginning of the election campaign. I know the area about which he was speaking quite well, and I thought he made abundantly clear to all hon. Members the nature and dimension of the problems facing his constituency. An expanding town has a special call on our sympathy and understanding at present.

I was also interested in the speech of the hon. and learned Member for Lincoln (Mr. Taverne), who referred to the special need of a city such as Lincoln which has an historic national contribution to make. There are special burdens associated with that. It has been apparent to everyone during the debate that all hon. Members can refer to special problems justifying special attention, thereby making a claim against the arbitrary setting of a flat-rate level for relief as is here proposed.

I was dismayed by the Secretary of State's speech. It was not that he did not understand what he was doing that worried me. I felt that he did not really care. I thought that was untypical of him. The right hon. Gentleman certainly knew something of the nature of the additional burdens which his action will inflict upon domestic ratepayers in many parts of the country. If his speech was a case for anything at all, it was for saying that at this time he had decided to make no change in the variable order planned by the previous Government. He made out a strong case for saying that this is not the time to overthrow what had already been planned.

Hon. Members have mentioned local government reorganisation and the difficulties it is bringing. I do not need to enumerate the problems that this reorganisation brings. In my area what was an inclusive county borough rate has now been broken into three separate constituent parts: a county council precept, a district council rate and a water authority sewerage charge. These three things together add up to a substantial increase for all ratepayers in the district council area.

In Bournemouth special hardship affects the domestic ratepayer because of the shortage of industry. There has been a large loss in connection with the needs element of the grant running into many million pounds, when one compares the new Dorset with the old Dorset and the county borough of Bournemouth. That accounts for a large proportion of the increase.

My right hon. Friend the Member for Crosby (Mr. Page) said that it was generally accepted that the inner city centres should be specially helped because of their special problems and needs. There was widespread understanding of that, but perhaps what is not so well recognised is that even in the generally sparse areas there are blocks of dense urban development where similar problems exist. For example, the Bournemouth, Poole and Christchurch area is a continuous urban area of nearly 300,000 population. Taken together, the three districts have, admittedly, only 7 per cent. of the new county area, but they comprise 52 per cent. of its population. The area therefore carries a considerable burden of the problems and expenditure associated with it.

The new district council rate is high partly because a holiday area like Bournemouth has to spend, rightly, so much each year on amenity expenditure. For Bournemouth that amounts to £1 million, the equivalent of a 5p rate. Bournemouth has to cater for a large annual inflow of staying visitors as well as one-day visitors, and it is right that it should spend the money. But that is an additional and special burden that the ratepayers of Bournemouth have to bear. It is in the national interest that holidays at home should be encouraged. Many people come from Birmingham, Manchester, London and the other great cities to spend their holiday in Bournemouth, and they are welcome there, but in equity the whole of this burden should not fall on the ratepayers of Bournemouth. There is something wrong with the present system.

Previously, the resources element in the grant system went only to the below-average rateable value authorities. Now, virtually all the districts get the grant. It is set at a level of about £154 rateable value per head of the population. Since Bournemouth has a level of £152, it gets little. The additional rateable value does not mean any increase in the actual resources; it simply means a lower level of Government grant. All around Bournemouth, the rural neighbours have their rateable resources brought up by this grant of £154 per head. They spend, by comparison, obviously, a minimum amount on services, and their inhabitants, equally obviously, enjoy the benefits of Bournemouth's facilities, without having to pay for them in rates.

In the past, the additional shopping and hotel facilities created more rateable value to help pay their rates in places such as Bournemouth and other holiday areas. This is not so now. The rateable value no longer counts; only expenditure counts in determining the district rate. I ask that special attention be given to that fact.

I should prefer, as my right hon. Friend the Member for Crosby said, to see the rating system changed fundamentally, or abolished altogether. I thought that the review, to which so much reference has been made, was to be a review of the grant distribution system. If that be so, I hope that the right hon. Gentleman will give special attention to the point that I have been making. There is no doubt that there needs to be a change in the rate support grant basis, or else a supplementary grant provision should be made for towns providing services for more than the enjoyment of their residents. This could be done by amending the £154 rateable value per head of population to include at least a proportionate part in respect of annual visitors as well as just the residents.

Then there is the water authority sewerage charge. This shows an increase of 64 per cent. on the 1973–74 estimates for Bournemouth. It is a very steep increase. I know that, here again, Bournemouth expected to pay considerably more. We have been carrying through a major sewerage diversion scheme. But the new charge is about 14 per cent. more than Bournemouth's own expected costs, and I suspect that that may be due to the fact that we are having to carry a disproportionate share of the new administrative superstructure which has been created.

For domestic ratepayers, the Conservative Government's proposed relief was designed to cushion the impact of the changes in the grant structure which have been made. It may have been crude—I think that that has been widely accepted—and it certainly was not perfect but its intent was valid enough. In Bournemouth, it would have served to reduce the massive rate increase to 33 per cent., which is steep enough in all conscience.

The present Government's proposed flat-rate relief does nothing to cushion the changes in the grant system, and may even be giving additional relief to those areas whose needs have already been taken care of through other elements in the rate support grant. This will now mean that the domestic ratepayers in my constituency will have to face an increase of up to 40 per cent. That, quite honestly, is too much.

Here is one example. A typical three-bedroom semi-detached house in Bournemouth has a rateable value of £250. The ratepayer paid £88 in rates last year. In 1974–75 it will be £123.50, an increase of £35.50 per year, or 68p a week. These, as my hon. Friends have already said, are steep increases in budgets which, very often, have to be met by retired people and those on limited incomes.

If the Government want to help inner city areas, it could be done by increasing the overall Government assistance, without placing the additional burden on domestic ratepayers elsewhere, but better by far would it have been had they left things as they had been planned by their predecessors in Government.

Several Hon. Members

rose—

Mr. Deputy Speaker

Order. If hon. Members would do their best to contain themselves within 10 minutes, all those who wish to speak would be likely to have an opportunity to be called. It is in hon. Members' own hands.

9.3 p.m.

Mr. Gwynoro Jones (Carmarthen)

Being a Welshman like your good self, Mr. Deputy Speaker, I will endeavour to speak within the time limit mentioned.

The former Minister of Posts and Telecommunications displayed a rather schizophrenic attitude towards the Rate Support Grant Order of the Government. We all recall the days when the Conservatives were telling the people of the country that Labour's programme was going to cost a very great sum. Yet this evening the right hon. Gentleman was pleading for more money to be handed out, and blaming this Government for rates having to go up although the pressures had been building up before. The former Minister in the Department of the Environment shook his head, as he used to do a great deal when he was a Minister, and said "Leave things as they were".

I speak as a Member whose constituents are suffering under this new order. Let me make one thing quite clear from the Welsh point of view. If we left things as they were under the Conservatives, Wales would lose £16 million. As a result of the order laid by my right hon. Friend, Wales is gaining £16 million. Thus, the argument does not fall consistently on both sides of the House. As one who is losing £70,000 in the Carmarthen district authority and some £5,000 or £6,000 in Dynefwr, I find the argument rather difficult.

Mr. Ioan Evans (Aberdare)

Will my hon. Friend also add that in Wales there will be great benefit to 31 of the 37 districts as a result of the Secretary of State's action?

Mr. Jones

Yes, my hon. Friend is absolutely right in his assertion that the majority of the local authorities in Wales will be receiving significant increases, but five of them will lose £250,000. So the actual deal is £16 million more, but five authorities will lose £250,000. It so happens, as my hon. Friend knows, that two of the district authorities fall within my constituency.

Many hon. Members opposite will benefit from the new order. But what will they do at 11.30? This is the sort of bogus political situation in which we find ourselves in the Chamber tonight. Liberal Members, I understand, intend to vote against the order. I am sure that the hon. and learned Member for Montgomery (Mr. Hooson) cannot afford for one moment to oppose the order. He will benefit to the tune of 5p in the pound. The people of Montgomeryshire will be eager to know at 11.30 tonight whether it is party politics or the hon. and learned Gentleman's constituency interest which determines what he does.

Many hon. Members have raised the question of what is wrong with the present rating system. Many hon. Members on the Opposition benches, including the former Minister—the person who was in charge for the last three and a half years—told us what was wrong with the system. The former Minister chided my right hon. Friend for not having made some major pronouncement within three weeks. We politicians are subjected to a great deal of cynicism, and that sort of argument coming from the right hon. Gentleman only adds to the cynicism that is creeping into our communities. The right hon. Member for Crosby (Mr. Page) stands to gain from the new order, yet he told the House how bad the order was. Is he talking as a party politician or as a constituency Member?

In that context, I should like to deal with the problem in Wales and within my constituency. The total impact must be assessed in comparison with what total assistance is being given. Under the Rate Support Grant Order Wales will receive about £229 million. The five authorities which are losing out on the deal are losing £250,000. That is the comparison, if one is to have any fair basis, that has to be made.

I come now to my own constituency. The Secretary of State for Wales, who was kind enough to meet me last week, listened while I expressed the anxiety of my district authority. I met the Carmarthen district authority last Wednesday. My right hon. Friend knows what I think of the fact that we are losing on the deal. When one is making a comparison and mentioning a figure of loss of support under the new order, it must be considered in relation to what is the total assistance given. In my new Carmarthen district authority, if things were left as they were then it was to have £776,000. Now it will have £1,076,000 assistance. Conceding, as I do, that it would have been £70,000 extra if the order had stayed as it was, it is still a significant increase in the grant and assistance given the year previously.

Clearly, we have to look at the way that local services are financed, and I hope that my right hon. Friend, given the necessary time, will ensure that we move away from the present rating system.

I, for one, am not exactly happy that some rural areas are losing out to urban areas. In Wales, for instance, while my rural county is losing out somewhat on the deal, other rural counties in Wales are gaining significantly. One must not present it as just a question of town versus rural areas. We must look at the whole system afresh. We must get away from analysing, basing and meeting the costs of local services on the question of property values. It is high time we moved to a system based on ability to pay, on the income of the household, rather than on the property itself. Those on fixed incomes, young people, young married people with small children, have to meet an unfair burden quite frequently.

I hope that the Secretary of State for Wales, when he winds up the debate will give to those of us from Wales who are concerned at the loss of assistance from the Government an assurance that our case will be borne in mind when he reviews the system for the forthcoming financial year. We want him to realise that rural communities have burdens and stresses placed upon them just as much as the inner cities and metropolitan areas have. They are problems of a different kind. They are problems of lack of services. Indeed, when people in my constituency compare the services that they have—or have not—at their disposal and then compare their rates with other areas, they sometimes think it high time that services were provided for them commensurate with the rates which they are paying.

Therefore, rural communities expect in the new review a realisation by the Government that the problems are just as great, just as intense—albeit different—as the problems which urban areas and towns experience. I shall listen with great interest to what my right hon. and learned Friend says when he winds up the debate.

If hon. Members are to express their feelings in the Division Lobby tonight on a constituency interest, well and good. But if we are to witness "a grand old Duke of Sidcup" performance, with the Leader of the Opposition leading his troops—many of them benefiting under this order, but for some abtruse reason, deciding to vote against it to a man— I will not play that sort of game. If it is to be party politics, let the right hon. Gentleman say so. If it is to be constituency interest, that is a totally different matter.

9.13 p.m.

Mr. John MacGregor (Norfolk, South)

I thank you, Mr. Deputy Speaker, for enabling me to catch your eye and to make my maiden speech in this important debate. I represent now the constituency of South Norfolk. It is with some surprise but great delight that I find myself following in John Hill's footsteps. I know with what warm affection and regard he was held both in the House and in the constituency. He is a most kind and sympathetic man who always did his utmost to help his constituents with their problems. Nationally, he had a wide range of interests over the 19 years that he spent in the House—agriculture, inevitably, but many others ranging from nursery education to long and sterling work in the cause of European unity. It is not only the people of South Norfolk who owe him a great deal.

I am a comparative newcomer to South Norfolk. There is a saying in the villages there that one is not accepted as a local until everyone who remembered one's coming has died. In addition to this slow acceptance of strangers, Norfolk has in the past been noted for its independence of mind, its gentle pace of life and its rural appeal. I stress "has been in the past", because all is now changing fast, and perhaps I, with a fresh eye, can see it most clearly.

The independence of mind is still there. The rural appeal is still there. Indeed it is a delightful county with long landscapes and fascinating sky views. Agriculture is still important, and Norfolk is well placed to make a large contribution to the expanding agriculture which our nation now so badly requires.

But agriculture no longer dominates. It is an interesting fact that, however widely the agricultural community is defined, it contributes only 20 per cent. of the South Norfolk work force. The remainder is to be found to a large extent in small to medium-sized industry, with Thetford playing a major part as a large overspill town from inner London. It is an overspill that has been done most attractively. The remainder is divided between small and medium industry and the large proportion who go to Norwich each day as part of the commuted work force for this expanding commercial centre.

If in this debate I dwell a little more on my constituency than is customary, it is because it is relevant to the debate itself. There are two other factors about South Norfolk which I should like to bring out. The first is that, in common with many other counties, it has a fast expanding population, with the expansion concentrated among the young, the young married couples, who are making such heavy demands on the schools in Norfolk, largely as a result of the overspill, and on the old, for Norfolk has been found to be a place very attractive to the retired: indeed, the proportion of over-65s in Norfolk is some 20 per cent. above the national average. They have come there because, until recently, and certainly now, Norfolk was a cheaper place in which to live and to eke out one's savings in retirement. So the fast expansion of the population is a relevant factor to Norfolk's local government services.

But the second factor, which in my view is equally important, is that, unlike many other counties, this population is evenly spread throughout the large expanse of South Norfolk. It is concentrated in small villages, sometimes tiny hamlets, and small towns, rather than in two or three major expansion areas. This inevitably creates immense problems for local government services. I might add that this combination makes it, as I discovered during the election campaign, one of the largest constituencies not only in terms of size but in terms of population.

I turn to the question of the rate support grant. I know that it is the custom to be non-controversial in one's maiden speech—though I am comforted by the remarks of the hon. Member for Gloucestershire, West (Mr. Loughlin) and certainly by many of the preceding speeches. I should like to take this opportunity to make clear to the House the serious situation facing many of my constituents. If not non-controversial, certainly I shall be non-partisan, for if I were to scatter shot, I should be spreading it evenly to many targets.

I recognise well the merits of the original objectives of the reform of local government finance and of the rate support grant, but I think that the new system has clearly created anomalies, as it was bound to, and we must hope that they will quickly be put right. My aim in the remainder of my remarks on the rate support grant is to be constructive and to draw attention to some of the lessons which I think have occurred in its application to Norfolk.

I speak here not only of my own constituency, but of Norfolk as a whole, because I know that my concern is shared by all other Members for that area, and in one district council I share the problem with my hon. Friend for Norfolk, South-West (Mr. Hawkins).

The facts for the domestic ratepayer—it is he on whom I am concentrating—are that on average he faces an increase of 55 per cent. this year, though this may not be as bad as the worst constituencies, for in some districts in south Norfolk the increase is as high as 80 per cent., or just over. That 55 per cent. average is composed of three elements.

About 15 per cent. of it is due to the inevitable consequences of inflation and the need to provide for the growing population; that is to say, it would have been an increase of 15 per cent. were not the rate support grant system altered. A further 18 per cent. is due to the reforms carried out under the previous Government. But the catastrophic change has been produced by the remaining 22 per cent. as a result of the action of the present administration.

I know that the total rates payable in areas like Norfolk are lower than many parts of the inner urban areas. But increases of this order play havoc with the budgets of the people in the areas concerned and for many who are just above the minimum level for the rate rebate relief. They have equally serious problems. It especially applies to many young married couples who have come in and inevitably paid the high house prices and increased mortgage rates. It applies also to the retired who are trying to make their retirement pleasant on small savings. Bearing in mind that the area has one of the lowest average incomes in the country, it is clear that rate increases of this order represent serious consequences for the people.

This rate increase of 55 per cent. compares with what the grants working group last autumn originally thought for Norfolk would be an increase of 2.1 per cent. The main factor, indeed, has been the loss of £12 million in the Government grant.

What, then, has gone wrong to produce this unexpected result? There are four factors to which I should like to draw attention and which I hope the Government will take into account in their review of the system next year.

The first factor is that the switch from the so-called rural to urban areas has been too sudden and too drastic. Almost half the loss to Norfolk has been caused by this switch. I speak with an interest as I am an inner urban ratepayer. But I well understand the local reaction of many of my constituents, who realise that, while they have the benefit of country living, they have at the same time the disadvantage of having only few of the facilities provided by local government services that their urban counterparts have.

I have had shoals of letters on this theme, and I should like to quote from just one. It says: We live in a small village with no street lights, no road sweepers, no paths for our children to walk on. We are very lucky, we do have a bus which runs about three days a week, at one a day. So why have we got to pay more rates to subsidise the city when we do not benefit from the facilities? That lady may well have added that they have no sewerage, no other facilities for children, such as swimming pools, no libraries, and so on. They pay heavy transport costs which have to be provided by their own car.

When one remembers also that these same so-called rural areas are, as I have said, areas with, on average, low incomes, and that they are also areas which are helping to ease the inner urban problem by taking a lot of the population from inner urban areas, at great expense to themselves, one sees the justice of the case that this switch from the rural to the urban areas has been too sudden and too drastic.

My second factor relates to population density. It seems, though we still have to see further evidence, that the old system of working out the population density on road mileage per head of population, rather than acreage per head of population, might have been more accurate and fairer. It more accurately depicts the picture of an area like South Norfolk, which has a large population but it is spread evenly throughout several hamlets, compared with one where the population may be concentrated in two or three centres in an otherwise large area with mountains, moorland, and so on in between. I believe that the formula for dealing with population density should be looked at again.

My third factor is the effect of a fast expansion in population. In South Norfolk it is now six times the national average and growing proportionately all the time. I do not believe that the significance of this on local authority services is yet properly reflected in the formula. It is not just the fact that there is a loss of two years' revenue, because the formula relates to population two years previously. In South Norfolk's case it means that an extra 21,000 population have not been catered for.

I think the point is much more that in areas such as this the expansion of population means that old small villages are doubling in a short space of time. Their facilities, which were adequate to cope with the problems they faced, say, five years ago, such as local schools, are now no longer adequate. Therefore, areas such as those face an inevitably heavy local government programme that must be reflected in their costs.

The fourth factor is the change back from the variable relief system to the fixed rate system, of which we have heard so much today. I shall not add to what has already been said, because the point has been extremely well made, most of all perhaps by my right hon. Friend the Member for Finchley (Mrs. Thatcher). But I believe that it is fair to say that at least the variable rate relief element took account of the situation for ratepayers, such as those in my constituency, who are facing this sudden and dramatic increase. Measures taken in haste such as this are rarely good measures. They always have their rebound, and today we have seen the effects of that rebound.

Three of the four factors I have talked about have one thing in common, namely, to show that some recognition should be given to the extra needs of so- called rural areas that are seeking to help the inner urban areas by taking their population, just as much as recognition needs to be given to the inner urban areas themselves. I hope that that will be reflected by returning to the proposition put forward by the previous Government in respect of the rate support grant this year. If not, I ask the Government to ensure that it should be reflected in the increase order this year, if there is one, and in the new formula to be arranged for next year.

9.26 p.m.

Mr. Phillip Whitehead (Derby, North)

It is a special pleasure for me to be able to congratulate the hon. Member for Norfolk, South (Mr. MacGregor) on his fluent and moderate maiden speech. As one of the other maiden speakers was reminded by my hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) tonight, we are allowed hon. Friends on our own side of the House—and not all of them at that. However, we have friends throughout the House and across the whole spectrum of political life. After long acquaintance with the hon. Member, I want only to say that his auspicious debut in our proceedings today augurs well and bears out everything that all his friends in the House would have wished.

I congratulate, too, all the other maiden speakers on both sides who have spoken. I see only the hon. Member for Leominster (Mr. Temple-Morris) in the Chamber at the moment. I assure him that if there have been occasions in recent years when we have forgotten how to pronounce the name of his constituency, or of the former sitting hon. Member, I believe that those days are now over and that we shall hear often from the hon. Member.

I appreciate my right hon. Friend's dilemma. I applaud the spirit of egalitarianism in which he has attempted to bring back the fixed rate of domestic support. When the hon. Member for Stretford (Mr. Churchill) said earlier that there was a degree of gerrymandering involved and that this was a shift over to help those who were in Labour seats, I think that he knew not what he said. If my right hon. Friend's considerations have been marked by anything, it is by a certain lofty disregard for those who enjoy majorities which are not on the sunny side of safety.

As my right hon. Friend said, the variable element in domestic rate support grant has clawed back from the conurbations what they should have had under a proper breakdown of needs and resources in the domestic element. So the sum of £446 million has been redistributed. The overall level has not been increased, as many of us had hoped, and it is an open matter whether the redistribution that has occurred is more than the rough justice which my right hon. Friend described.

It is indeed rough justice. Following the last revaluation, many of our constituents faced a heavy burden. I quote part of a letter I have received which is typical of many. The writer, a shop steward and a man of limited means, writing about the last Government's rate increases, says: During a year of rocketing interest rates, in 1973 we were presented with a revaluation, which transformed our rateable value from £68 to £254,…an increase of 44.5 per cent. Now we are told the rate levy is to be 45p in the pound which is a 31.5 per cent. Increase.…Surely some consideration is overdue to people in our position…who are prey to Government whims…and moves which have put vast profits into the pockets of certain sectors of our society, certainly not the working classes. Now I must tell the writer that in Derby it is not 45p but 48p in the pound. In Derby, which is represented by my hon. Friend the Member for Derby, South (Mr. Johnson) and myself, we are losing 3p in the pound. The hon. Member for Stretford said that 1½p in the pound was a colossal disaster, and went on to define the disaster as being every cut-back that has occurred over the last two years, all ascribed to that 1½p on the rates. I do not take that line, but I contend that 3p is a lot and will be seen as such.

Other Members are in a worse situation. My hon. Friend the Member for Belper (Mr. MacFarquhar) represents two local authorities which will lose 4p and 4½p respectively. My right hon. Friend says that the problems of the cities are severe and acute and must be met by redistribution in an egalitarian sense. I must in fairness say to him that the problems of many of the towns that now find themselves in the new county areas are also acute and severe.

For many years we have been reminded of the nature of the problems. That well-known Labour voter, the former right hon. Member for Wolverhampton, South-West, Mr. Enoch Powell, was always reminding us of the problems which had been brought to the cities and towns by immigration. We have problems in Leicester, Wolverhampton, Derby and many other places which directly derive from acute problems of urban renewal and the burdens on our schools, roads and hospitals, and so on.

Many authorities in such situations now find themselves with marginally aggravated problems as a result of what has happened. They are facing, anyway, large increases in costs. The right hon. Member for Bournemouth, West (Sir J. Eden) mentioned the heavy superstructure of local government, which is now an additional cost facing many local authorities. Who brought that about? Certainly it did not result from the shift in the domestic rate support grant. In addition, many of the new local authorities are coping with the effects of the December budget and the savage effects of the past year's inflation on their costing, and, as hon. Members have mentioned, with the increased sewerage and water authority charges.

It is not only the local authorities and the owner-occupiers—who have probably preoccupied us with their protests over the last week—who have been affected. Everybody is affected. The right hon. Lady the Member for Finchley (Mrs. Thatcher) made light of the problems of council tenants. Council tenants are also ratepayers, and they now find themselves in a situation—particularly if, as in my constituency, they pay rent and rates simultaneously—where, as they see it, they face not one but two rate increases. This has tended to vitiate many of the good things that have been done including the freezing of council house rents, which I particularly applaud, in what has been a good and auspicious start for the Government.

Many of us on this side are awaiting more assurances than we have had regarding the Government's proposals, not just until 1st April but during the next year or two. If I vote for this order tonight, it will be mainly because I feel that most fair-minded people would probably give the Government nine out of ten on their performance so far, making this the tenth point.

There have been a lot of interruptions from the hon. Member for Louth (Mr. Archer) and others, asking us why we did not choose to abstain or vote against the order so as to provoke some kind of Government crisis. I remind the hon. Gentleman of the definition given by a former Leader of the Conservative Party, Mr. Disraeli, of the difference between a disaster and a catastrophe. He said that if Mr. Gladstone were to fall into the lake that would be a disaster. If anyone pulled him out, it would be a catastrophe. I do not pursue that analogy to say we have a disaster before us, but in this situation many of us feel that to have the Government defeated tonight and asking for a vote of confidence on Budget Day would be an absurd situation, little short of catastrophe. It would be directly opposed to the many good things which have been done by this administration so far.

What we are looking for are reasonable proposals for long-term reform. When the Secretary of State for Wales winds up, we want rather more than the one or two general statements which we had from the Secretary of State for the Environment when he opened the debate.

On 12th February of last year I introduced a Private Member's Bill on the subject of rating reform. I am somewhat amused at the conversion today to widespread rating reform of the right hon. Member for Crosby (Mr. Page) who then replied to that debate. The Damascus road is crowded with converts at the moment. The right hon. Gentleman at that time spoke of the Department of the Environment being papered with White Papers and Green Papers. He hid behind those papers at the time. He had no wide-ranging proposals for reform then.

I repeat what I said in that debate. I recommend to my right hon. Friend that we want to hear at the conclusion of the debate proposals for the overall reform of the rating system. We should like to see the alleviation of the imbalance in the last rating revaluation which shifted the balance to the domestic ratepayers, partly because of the fantastic inflation in house prices and house values which had occurred.

We should like to see the elimination of rating relief on second houses. We should like to see a shift in the burden of valuation from property to the income of householders, which is a less regressive system. We should like to see consideration given to various services being taken from local authority responsibility. Education is one that comes to mind in this area.

Finally, although it can be no more than a palliative on the margin, we should like to see supplementary methods of raising revenue. Local sales taxes, for example, have often been discussed in the House, but they have never been taken seriously by successive Ministers, nor have proposals for examining them been brought before the House.

In the book which he commended to the House in his opening remarks, which is a snip at something less than £4, my right hon. Friend says that rates are certainly unpopular and in many ways unsatisfactory. We all know that. They will always be unpopular, but there are ways of making them less unsatisfactory. Tonight is the night when we want to hear how that should be done.

9.38 p.m.

Mr. Fred Silvester (Manchester, Withington)

I am proud that my reincarnation in this House should be as Member of Parliament for Manchester, Withington.

Manchester, of course, does not require any singing of praises by me. Its history as the cradle of industrial power in this country is well known. It is perhaps appropriate that I came to the House today from the opening of the extension to the international airport at Manchester, which will serve to remind us of the continuing power which that great city will wield in this country.

My constituency has within it a number of important medical centres which I shall probably mention again from time to time. We not only have the great Withington hospital itself, but there is the Christie Hospital and the Holt Radium Institute, of international repute for their work in the cure of cancer. There is also the pioneer work of Duchess of York Hospital for Babies.

I am proud to succeed Sir Robert Cary, who represented Withington for 23 years. He had been a Member since 1935. He fought every election since 1924 and had the distinction, which must be rare, of piloting no fewer than two Private Members' Bills through the House—something I should like to emulate, given the opportunity. His experience was much appreciated in the House, and I know that his voice, which has spoken for Manchester and the North-West, is well remembered in the constituency which he represented.

I want to make a few simple points about the order, and I begin by referring to a misrepresentation which has come up time and again, in speeches not only from the Government side of the House but in councils up and down the country, namely, that the amendment to the rate support grant which the Secretary of State has introduced is responsible for the redistribution of support from the counties to the big cities. In fact, the most important part of that redistribution was carried forward by the order laid before the House by the previous administration.

If one takes the general rate for a city such as Manchester, it will be found that most of the benefit that will accrue to that city derives from the previous order. In Manchester, the increase in grant was £11.6 million—that is, a 43 per cent. increase—all deriving prior to the election. It accounts for 14 per cent. of the total budget of that city. It is most important, therefore, that we should understand that, despite protestations from politicians, the advantage to the city of Manchester and to the inner cities is one that has been available to us both before and since the election.

I have been speaking of the general rate because I wish to remind the House that it is with this rate that most people who are in business or who are shopkeepers are concerned. Some have amelioration when they have a mixed rate. But for many shopkeepers it is the general rate that matters, and the general rate will not be affected by the change which this new order makes.

I hope that the House will forgive me for pressing the case of shopkeepers in this respect, but they are increasingly overlooked in the discussion about the domestic rate. My hon. Friend the Mem- ber for Reading, North (Mr. Durant) referred to it in his maiden speech. In my constituency, there is a large number of small shops that form an important part of the pattern of life for the community, which has an above-average number of elderly people. They have become used to that form of shopping, and it is very important to them.

It is worth remembering, too, that under the present order of the Price Commission on retail margins, although small shops are excluded, they will be under increasing competitive pressure. To add to that an additional rate burden is to ask too much when there are already so many pressures to keep them on their toes.

So much for the general rate. If one adds to that the 7p already available on domestic rate relief under the old order, it will be seen that for cities such as Manchester so much money had already been given that it was possible for a prudent authority to reduce the domestic rate. That was before the present change was made. Manchester is one such authority benefiting from the change being made between the two orders. The Secretary of State is beleaguered both behind and before by people getting at him because their rates have been increased.

We are now offered another 6p in the pound. I must make two points about that. First, I reiterate that the amount which that gives to Manchester is small beside the amount already available to it under the old order. Second, I am always glad that my constituents should be relieved of any obligation to pay more rates, and I shall not look a gift horse in the mouth. But I can understand the anger of my right hon. and hon. Friends when they see that the other end of that horse has a vicious kick. Those people will be badly affected. My area, Manchester, will certainly gain, but very little compared with what it was already gaining under the old system, and at the cost of a great deal of unhappiness in other parts of the country.

One of the most unpleasant aspects of the order is that it is frequently debated in terms of setting the town against the country. That will mean conducting this debate in no good manner, and it will reach no sensible conclusion.

There are two important aspects of the rating system which the order does not cover but which we shall have to meet. The first is the efficiency of local government expenditure. It may have been asking a lot to require local authorities to keep their growth in expenditure this year to 13 per cent., but it cannot be wrong to ask local authorities, which are now responsible for a third of total public expenditure, to make a contribution to increased financial discipline in times like the present. Manchester, for example, will have a rise of 25 per cent. in its expenditure, which to say the least is unhelpful and badly timed.

The second thing that we must do is find a way of making the system fairer. Hon. Members have discussed the differences between authorities. It is also worth pointing out that within one city there may be great unfairness. There are people in my constituency who are forced to contribute to the services required for big city administration but get little benefit from them. We are well used to this in national taxation—we do not expect to get back exactly what we pay in, but in the case of rates this is not a fair system. Why should a single householder be required to pay more rates than someone with several adult incomes coming into the same house? That is an unfair system which we shall clearly have to rectify.

I was interested in the proposals of my right hon. Friend the Member for Crosby (Mr. Page), who I am sure the House heard with great attention. One thing which I hope we shall all concentrate on as a result of the order is the fact that the problems of the inner cities arise from the pursuit of national policies. They will have to be paid for nationally, and services like education will have to be taken out of the local rate. By this simple stroke we should make it possible to debate the rate support grant order of the future with this unfortunate division between town and country greatly ameliorated.

9.59 p.m.

Mr. Leslie Huckfield (Nuneaton)

I am not sure whether it is within the traditions of the House to accord the same congratulations to a reincarnation as to a maiden, but I offer my congratulations to the hon. Member for Manchester, Withington (Mr. Silvester), not least for disappearing from Walthamstow and reappearing in Withington. I am sure that the House has benefited from his experience both tonight and when he was last here.

I should also like to pay my tribute to the hon. Members for Leominster (Mr. Temple-Morris) and Reading, North (Mr. Durant) and to my hon. Friends the Members for Thornaby (Mr. Wrigglesworth) and West Bromwich, East (Mr. Snape), as well as to the other hon. Members who have spoken tonight.

While the maiden speeches were flowing thick and fast, I took a look at the league table of relief published in the Municipal Journal on 1st March 1974. In that table, on page 221, was listed the relief that every district was due to receive under the old order. It showed those Conservative Members whose constituents were due to receive 5p and all those who were due to receive 13p. It is amazing the number of "15p shouts" we have had from hon. Members whose constituents would be affected to the extent of only 2p. However, the cries of protest from Conservative Members have been quite incredible. On the other hand, many of my Labour colleagues have far more ground for protest because of the situation in which their constituents have been placed, and their cases should have been heard far more than the cases put by Conservative Members.

I make no apology for the fact that I represent a district council—as it will become on 1st April—which, under the order, will lose domestic rate relief of 12½p. Many of my constituents have already protested to me about the effect of the order—[An HON. MEMBER: "Then vote against it!"] I am quite prepared to make my own speech without any assistance, and I intend to do so. Many of us have had difficulty in accepting the formula on which the old system of rate relief was based. A system which traditionally benefited only rural areas and did not offer some succour and comfort to urban areas was not particularly palatable to Labour Members.

Many of my constituents understand the pressing problems of areas such as central London, central Manchester and many of the areas that will benefit from this new order. However, they wonder whether my right hon. Friend the Secretary of State for the Environment fully understands the pressing problems in many of the smaller towns which now find themselves in non-metropolitan counties.

I represent a constituency that is not in the West Midlands metropolitan county but is in the new county of Warwickshire. When we consider the kind of rate relief which my constituency was accorded in the old system and see the way in which the situation has now changed, we note that the new rate support grant order appears to impinge on those towns which are outside the metropolitan counties but still have a tremendous number of services to provide. Some rural areas have suffered smaller cuts than has my constituency, but constituencies such as mine must continue to provide services. This underlines the problem that we now face.

It is difficult for the authorities in my constituency to sustain a reduction in rate-borne expenditure, particularly when it is appreciated that in Nuneaton 48p out of 60.7p is beyond its control anyway. I understand from the treasurer of my authority that even if a reduction from 60.7p to 60p could be achieved—although that would have the effect of cutting the potential expenditure available to the council by £116,400—it would save ratepayers only some £79,100. In other words, a cut of that magnitude to try to save expenditure would have serious effects on the spending programme of the district council but would be of little help to domestic ratepayers. Because of the level of services it has to provide, an authority like mine does not have available to it the opportunity to make cuts in expenditure, as do, for example, some of the authorities that do not have to provide so many services.

Let us consider the kind of rate expenditure which will impinge on an authority like mine. Of the 60.7p rate, 41p comes from a Tory-controlled county council which increased its rate and proposed the new rate even before the General Election. When we consider the kind of services which the new counties have to provide, especially their extended remit in health and social services, we are forced to ask why, if the Conservatives were so keen to reform local government and to have the new county councils carrying out far more functions, they did not give the county councils more money to do the job. I cannot help feeling in view of some of the rate calls mentioned by hon. Members that the bulk of them arise from the levy which comes from the county councils who declared their rates before the election. To blame all that on a Government who have been in power for a few weeks is just not on.

As a result of the orders the average domestic ratepayer in Bedworth will have to pay an extra £32 per year, or 62p per week. In Nuneaton, the average domestic ratepayer will have to pay an additional £33 per year, or 63p per week. A person now paying £100 for the general and water rate in Bedworth will find himself paying 85p more per week. A person now paying £100 for the general and water rate in Nuneaton will have to pay an extra 90p per week. These are not trifling amounts, or amounts which my constituents can take lightly. Many of the council tenants thought their rent had been frozen by the Government's proposals, but the freeze on rents is more than cancelled out by the increase in rates. That raises the question, what is the average benefit of those two proposed pieces of legislation?—a point that my constituents have been raising with me over the weekend.

We cannot escape from the fact that whichever way we reform the rating system someone is bound to get hurt. There have been speeches from both sides of the House calling for a reform of the rating system, but any reform will mean that someone will gain and someone else will lose. I believe that that is a consequence of reforming local government without reforming local government finance. When in Government, the Conservatives were keen to reform local government and to create these larger areas. I wish to goodness that they had dealt in much more detail with the bigger problems that they were creating.

My right hon. Friend has already had a telegram from my two local authorities. He or my hon. Friend the Under-Secretary will see a deputation tomorrow morning. I know that the deputation will be told that increased rate rebates are available from 1st April—rebates that were instigated not by the Conservatives but, I believe, by the previous Labour Government. For the Conservatives to claim the credit for the bigger rate rebates is rather like the hon. Member for Stretford (Mr. Churchill) trying to say that everything that happened in his constituency in the last two and a half years was because the Labour Government proposed to lop l½p off his domestic rate.

My constituents will face a serious prospect unless there are measures in the Budget about mortgages. They are in a serious position because of the loss of domestic rate relief which they will suffer under the order. I know that my right hon. Friend may believe that he understands the full compass of the problems which have been presented to the House, but I do not think that he has so far taken sufficiently into account the problems of urban areas outside the metroplitan counties.

There have been protests from hon. Members on both sides who represent rural areas. Incidentally, most of the areas which appear to be hardest hit are represented by the Liberal Party, but it has not been much in evidence in the debate.

I am not sufficiently satisfied that my right hon. Friend has understood the problems of areas like mine and I hope that in the concluding speech for the Government there will be greater succour and comfort than there has been so far. I hope that greater understanding will be shown, whether it be in an increase order which, I am told, is still available, or through some other interim measure, which I understand is possible. Unless greater succour and comfort is forthcoming, or greater understanding is shown, I shall have great difficulty in supporting the order.

Mr. Teddy Taylor (Glasgow, Cathcart)

On a point of order, Mr. Deputy Speaker. It is now clear that the debate on this very important order will continue until at least 11.30 p.m., which means that the Scottish order, which is equally important and which will affect the rates paid by people all over Scotland, will be debated from 11.30 p.m. onwards. This is outrageous when one considers the importance of the business. Will you ask the Leader of the House to make a statement saying that he agrees that in view of this important debate continuing until 11.30 p.m. the Scottish order will be discussed tomorrow? It would be an insult to ratepayers in Scotland if the important order relating to Scotland were not discussed until the small hours.

Mr. Deputy Speaker (Mr. Oscar Murton)

I understand the hon. Gentleman's concern, but the Chair is governed by procedure laid down in Standing Order No. 3(1)(b) which refers to proceedings in pursuance of any Act of Parliament … and states that: … Mr. Speaker shall put any questions necessary to dispose of such proceedings not later than half-past eleven o'clock or one and a half hours after the commencement of those proceedings, whichever is the later". It is in this case 11.30 p.m.

Mr. Taylor

I appreciate that, Mr. Deputy Speaker, but surely it does not prevent the Leader of the House, or the Chief Whip, from agreeing that the Scottish order be discussed tomorrow. I realise that we have the Budget tomorrow, so perhaps the Scottish order should be discussed on Wednesday. There is ample time this week for a proper debate on this vital order.

English Members have rightly shown that the order affecting England is important and needs a lot of time to be debated. The Scottish order is just as important. It would be scandalous to discuss it after 11.30 p.m.

Mr. Deputy Speaker

The Chair is bound by Standing Orders and, as such, in this case it should be 11.30 p.m. before this debate is concluded.

Mr. Ian MacArthur (Perth and East Perthshire)

Further to that point of order Mr. Deputy Speaker. With great respect to you, I recognise that you are bound by the Standing Orders of the House, but is there no procedure, in circumstances of this kind, whereby the presence of the Leader of the House can be expected at ten o'clock, when it was widely expected by hon. Members on both sides that we would start the debate on the Scottish order. This is not only a matter of concern for Scottish hon. Members. There are 149,000 tenants in Scotland who are paying no rent because of the Conservative housing policy, and they are waiting anxiously to hear the result of the debate tonight—

Mr. Deputy Speaker

Order. The hon. Gentleman is getting a little wide of the mark. The question of a decision by the Leader of the House is no concern of the Chair.

Mr. J. Bruce-Gardyne (South Angus)

Further to that point of order, Mr. Deputy Speaker. We all appreciate that you are placed in a difficult position in these circumstances, but the English order has now been discussed for six hours, and it is apparently proposed that the Scottish order, of at least equal importance to all the ratepayers of Scotland, is to be confined to the watches of the night. May we submit, through you, that there is an urgent case for the Leader of the House now to make arrangements to take the Scottish business at a more suitable time on another occasion?

Mr. Deputy Speaker

The hon. Gentleman is quite wrong in this matter. It is no concern of the Chair, and he is taking up the time of the House when many hon. Members are still waiting to speak.

10.6 p.m.

Mr. Michael Alison (Barkston Ash)

The Secretary of State for the Environment started his speech today with a reference to the rather disagreeable environment in which he found himself in that vast building where he now lives. I warn him of one occupational hazard he will find as he gazes out of the ninth floor of that great building across the panorama of London, taking a bird's eye view of things. Many of the mountains that confront people close to the ground will appear to him from a great height to be much flatter than they really are.

In dealing with the order we must adjust all our thinking. I beg the right hon. Gentleman in particular to adjust his thinking to a worm's eye view of what is implied for individual families or householders in specific houses in specific localities. Not enough attention has been paid to what is now crowding in on individual householders as a result of the various hazards that have cropped up in their lives, partly as a result of events during the life of the last Government and partly as a result of what the right lion. Gentleman is doing tonight.

The right hon. Gentleman will know, as an economist, that there are many elements in the costs that householders now have to bear for which there is no substitute in alternative forms of expenditure. There is virtually no dodging the burden that a mortgage now places upon the householder. He cannot switch to an alternative form of consumption in that sector. There is nothing he can do about the impending enormous increase in the cost of electric lighting and heating.

On top of all that, we now come to the hazards to be presented to some households by the change from the old variable formula which my right hon. and learned Friend the former Secretary of State had proposed. I want to remind the Secretary of State of what those hazards mean to a typical family. I take a house in the town of Selby in North Yorkshire, one of the areas disadvantaged by the order. I hope that the right hon. Gentleman can enter sympathetically in his imagination into the family life of those in a three-bedroom semi-detached house with a rateable value of, say, £250 under the last revaluation, where the householder was paying a rate of £78 in 1973–74.

As a result of what the right hon. Gentleman is doing in the order, that rate will go up to £120. I have here a specific example provided for me by the county treasurer of North Yorkshire. It gives the original notification, before the present order, after taking account of subsidy in 1974–75. I shall pass it to the Secretary of State. If the original notification under the variable formula had applied, the householder paying £78 in 1973–74 would have found that his rate had gone up to £103. As a result of what the right hon. Gentleman is doing tonight, he will be paying a rate of £120. Compared with 1973–74, that is an increase—and it is by no means the most astronomic—of £42 a year. That is nearly an extra £1 a week and is a rise of 54 per cent. The Selby District Council sent me a telegram which indicated that some householders would be paying more—up to 75 per cent.

I hope the right hon. Gentleman appreciates that for a family with perhaps no great income, having had to face increases in mortgage repayments and facing impending increases in electric heating and lighting charges, the sort of rate increases which are now implied by the order are little short of catastrophic in personal terms. They turn the phenonomen of inflation literally into a spectre. If the right hon. Gentleman is unable to perceive, with his casual throwaway use of the phrase "rough justice", what such increases will mean, he must accept that the order implies something in which justice plays little part. "Roughly" is an under-statement of the impact upon the individual. The right hon. Gentleman must take away the order and rethink it.

Mr. Crosland

The hon. Gentleman is a person of great integrity. Does he agree that the increase in mortgage rates to 11 per cent. was nothing to do with the present Government? Does he agree, on the basis of the figures which he has quoted, that the greater part of the increase in rates which people in Selby will suffer is due to the previous Government's rate support grant and not to the change which I have made?

Mr. Alison

I cannot accept that. I told the right hon. Gentleman that the increase implied by the order represents another £17. I have already given him the figures. I have told him what the original rate would have been in 1973–74. Under the original notification the rate would have gone up to £103. That is serious enough. Under the new notification it has gone up another £17 to £120. I hope that the right hon. Gentleman takes the point which I am making. It is no good harking back to whose responsibility it is. If right hon. Gentlemen want to try to comfort honest citizens in the community, they should think about the future. It is the future which is implied in the order. By harking back to whose responsibility it was that mortgage rates increased, or who is responsible for impending increases in coal, fuel or lighting charges, the Government are betraying the trust that people put in them.

The people put trust in Parliament, and it is the future about which we should be concerned. The right hon. Gentleman has brought forward an order which he has not properly thought through. The order has not been considered from the worm's eye point of view. It has not been considered in relation to all the other matters like extra coal costs, which will be disastrous for many people. The right hon. Gentleman must bear in mind that in some cases folk are facing another £1 a week in extra rates as a result of what is implied in the order.

The right hon. Gentleman talked in a casual way about rough justice. He put it forward with something of an old-fashioned smile as if everyone in politics is accustomed to this sort of thing. He then threw in, to make matters worse, the concept of egalitarianism as the basis for justifying his rough justice as the guiding principle of this measure. However, he has not even got his egalitarianism anything like approaching right because he bases his argument for the new order upon the need to do something special for the inner city areas.

It is ludicrous to pretend that those areas are as seriously disadvantaged as he chooses to pretend when we bear in mind that many such areas contain a lot of relatively well-to-do people. Even if they contain a lot of poor folk, the rate rebates apply to them and there is a genuine cushioning effect to that extent. Further, the total formula upon which rate support grant is distributed contains the needs and resources element, specially tailored to inner city areas. Thus overwhelmingly the largest part of the rate support grant specifically takes into account in a deliberate way the special needs of inner city areas.

The situation is ludicrous in that places in London like the city of London, the Royal borough of Kensington and Chelsea, the city of Westminster, Barnet, Bexley, Royal Kingston-upon-Thames and Richmond - upon - Thames—these poor, neglected inner city areas—are to get special help from the Secretary of State. But what is he doing for Yorkshire? The premier and largest county, as the Comptroller of Her Majesty's Household, now silent, unfortunately, because of his trappist vows, knows, is split into north, south and west. It contains 17 separate districts. No fewer than 15 of them are disadvantaged by what the Secretary of State is doing. Only two get any sort of advantage.

Where is the egalitarianism there? Where is the right hon. Gentleman's desire to help the poorer parts of Yorkshire? There is nothing egalitarian about his formula. It is haphazard. Such is the inaccuracy of the right hon. Gentleman's aim that nine-tenths of the largest county will be outside the range of help he wants to give. Most of Yorkshire will be outside that help because the right hon. Gentleman wants to do things for places like the city of London, the city of Westminster and other places in the capital. It is a ludicrously rough form of justice.

It is no use simply saying that we must look at long-term ways in which to inform the system. As my right hon. Friend the Member for Finchley (Mrs. Thatcher) pointed out with great insight, there is ready to hand something which the right hon. Gentleman could do, not next year but in the Budget tomorrow or very shortly afterwards. He could turn again to the method which my right hon. and learned Friend the Member for Hexham (Mr. Rippon) introduced when revaluation imposed extra burdens on householders. My right hon. and learned Friend introduced special ad hoc relief.

My right hon. Friend the Member for Finchley reminded the right hon. Gentleman that on 6th March last year the then Government announced their intention to give some relief to those domestic ratepayers whose rate bills would increase substantially in 1973–74 as a result of revaluation. The details of the relief available were given in Circular 34/73. The relief payable was half the amount of increase over 10 per cent. in domestic rate bills arising purely as a result of revaluation.

Why should not this precedent be followed now? In financial terms, it is clearly available. The Government have found it possible to produce £20 million for bread subsidy and to make extra finance available following the freezing of rents. Why not, therefore, adopt this simple method of ad hoc relief? The method for revaluation relief was first to calculate a factor representing the increase in rates which would have arisen in 1973–74 because of changes in rate-borne expenditure, discounting revaluation, and then to add 10 per cent. on to it; and any ratepayer whose bill for 1973–74 exceeded his 1972–73 assessment, multiplied by the factor I have described, was entitled to relief as to half the increase.

Why should not this formula be applied to the extra element of reorganisation costs now in place of the revaluation factor? It would not cost a large sum of money. It would be a practical step, and one which we would expect of the right hon. Gentleman.

If the right hon. Gentleman is unable to offer help generally to Yorkshire, where so few areas are to get advantage from what he is doing—and even the rates of towns like Wetherby, helped under the order, will still go up over 50 per cent.—then hardship will result. It is vitally necessary in the exceptional circumstances of reorganisation for him to do something practical.

Many hon. Members have expressed grave disquiet. We have to focus upon the deeply worrying circumstances now beginning to press in upon householders. If the Government mean anything at all in terms of egalitarianism and justice, let alone rough justice, they will bring forward a special measure of relief to take account of the special circumstances of this year. If the right hon. Gentleman or his colleagues cannot give an assurance on this point, then I, representing a Yorkshire constituency, will have no hesitation in voting against the order.

Mr. Deputy Speaker

Order. Before I called the next hon. Member I would point out that there is not much time remaining and that quite a number of hon. Members still wish to speak. Short speeches would be most acceptable.

10.21 p.m.

Mr. Paul Tyler (Bodmin)

I have a special interest in this debate in that I am a ratepayer in the district which is hardest hit by the revised rate support grant. I heard an hon. Member saying that he was to be affected to the tune of 1.5p. I was surprised that he dared to rise to his feet at all. My district is, we understand, to suffer a cut in grant of 27p in the pound. Despite that I have some sympathy with the right hon. Gentleman's intentions. I accept that there is a need to assist the lower income areas of the country, that they must be given the opportunity of greater income and that they must have the burden of increased expenditure taken off them.

Similarly I see that the central areas of our great conurbations have special problems and needs and require special encouragement. It is equally important that we recognise that the figures worked out by the previous administration were not compatible with those aims and intentions. My point is that two wrongs do not make a right. Two half-baked schemes put together do not provide a proper solution to the problem. I cannot understand how any hon. Member opposite can justify a scheme which will help Leeds at the expense of Huddersfield and will penalise towns with such major problems as Leicester, Stoke, Hull, Derby and Wolverhampton.

I cannot understand anyone who seeks to justify a scheme which enables the people of Wales to get nearly three times as much as the people of Cornwall, who have almost identical problems. Here I come to the crunch point. The Minister was kind enough to give me a Written Answer at the end of last week giving comparisons between the water and sewerage rates for districts in Cornwall compared with districts in Wales. What comes out of those figures is that while the highest combined figure for Wales is 32.5p in the pound—and in my district of Caradon in Cornwall it is 27.7p—there are, nevertheless, figures in Wales which are much lower, down to 11.2p, which is far below anything in Cornwall.

In certain parts of the country there is an accumulation of factors which deserve special treatment, where the water and sewerage rate falls disproportionately hard upon the domestic ratepayer and where the domestic ratepayer is part of a low income group. This accumulation of factors arises especially in Wales and Cornwall. To a lesser extent it is present in some other development and intermediate areas The Secretary of State has given special treatment to Wales. He should extend that special treatment to these other areas.

The right hon. Gentleman must give three undertakings to meet the misgivings of hon. and right hon. Members. First, he should say—and I hope he will—that he is prepared to offset the burden of large water and sewerage rates. His right hon. and learned Friend the Secretary of State for Wales created the precedent, and the Secretary of State for the Environment should extend it.

Secondly, there must be an immediate extension of rate rebates to cover sewerage and water charges. Those who are eligible for maximum rebate in my constituency face massive increases of about 70 per cent. or 80 per cent., and they are the people whom the Government say they particularly want to help. Cornwall is an area of incredibly low incomes. The average wage in Cornwall is about £10 less than the average wage in Wales.

Thirdly, the right hon. Gentleman, in consultation with his colleagues in other Departments, should give special assistance, through the machinery and the geography of the development and intermediate areas, to those areas of the country where there is an accumulation of special factors. If the right hon. Gentleman gives those explicit assurances we shall feel that the intentions he announced are being met. I do not believe that they are being met by the order.

10.26 p.m.

Mr. James Wellbeloved (Erith and Crayford)

The subject of the debate is of vital importance and affects every one of our constituents. It concerns the impact of rates upon domestic households. I am in favour of the action which my right hon. Friend has so swiftly taken to try to redress the nonsense imposed upon local authorities by the previous administration.

I was delighted that the hon. Member for Barkston Ash (Mr. Alison) referred to the London borough of Bexley. I have the honour to represent one of the constituencies in that borough, an honour which I share with the right hon. Gentleman the Leader of the Opposition, who is the right hon. Member for Sidcup (Mr. Heath) and the hon. Member for Bexley-heath (Mr. Townsend). I wonder whether the Leader of the Opposition and his hon. Friend the Member for Bexleyheath will have the gall to go into the Lobby against the Government on this issue.

One might think that this was the first occasion on which a Government have had an opportunity to do something about the heavy burden of rates. I served on the Standing Committee on the Local Government Bill, with the hon. Member for Bury St. Edmunds (Mr. Griffiths), who will recall that Labour Members put down numerous amendments to the Bill to deal with the resources, needs and domestic elements of the rate support grant, and asked the then administration to give local authorities the opportunity to raise revenue from other sources. I tabled an amendment to provide that local authorities should have the opportunity of imposing a tourist tax on hotel beds. In many areas that would have gone a long way towards meeting the unfair burden that some ratepayers have to bear because of their geographical situation.

London has had a bit of a kick-around today, and the fair and just case for London has not been put. London has two basic disadvantages—apart from the Leader of the Opposition and the hon. Member for Bexleyheath. The first is that it has the highest rateable values in the United Kingdom, and that is accepted beyond dispute. London ratepayers also have thrust upon them the burden of £104 million unavoidable expenditure which no other local authority or combination of local authorities has to face. That heavy expenditure is borne by London just because it is the capital city. For instance, visitors from overseas clog our roads with traffic, causing immense frustration and cost to London ratepayers.

If I may say so to my hon. Friends who normally have great compassion and care for the less-well-off sections of our society, they ought to listen to my case because London unfortunately acts as a magnet to down-and-outs and drug addicts from all parts of Britain. Many of the down-and-outs whom I see on the Embankment, for whom I and the rest of London ratepayers bear the burden of providing facilities, come from constituencies represented by some of my hon. Friends They should bear in mind that when the Yorkshire hippy camps on the Embankment in London it is not the Yorkshire ratepayer who bears that burden. It is the London ratepayer who does so.

There is also the disadvantage that many hon. Members opposite live in London. They live in what they regard as their weekday cottages while they are here for the odd day during the week attending Parliament. One of our complaints was mentioned by the hon. Member for Bodmin (Mr. Tyler), who referred to an accumulation of factors. It is because London has an accumulation of factors which do not apply to any other local authority area that I believe it was right for London—and I could give figures for many other areas with large populations—[Interruption.] My hon. Friend the Member for Huddersfield, West (Mr. Lomas) is eager to catch your eye, Mr. Deputy Speaker, and I have no doubt that with his normal persistence he will do so. As my right hon. Friend the Member for Battersea, North (Mr. Jay) says from a seated position, there will be plenty of time for my hon. Friend.

As a result of the action of my right hon. Friend the Secretary of State for the Environment, a large number of major authorities will now be able to tackle some of the problems which face large cities. The Association of Metro- politan Authorities, the new body formed to look after the interests of the new large authorities, supports my right hon. Friend's action.

Mr. Kenneth Lomas (Huddersfield, West)

Nonsense.

Mr. Wellbeloved

My hon. Friend calls it nonsense. If he wishes me to read the brief which that body has sent to me, I shall be more than pleased to do so, but I am sure that in the interests of time he will accept what I say. Most ratepayers in London suffer from the effect of other things which the Conservative Government forced through—[Interruption.] We always get this sort of attitude —I will not call it a drunken attitude because you would call me to order, Mr. Deputy Speaker—from hon. Members opposite after a good dinner. Hon. Members opposite seem to congregate on the back benches and at least give the appearance of being slightly inebriated and careless of the real interests of the people of this country. [HON. MEMBERS: "Withdraw."] I will not withdraw. If hon. Members give the appearance of being drunk, that is their fault.

Mr. Deputy Speaker

While the hon. Gentleman is not being strictly unparliamentary, he is speaking with slightly less dignity than we expect.

Mr. Wellbeloved

If I had said they were drunk, I would have been out of order, Mr. Deputy Speaker. I am not suggesting that they are drunk. I am merely suggesting that they are giving a very good imitation of it.

Mr. Deputy Speaker

I was dealing with the question of dignity.

Mr. Wellbeloved

The dignity of the House would be better served if hon. Members tried to maintain a dignified silence when others were speaking on such important and vital matters affecting the ratepayers.

As I was saying, some of the actions of the Conservative Government, ranging back to 1962, have had a disastrous effect upon ratepayers. I recall the reorganisation of London government. That measure was forced through the House on a timetable motion without a proper opportunity to discuss it. It had the result of forcing up the cost of local government administration in the metropolis to a phenomenal extent and of increasing tremendously the rates paid by London ratepayers.

I regret that the Conservative administration, far from taking the lesson of London reorganisation, pressed ahead with the reorganisation of local government throughout England and Wales, because this has contributed to the high rate demands that are about to flood out upon ratepayers all over the country. It is a bit much for hon. Members on both sides of the House to attack my right hon. Friend, because he has done something that is sensible and correct in the light of the situation that he found when he took over the Department.

When the rate support grant was introduced it had three elements—the domestic relief element, the resources element and the needs element. It is the needs and resources elements which ought to be the vehicles for bringing the necessary relief to hard-pressed ratepayers, whether they live in urban or in rural areas, and, if my right hon. Friend has not already done so, I am sure that when he winds up the debate he will make it clear that it is the Government's intention to do just that in the time that they have available.

The domestic element in the rate support grant was never designed to deal with the resources and needs of local government. The domestic element, when it was introduced, was a flat-rate payment over the whole country. The system was altered by the previous administration, basically to try to give preference to those areas which it thought were more important electorally, though I understand and sympathise with those of my hon. Friends who were caught in that little bit of political jiggery-pokery.

I hope that as a result of this debate and the Division tonight we shall be back to a flat-rate domestic element over the whole of England, and an equivalent rate for the whole of Wales. This is a fair way of dealing with the matter, but sooner or later this Parliament will have to get down to the total reorganisation of the method by which local authorities are financed. I hope that when that is done we shall have the support of some of those right hon. and hon. Gentlemen opposite who have been so loud in their condemnation of the Government on this order.

I wait with bated breath to see whether the right hon. Member for Sidcup and the hon. Member for Bexleyheath join me in the Lobby in support of the order and of their ratepayers in the London borough of Bexley.

10.39 p.m.

Mr. Eldon Griffiths (Bury St. Edmunds)

I am grateful to my hon. Friend the Member for St. Ives (Mr. Nott), who is to reply for the Opposition, for allowing me two minutes of his time, and I hope that the Secretary of State will match that, because I feel that I must intervene following the absurd intervention of the hon. Member for Erith and Crayford (Mr. Wellbeloved).

The debate today concerns the sum of £3,076 million. As the Secretary of State recognised, nearly the whole of the debate has centred on the domestic element of rate support grant, which is a small proportion of that sum. I make no complaint about that, but, as a former Minister responsible for rates, I wish to make two general points.

First, we are talking about an enormous and increasing proportion of our gross national income. If our local government is the best in the world, it is exceedingly expensive. I hope that there will be general agreement that it is high time that the increasing costs of local government were brought under some control. I hope that the additional help which is given will not be an invitation to local authorities to spend more. The national economy requires that, if anything, they should moderate their expenditure in the national interest.

The rating system is defective and needs to be improved. We sought in the last administration to make it more effective by taking account of such factors as changes in local government, water administration and other things. In the variable element we found a more sensitive system of fine tuning. I regret that the right hon. Gentleman, arbitrarily and hastily, has thrown that overboard, and I believe that he will live to regret it. The system he has brought in is not only arbitrary and capricious: it simply does not achieve the very purpose of egalitarianism that he has himself set forward.

I should like to read some of the results, in the form of a league table of what Labour Members will tonight be voting for. As a result of the order, Government help to domestic ratepayers will go up or down as follows: the city of London, 2p up, the city of Durham 2½p down; Sevenoaks 3½p up, Darlington 3½p down; Mid-Sussex 3p up, Leicester 3½p down; Brighton 5p up, Redditch 11½p down; Bath 5½p up, Stoke-on-Trent 5½p down; Kingston-upon-Thames 6½p up, Kingston upon Hull 4½p down.

This is social justice? It is nothing more than absurd. It began as a piece of political payola, and the Government are not even competent to carry out that.

10.43 p.m.

Mr. John Nott (St. Ives)

As is customary, I should like to start by congratulating the six maiden speakers in this debate. All made exceptional contributions to our discussion of this important order.

My hon. Friend the Member for Leominster (Mr. Temple-Morris) made an excellent speech. He follows a much-loved Member, Sir Clive Bossom, whom we shall all miss very much. His speech was fully up to the standard that I remember well when we used to debate together at Cambridge 15 years ago. He described feelingly the resentment of those who look across the border to the flat-rate relief of 33½p in Wales, when there is, of course, a variable rate with the English towns and counties. He and the House will be interested to hear from the Secretary of State for Wales how this can be justified, and what are the "special problems" to which the right hon. Gentleman referred. We look forward to many further contributions from my hon. Friend.

My hon. Friend the Member for Reading, North (Mr. Durrant) made an interesting speech, whose brevity will have commended it to the House. His strong feeling that all local government finance, including rating, is in need of reform is widely held in the House, as was clear from several speeches. We all look forward to hearing more from my hon. Friend in future.

I greatly regret having missed the maiden speech of my hon. Friend the Member for Northampton, South (Mr. Morris), because I understand it was a fine speech. That does not surprise me, since I served for a time with him on the Islington Borough Council under his leadership. If anyone knows the problems of the inner conurbations it is my hon. Friend. With his profound knowledge of local government, we hope to hear a great deal from him in these debates. There is nothing the House respects more than an hon. Member who speaks with experience and knowledge of a subject.

My hon. Friend the Member for Norfolk, South (Mr. MacGregor), representing a rural county, made an able and fluent speech. He succeeded one of the most respected Members of this House, Mr. John Hill, who will be greatly missed, particularly in debates on agriculture and education. My hon. Friend the Member for Norfolk, South spoke most interestingly about his constituency and its problems. He said that in Norfolk—and this sounded a little like my own county of Cornwall—a man is ultimately accepted when everybody who remembers him arriving has died. I know from what he said and the manner in which he presented his case that he will prove to be an exception to that rule in Norfolk, and that he will become accepted there very soon indeed.

The hon. Member for Thornaby (Mr. Wrigglesworth) was greatly encouraged in his maiden speech by the fact that Middlesbrough has returned to the First Division. He made a good constituency speech, and I know that the enthusiasm for his team will carry over into representation of his constituents' interests in this House. Everybody who listened to him thought that he made an excellent contribution to the debate.

I regret that I missed the maiden speech of the hon. Member for West Bromwich, East (Mr. Snape), but I am told that it was a robust and articulate contribution. He did not speak with any great admiration for the Conservative Government, but in view of the hammering given to the Labour Government in this debate, it must be said that the hon. Gentleman added some measure of balance to it. I congratulate him, too.

I wish to say how delighted we all are to welcome back to the House my hon. Friend the Member for Manchester, Withington (Mr. Silvester). The only regret we all have is that we no longer have in the House that much-loved Member Sir Robert Cary. His experience, modesty and good humour will be greatly missed by every Member of the House of Commons.

I wish to commence my short wind-up of this debate by saying that I am somewhat unaccustomed, but none the less relieved, to be speaking in this House without the aid of a Treasury brief. Therefore, I must ask the House to accord me its customary generosity as I embark on a speech on a subject which, until last Friday, found me not wholly devoid of knowledge because, much to my astonishment, I was at one time an alderman. On the other hand, as an ex-alderman I am not wholly lacking in ignorance of this subject. Having heard the contribution of my right hon. Friend the Member for Crosby (Mr. Page), who knows so much about this subject, I confess that I came to this debate clothed in modesty rather than in my old aldermanic robes.

I certainly came to this debate with greater humility than did the right hon. Gentleman the Secretary of State for the Environment. When the right hon. Gentleman spoke of "that elegant adornment of London's environment," I thought for one moment that he was referring to himself rather than to No. 2 Marsham Street. It is a lofty building and matches what the hon. Member for Derby, North (Mr. Whitehead) described as his right hon. Friend's lofty disregard —a disregard which I think has come across in this debate today. It was a mark either of the Secretary of State's remarkable powers of comprehension or of his impatience—even, perhaps, of the intellectual arrogance suggested by my hon. Friend the Member for Grantham (Mr. Godber)—that within a few days of assuming office the right hon. Gentleman saw fit to overthrow, in the thirteenth hour, an earlier decision made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon). We must remember that the decision taken by the Conservative Government was made in good faith, after full consultation with all the local authority associations. It was made after a study of all the options. It cannot be suggested that the new Minister had time seriously to consider the matter. I echo the words of the hon. Member for Gloucestershire, West (Mr. Loughlin).

I realise that any formula that attempts to balance out the discrepancy between different parts of the country cannot avoid some anomalies. My right hon. and learned Friend admitted this. But in his choice of the variable domestic element he sought to impose a limitation on the increased burden ratepayers might face, provided that local authorities kept to the agreed rate of spending and exercised economies in saving and other matters. It is evident that the Secretary of State takes the same view, that a variable element makes some sense, because in his proposals he has chosen to use a variable basis as between England and Wales. Yet he rejected it as between one English county and another and between one part of the United Kingdom and another. It is that among many other factors on which the House will require an answer. I hope, again to use the words of the hon. Member for Derby, North, that we shall get more than the one or two general statements made by the right hon. Gentleman in opening the debate.

As the debate has made clear, by adopting an arbitrary flat rate the Secretary of State has pleased some hon. Members but he has greatly angered others on both sides, including the hon. Members for Gloucestershire, West, Dewsbury (Mr. Ginsburg), Nuneaton (Mr. Huckfield) and Derby, North. In a divided House and a House that is divided across the parties, it is normally simple for the Government to get their way, but I think that tonight things look a little different.

However, regardless of constituency interests, what has been so evident in the debate is that in his first public action the right hon. Gentleman has undermined the belief that these matters will at least attempt to be handled with equity and justice. The Secretary of State described his own action as "rough justice", and surely only an over-confident Minister can speak of his own action in this way, especially when that rough justice affects the elderly, the over-committed and those who seriously need assistance. What is there in his egalitarian purposes to please him in what he has done in this matter?

I realise that the right hon. Gentleman's horizons might be clouded and his political time scale may be rather short, but prudence should have led him to act cautiously in this controversial area. Even the hon. Member for Gloucestershire, West accused him of "instant government", and that is indeed how it appears to the whole House.

As my right hon. Friend said in opening the debate, we fully acknowledge the plight of many of our city centres and the obvious needs of our big towns. My right hon. and learned Friend the Member for Hexham said in his statement on 22nd January that there was a very real need to give a greater degree of rate support to the metropolitan areas. We sought to do this by an increase in the needs element and changes in the formula. My right hon. and learned Friend emphasised his determination to change the grant arrangements so as to increase the grant to such areas as Greater Manchester, Merseyside, West Yorkshire and the GLC. But in endeavouring to correct an undoubted discrepancy of treatment each time it occurred, my right hon. and learned Friend was also careful to impose a limitation on the burdens on other areas. He said we have tried to bring about a generous settlement, which, while recognising the particular problems of the cities, at the same time imposes a limitation on the burdens in the counties and elsewhere."—[OFFICIAL REPORT, 22nd January 1974; Vol. 867, c. 1474.] What is so precipitate about this decision is, as the hon. Member for Gloucestershire, West said, that the Government are in any event intending to carry out a thorough review of the grant distribution system during the course of this year. If that is so, why was it necessary to change the original proposals for 1974–75? In doing so after a few weeks—hardly enough time for Ministers to have studied the facts in full detail—the Government have overthrown the well-established tradition of attempting to phase in from year to year changes in domestic rate burdens. Surely it would have been wiser to maintain for the time being a variable domestic rate element as a transitional measure, thereby avoiding bigger increases in particular years so that the grant distribution system may be reviewed in depth over the course of 1974.

My right hon. Friend, the Member for Finchley (Mrs. Thatcher), in her opening speech, challenged the Secretary of State to say whether the Chancellor of the Exchequer would take action tomorrow to mitigate the rise in rates, as did my right lion. Friend the Member for Altrincham and Sale (Mr. Barber) in his Budget last year.

There is still much confusion about what the Government intend to do, and so far the debate has done nothing to clear up this confusion. I particularly again draw attention to the remarks of my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). All of us in the West Country read in the Western Morning News—a most reputable newspaper, which does not misreport these matters—this morning that the hon. Member for Oldham, West (Mr. Meacher), an Under-Secretary of State for Industry, had said at Exeter Labour Party's annual dinner-dance at the weekend: While the redistribution formula in the rate support grant has given enormous aid to the large cities of this country, I am conscious that it has brought disadvantages to cities like Exeter. I am authorised to tell you that this Government will at an early stage be introducing a rate relief measure precisely to aid areas like Exeter which have been disadvantaged by that altered rate support grant formula. The Express and Echo for Saturday, 23rd March has a headline stating that Exeter had got a pledge on rate aid. If the Under-Secretary of State for Industry is giving pledges on rate aid which will help Exeter, can we please know now more about it from the Secretary of State for Wales? We all appreciate that the hon. Member for Oldham, West is an expert at inaccurate statistics, but we do not expect him to make a statement on behalf of another Department which proves inaccurate.

How can the Secretary of State say that his actions were without consequence for the rate-fixing process when Under-Secretaries from other Departments are going around the country spreading confusion?

The Secretary of State's action appears all the more strange when one reads the circular from the Association of District Councils. The circular points out that out of 296 new district councils in the non-metropolitan counties of England no fewer than 234 will lose part of the domestic rate relief previously notified in mid-February.

It is not only rural areas which are adversely affected. Hon. Members on both sides have spoken about towns and cities such as Stoke-on-Trent, Kingston upon Hull, Portsmouth, Leicester, Derby and Plymouth, all of which will have increases in their rate burdens. These towns and cities, no less than the inner areas of the conurbations, face social and housing programmes. They also have heavy programmes for urban renewal, clearance, redevelopment, and environmental improvement.

I should like to know from the Secretary of State what has happened in the last four weeks which makes the people in these cities and towns less worthy to receive help than the inhabitants of other towns—

Mr. Marks

Why were the former Government's proposals notified to district and other councils before Parliament approved them?

Mr. Nott

It was part of the perfectly normal process of consultation. My right hon. and learned Friend the then Secretary of State spoke at the three statutory meetings which took place.

The effect of the change is not to provide more money for improving services in cities and urban areas, but to provide additional relief to those householders who happen to live in these areas at the expense of those living in other parts of the country. If the aim of the domestic element is to cushion people against steep rate increases it should be provided wherever people live. If cities have been extravagant, domestic ratepayers are to be safeguarded. If rural areas and some other cities have acted responsibly and prudently, their ratepayers will be clobbered just the same.

At this point I hope that the House will forgive me if I briefly illustrate the effect of the Government's action by referring to Cornwall, not just because it is my own county but because by taking one example we can see the consequences of what has happened. Under the original proposals, which had already been widely publicised, householders in the second-tier authority of Penwith were to suffer an increase of from 0 per cent. to 8 per cent. in 1974–75, and in Caradon an increase of from 0 per cent. to 26 per cent. Suddenly, without warning, following the Secretary of State's announcement, these increases in Cornwall range from a minimum of 50 per cent. to a maximum of 95 per cent. in Caradon.

As the hon. Member for Gloucestershire, West said, it is no use listing the comparative size of the rates people in these areas pay. The fact is that rates bear a relation to the services provided.

Is the Secretary of State saying that he accepts it as fair and reasonable to have a near doubling of the rate in Caradon? The matter was referred to by the hon. Member for Bodmin (Mr. Tyler). It is a Liberal constituency. I hope that this first lesson in Socialist Government will teach those who voted Liberal in Bodmin the folly of their ways.

Why, if the Government impose a flat rate throughout this country, have they chosen what is in effect a variable rate for Wales? I hope that the Secretary of State for Wales will answer that. He will perhaps say that is a question of water and sewerage. But 40 per cent. of the total rate in Caradon, for example, is represented by water and sewerage. Therefore, how can that possibly be used as an excuse for what has been done?

As the Secretary of State for Wales is to wind up the debate, and as I speak as a Cornish Member, I must warn the Government that no good will come to them if they seek to divide the Celts in the House. The Celts are practically a majority party in the House—and may the good Lord preserve the House for that! We will not be put upon by the English. I read in the Sunday Telegraph yesterday that the Celts were the original streakers of the ancient world, and my constituents are in a streaking awful rage about the rates.

I do not have time to refer to rate rebates. A year ago, when in opposition, the Under-Secretary for the Environment talked about rate rebates, which were substantially increased by the previous Government. That substantial increase will do something to mitigate the rate rises proposed by the flat-rate basis. The hon. Gentleman said that the rebates would be of piddling help. I hope that Conservative Ministers do not use that kind of inelegant phrase.

In the debate on land and housing on 14th March last year the Deputy Leader of the Labour Party said: The increased rates are the last straw for the householder under this Government."—OFFICIAL REPORT, 14th March 1973; Vol. 852, c. 1317.] Now the householder sees what has happened under the present Government, when 234 out of 296 non-metropolitan district councils have been adversely affected by the action of the Secretary of State.

I come to the Government's recent freeze on rents, which was mentioned by the hon. Members for Derby, North and Nuneaton. Almost the same day as that freeze was announced there came a wholly unexpected rise in rates for hundreds of thousands of tenants throughout the country. For many, the rise in rates will exceed the increased rent of 50p under the Housing Finance Act, which has been overturned.

What kind of political cynicism motivates a Government which trumpet a rent freeze one moment and then at the next moment snatch out of the pockets of those same people a greater sum in increased rates? What kind of political philosophy dictates that the rates of tenants in private accommodation should rise to subsidise the rents of council tenants who may earn more than themselves? What help is it even to those same council tenants to be told one day that their rent increase of 50p is stopped and the next day to be told that their rates will rise by 53p? That is precisely what has happened in my constituency. What justice is there in a change to a flat-rate domestic element which at one jump, with no transitional arrangements, requires householders who happen to live in one part of the country to subsidise the rates of householders in another? That is not the way in which the nation's business should be conducted.

When the Secretary of State referred to the good Socialists and the loyal Labour Party members in his constituency who complained to him at the weekend—indeed, his hon. Friend the Member for Thornaby in his maiden speech said that 10,000 names had come to him since the last election complaining about what the right hon. Gentleman had done—did it occur to him that they might have been right? Did he consider in his egalitarian zeal that he had made a real muddle? Did he consider the lofty disdain which was referred to by his hon. Friend the Member for Dewsbury.

I have always rather admired the right hon. Gentleman at a distance. After all, he has written many books full of stuff about Socialist philosophy. Anyone who has the application to employ his time so uselessly has surely to be admired, but his change in the domestic rate arrangements will not rebound to his advantage. Many ratepayers in the conurbations will face a somewhat lower increase, but that will not compensate for the resentment of those in several towns and many district councils throughout the land who will find themselves faced with an unprecedented rise next year.

When the right hon. Gentleman opened his speech and talked of the rate-fixing process, the complicated girations to fix the formula, he said that it was so complicated that someone had suggested that they might sacrifice a goat. The right hon. Gentleman will be the sacrificial goat in this instance. He has started the process of misjudgment and muddle which will surely characterise many of the Government's actions from henceforth.

11.9 p.m.

The Secretary of State for Wales (Mr. John Morris)

The hon. Member for St. Ives (Mr. Nott), whatever else he has done, has eaten a little into my time. I was due to rise at five minutes past 11 o'clock. [Interruption.] Will right hon. and hon. Members pipe down.

This has been a long and interesting debate. Hon. Members on both sides have expressed their satisfaction and dissatisfaction with my right hon. Friend's proposals, as might have been expected. We have had an unusually large number of maiden speakers. It is my privilege to congratulate all of them on their contributions. I am sure, in view of the lateness of the hour, that they will forgive me if I do not go into detail about their speeches. My hon. Friend the Member for Thornaby (Mr. Wrigglesworth), in a fluent and able speech, told us of the anger about rate increases. Of course, from my right hon. Friend's proposals, Middlesborough is a gainer of 4p. The hon. Member for Leominster (Mr. Temple-Morris) combined the talents of the skilled advocate and Celtic passion and began to bring the debate back to a proper perspective. He said that any system which doubles the rates must be wrong and that his own party was partly to blame.

My hon. Friend the Member for West Bromwich, East (Mr. Snape), in a very able speech, said that the seeds of this increase were sown by the last Government in their reorganisation proposals. The hon. Member for Reading, North (Mr. Durant), in his able speech, told us of the anxieties of a shopkeeper in his constituency about the increase in rates. I have good news for his constituent. Under my right hon. Friend's proposals he will be the beneficiary of 5p. I am sorry that I did not hear the speeches of the hon. Member for Norfolk, South (Mr. MacGregor) and Northampton, South (Mr. Morris) but I am told that they, too, were very able.

My right hon. Friend has been most unfairly under attack. It has been suggested that he is some kind of novice who came suddenly to office and upturned the tables the moment he got there. It is within the recollection of the House that he was Secretary of State for Local Government and Regional Planning and before that successively Secretary of State for Education and Science and President of the Board of Trade in the last Labour Government, and that in opposition he was shadow Secretary of State for the Environment, considering then the very problems which he took over the moment he was appointed by my right hon. Friend the Prime Minister.

As my hon. Friend for South Shields (Mr. Blenkinsop) said, clearly there is a great deal of hypocrisy about the statements we have heard from right hon. and hon. Members opposite today because, as he pointed out, even after the modest benefits which South Shields will get from my right hon. Friend's proposals, there is to be a rate increase of between 50 and 60 per cent.—and none of that can be laid at the door of the present Government.

The truth is that there is a substantial increase in rates throughout the country, and it is no good the right hon. Member for Finchley (Mrs. Thatcher) waxing furious about it and suggesting that most of it is our responsibility. We are deal- ing here with only a part of the totality of Government support for the rates—£446 million—and only part of that sum has been shifted by my right hon. Friend to those parts of the country which, in our judgment, should carry the greater burden. We are dealing with only £200 million out of a total rate support of £3,076 million. Indeed, the rate support grant is 60.5 per cent. of the total relevant expenditure of the local authorities for this purpose. Therefore, the Opposition's case against my right hon. Friend is hypocritical.

The right hon. Lady talked of "callous indifference" by my right hon. Friend, but she spoiled her advocacy by over-egging the pudding. She glosses over the fact that her constituency in Barnet is a minor gainer from his proposals. Indeed, hon. Members opposite representing London have been conspicuous by their absence today. Most of the London areas are substantial gainers from my right hon. Friend's proposals the only parts which do not gain are, fractionally, Bromley, Croydon, Harrow and Havering. If any hon. Member opposite who represents London votes against the order, he will have a lot of explaining to do to his constituents.

To talk of "callous indifference" is a gross over-exaggeration by the right hon. Lady. She talks of extravagance by local authorities in paying high staff salaries resulting from reorganisation. Anyone coming from outside might believe that all this could be laid at the door of the Government. But local government reorganisation has been the child of the Tory Party. The previous Government introduced it. They allowed this whole edifice to be built up. When the right hon. Lady talks of local government extravagance, is she suggesting that there should be greater Government interference? Has there been some major new manifestation on the local government front since 1st March?

In what was said to be an important vote in this House the other day, but which turned out to be a non-event, we saw the Grand Old Duke of York leading his troops up the hill and down again. I warn the right hon. Lady that she must not imitate the Grand Old Duke of York and become known as the Grand Old Duchess of York.

It is odd, when the former Government were suggesting as recently as 17th December that public expenditure should be kept down, that there should now be the suggestion that we should indulge in greater public expenditure by way of greater assistance.

Mr. Loughlin

I am enjoying my right hon. and learned Friend's speech, but will he now deal with the issues that have been raised, from this side as well as the Opposition side of the House?

Mr. Morris

I am obliged to my hon. Friend. I will deal with his comments in a moment. I am dealing with the right hon. Lady just now.

We had a thoughtful and telling speech from my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short). She made the pertinent point that much of the present situation is due to the actions of the last Government following from local government reorganisation, water reorganisation charges and the enormous rate of inflation. These are crucial factors behind the present rates, regarded as a burden by so many hon. Members.

Mr. Graham Page

rose—

Mr. Morris

I cannot give way. The House knows that I am usually most generous in giving way. I have been allowed only 22 minutes in which to reply.

Under this Government, as under the last one, the total rate burden remains the same. The total of Government support remains the same. I hear accusations of gerrymandering. What has happened? There has been a shift of a minor part of the whole of Government assistance.

Mr. Timothy Raison (Aylesbury)

rose—

Mr. Morris

It was the Conservative Party which began this. It did not go far enough in giving the Government aid that was so much needed by many parts of the country. It is a matter of judgment, and in our judgment we have to do more. [Interruption.] Every part of the country could have done with much more. Obviously in the present economic situation—[Interruption.]—we have to shift a part of the burden within the totality of aid.

Mr. Raison

rose—

Mr. Speaker

Order. On the whole, it has been an orderly debate so far. I am afraid that behaviour does not seem to change very much whichever side is in Opposition or in Government.

Mr. Morris

The House will, I am sure, want to hear the reply to the many able and thoughtful speeches that have been made, and I will do my best in the limited time, if I am allowed to do so by hon. Gentlemen opposite, to make my reply.

The hon. Member for Tiverton (Mr. Maxwell-Hyslop) enjoyed himself hugely and was supported from the Front Bench when he referred to a speech made by my colleague the Under-Secretary of State for Industry. I understand that my hon. Friend was referring to the relief which would be given by the proposed rate rebate scheme which will help up to 3 million people who are less well off. The first scheme was introduced by the Labour Government, and the Conservative Government proposed to improve it.

Mr. Graham Page

Will the right hon. and learned Gentleman give way?

Mr. Morris

No. The order had not come into effect, it having been laid after the election was announced. We have taken over lock, stock and barrel, the proposals of the previous Government.

Mrs. Thatcher

That is absolute nonsense. The Under-Secretary of State's words were: I am authorised to tell you that this Government will at an early stage be introducing a rate relief measure precisely to aid areas like Exeter which have been disadvantaged by that altered rate support grant formula. That cannot refer to the rate rebates which were provided for in the last measure of the previous Government.

Mr. Morris

I have told the House that my hon. Friend was referring to the rate rebate scheme which had not yet come into effect. The order has been laid and we have taken over the previous administration's proposals.

Mr. James Prior (Lowestoft)

Will the right hon. and learned Gentleman give way?

Mr. Morris

I will not give way.

Mr. Prior

On a point of order. Would it not be in order on an occasion such as this, Mr. Speaker, for a personal statement to be made to the House at the earliest opportunity, as what the right hon. and learned Gentleman is saying now is totally different?

Mr. Speaker

That is not a matter for the Chair.

Mr. Morris

I have made the position clear. My hon. Friend was referring to the rate rebate order which was to be made and is being made.

The interruptions have made it exceedingly difficult for me to deal with the other points.

There have been attacks on the rating system. My right hon. Friend said that there was an element of rough justice in his proposals. I am sure that the House will accept that his aim is right and that a large number of people who are hard-pressed will welcome my right hon. Friend's proposals. My hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) and other hon. Members wanted a review.

The right hon. Member for Crosby (Mr. Page) dealt with the need to abolish all rates. The right hon. Gentleman's was a fascinating speech. Indeed, three and a half weeks out of office undoubtedly sharpen the mind enormously. I thought that he was a strong candidate for being a one-man Royal Commission upon the rates.

Mr. Graham Page

The right hon. and learned Gentleman, having referred to me, will perhaps now tell the House what provision is being brought in by the present Government to aid Exeter as promised by the junior Minister.

Mr. Morris

The right hon. Gentleman knows that that is not an intervention which I would have given way to at this juncture had I suspected that that would be its nature—though earlier, yes.

The right hon. Gentleman was less caustic than the right hon. Lady the Member for Finchley, because the right hon. Gentleman's comment upon my right hon. Friend's proposals were that they were rough guesswork and flat-footed. The implication from that was that his Government's proposals were less flatfooted and that there was less guesswork about them. I am sure that on reflection the right hon. Gentleman would not want that implication to go abroad, because there was a great deal of roughness in those proposals as well.

One other matter which is of very great importance is the need for a review of the whole system. My hon. Friend the Member for Dewsbury (Mr. Ginsburg) brought a delegation to see my right hon. Friend, and my hon. Friend the Member for Meriden (Mr. Tomlinson) forcibly argued the case for a review, as did my hon. Friend the Member for Gloucestershire, West.

In the next 12 months there will be a review of the distribution of the rate support grant. We shall be going into the whole matter more thoroughly in time for next year and shall be paying particular attention to those aspects of the system which appear to give rise to anomalies. My right hon. Friend does not rule out a more fundamental review of the whole rating system, but this obviously will be longer term than in the next 12 months. The solution to this problem has escaped Government after Government, and I would certainly agree that there is a need to look at the problem as a whole.

What happens if the order is rejected tonight? Local authorities would have to borrow at the rate of £60 million a week at a current rate of interest approaching 15 per cent. How long this would continue I cannot say, but if hon. Members think that it would be easy or quick to renegotiate a whole grant settlement they are wrong. If there were to be any question of altering the needs and resources elements, there would have to be complicated discussions between the Department and the local authority associations, followed by discussions at ministerial level, culminating in a statutory meeting, and then the laying of a new order. This is a process which would be bound to take many weeks. This is a fact and not a threat.

The shortage of time is not our fault. The last Government created the problem. Normally this kind of order would have been laid before December. Therefore, the onus and the whole responsibility for this matter being dealt with so late in the day lies with the last Government. The rejection of this order would cause undue and grave hardship. I therefore commend the order to the House.

Question put:—

The House divided: Ayes 292, Noes 217.

Division No. 3.]	Ayes	[11.29 p.m.
Abse, Leo	English, Michael	Lewis, Arthur (Newham, N.)
Allaun, Frank	Ennals, David	Lewis, Ron (Carlisle)
Archer, Peter	Evans, Fred (Caerphilly)	Lipton, Marcus
Armstrong, Ernest	Evans, loan (Aberdare)	Lomas, Kenneth
Ashley, Jack	Evans, J. (Newton)	Loughlin, Charles
Ashton, Joe	Ewing, H. (St'ling, F'kirk&G'm'th)	Loyden, Eddie
Atkins, Ronald	Faulds, Andrew	Lyon, Alexander W. (York)
Atkinson, Norman	Fernyhough, Rt. Hn. E.	Lyons, Edward (Bradford, W.)
Bagier, Gordon A. T.	Fitch, Alan (Wigan)	Mabon, Dr. J. Dickson
Barnett, Guy (Greenwich)	Flannery, N.	McCartney, Hugh
Barnett, Joel (Heywood & Royton)	Fletcher, Raymond (Ilkeston)	McElhone, Frank
Bates, Alt	Fletcher, Ted (Darlington)	MccFarquhar, Roderick
Benn, Rt. Hn. Anthony Wedgwood	Foot, Michael, Rt. Hn.	McGuire, Michael
Bennett, A. F. (Stockport, N.)	Ford, Ben	Mackenzie, Gregor
Bidwell, Sydney	Forrester, John	MacLennan, Robert
Blenkinsop, Arthur	Fowler, Gerry (The Wrekin)	McMillan, Tom (Glasgow, C.)
Boardman, H. (Leigh)	Fraser, John (Lambeth, Norwood)	McNamara, J. Kevin
Booth, Albert	Freeson, Reginald	Madden, M. 0. F.
Boothroyd, Miss Betty	Galpern, Sir Myer	Magee, Bryan
Bottomley, Rt. Hn. Arthur	Garrett, John (Norwich, S.)	Mahon, Simon
Boyden, James (Bishop Auckland)	Garrett, W. E. (Wallsend)	Mallalieu, J. P. W.
Bradley, Tom	George, B. T.	Marks, Kenneth
Broughton, Sir Alfred	Gilbert, Dr. John	Marquand, David
Brown, Bob(Newcastle upon Tyne,W.)	Ginsburg, David	Marshall, Dr. Edmund (Goole)
Brown, Hugh D. (Glasgow, Provan)	Golding, John	Mason, Rt. Hn. Roy
Brown, Ronald (H'kney,S. & Sh'ditch)	Gourlay, Harry	Mayhew, Christopher(G'wh,W'wch,E.)
Buchan, Norman	Graham, Ted	Meacher, Michael
Buchanan, Richard (G'gow, Springbrn)	Grant, George (Morpeth)	Mellish, Rt. Hn. Robert
Butler,Mrs.Joyce(H'gey, WoodGreen)	Grant, John (Islington, C.)	Mendelson, John
Callaghan, Rt.Hn. James (Cardiff, S.E.)	Griffiths, Eddie (Sheffield, Brightside)	Mikardo, Ian
Callaghan, Jim (M'dd'ton & Pr'wich)	Hamilton, William (Fife, C.)	Millan, Bruce
Carmichael, Neil	Hamling, William	Miller, Dr. M. S. (E. Kilbride)
Carter, Ray	Hardy, Peter	Milne, Edward
Carter-Jones, Lewis	Harrison, Walter (Wakefield)	Mitchell, R. C. (S'hampton, Itchen)
Castle, Rt. Hn. Barbara	Hart, Rt. Hn. Judith	Molloy, William
Clemitson, Ivor	Hattersley, Roy	Moonman, Eric
Cocks, Michael	Hatton, Frank	Morris, Alfred (Wythenshawe)
Cohen, Stanley	Healey, Rt. Hn. Denis	Morris, Charles R. (Openshaw)
Coleman, Donald	Heffer, Eric S.	Morris, Rt. Hn. John (Aberavon)
Colquhoun, Mrs. M. N.	Hooley, Frank	Moyle, Roland
Concannon, J. D.	Horam, John	Mulley, Rt. Hn. Frederick
Conlan, Bernard	Howell, Denis (B'ham, Small Heath)	Murray, Ronald King
Cook, Robert F. (Edinburgh, C.)	Hughes, Rt. Hn. Cledwyn (Angles'y)	Newens, Stanley (Harlow)
Cox, Thomas	Hughes, Mark (Durham)	Oakes, Gordon
Craigen, J. M. (G'gow, Maryhill)	Hughes, Robert (Aberdeen, North)	Ogden, Eric
Crawshaw, Richard	Hughes, Roy (Newport)	O'Halloran, Michael
Cronin, John	Hunter, Adam	O'Malley, Brian
Crosland, Rt. Hn. Anthony	Irvine, Rt. Hn. Sir A. (L'p'I, EdgeHI)	Orbach, Maurice
Cryer, G. R.	Irving, Rt. Hn. Sydney (Dartford)	Orme, Stanley
Cunningham, G.(lsl'lgt'n, S. & F'sb'ry)	Jackson, Colin	Ovenden, John
Cunningham, Dr. John A.(Whiteh 'v'n)	Janner, Greville	Owen, Dr. David
Dalyell, Tam	Jay, Rt. Hn. Douglas	Padley, Walter
Davidson, Arthur	Jeger, Mrs. Lena	Palmer, Arthur
Davies, Bryan (Enfield, N.)	Jenkins, Hugh (W'worth, Putney)	Park, George (Coventry, N.E.)
Davies, Denzil (Llanelli)	Jenkins, Rt. Hn. Roy (B'ham, St'fd)	Parker. John (Dagenham)
Davies, Ifor (Gower)	John, Brynmor	Pavitt, Laurie
Davis, Clinton (Hackney, C.)	Johnson, James (K'stonuponHull, W)	Peart, Rt. Hn. Fred
Deakins, Eric	Johnson, Walter (Derby, S.)	Pendry, Tom
Dean, Joseph (Leeds, W.)	Jones, Barry (Flint, E.)	Perry, Ernest G.
de Freitas, Rt. Hn. Sir Geoffrey	Jones, Dan (Burnley)	Phipps, Dr. Colin
	Jones, Gwynoro (Carmarthen)
Delargy, Hugh	Jones, Alec (Rhondda)	Prentice, Rt. Hn. Reg
Dell, Rt. Hn. Edmund	Judd, Frank	Prescott, John
Dempsey, James	Kaufman, Gerald	Price, Christopher (Lewisham, W.)
Doig, Peter	Kelley, Richard	Price, William (Rugby)
Dormand, J. D.	Kerr, Russell	Radice, Giles
Douglas-Mann, Bruce	Kilroy-Silk, Robert	Rees, Merlyn (Leeds, S.)
Duffy, A. E. P.	Kinnock, Nell	Rhodes, Geoffrey
Dunnett, Jack	Lambie, David	Richardson, Miss J.
Dunwoody, Mrs. Gwyneth	Lamborn, Harry	Roberts, Albert (Normanton)
Eadie, Alex	Lamond, James	Roberts, G. E. (Cannock)
Edelman, Maurice	Latham, Arthur (City of W'minsterP'ton)	Robertson, John (Paisley)
Edge, Geoff	Leadbitter, Ted	Roderick, Caerwyn E.
Edwards, Robert (W'hampton, S.E.)	Lee, John	Rodgers, G. (Chorley)
Ellis, J. (Brigg & Scunthorpe)	Lestor, Miss Joan (Eton & Slough)	Rodgers, William (Teesside, St'ckton)
Ellis, Tom (Wrexham)	Lever, Rt. Hn. Harold	Rooker, J. W.
Roper, John	Stonehouse, Rt. Hn. John	Weitzman, David
Rose, Paul B.	Stott, R.	Wellbeloved, James
Ross, Rt. Hn. William (Kilmarnock)	Strang, Gavin	White, James
Rowlands, E.	Strauss, Rt. Hn. G. R.	Whitehead, Phillip
Sandelson, Neville	Summerskill, Hn. Dr. Shirley	Whitlock, William
Sedgemore, B. C. J.	Swain, Thomas	Wigley, Dafydd (Caernarvon)
Selby, Harry	Thomas, D. E. (Merioneth)	Willey, Rt. Hn. Frederick
Shaw, Arnold (Redbridge, Illord. S.)	Thomas, Jeffrey (Abertillery)	Williams, Alan (Swansea, W.)
Sheldon, Robert (Ashton-under-Lyne)	Thorn, S. G. (Preston, S.)	Williams, Alan Lee (Hvrng, Hchurch)
Shore, Rt. Hn. Peter (S'pney&P'plar)	Tierney, S.	Williams, Rt.Hn. Shirley(H'f'd & St'ge)
Short, Rt. Hn. E. (N'ctle-u-Tyne)	Tinn, James	Williams, W. T. (Warrington)
Short, Mrs. Renee (W'hamp'n, N.E.)	Tomlinson, J. E.	Wilson, Alexander (Hamilton)
Silkin, Rt. Hn. John (Lsham, D'tord)	Tomney, Fank	Wilson, Rt. Hn. Harold (Huyton)
Silkin, Hn. S. C. (S'hwark, Dulwich)	Torney, Tom	Wilson, William (Coventry, S.E.)
Sillars, James	Townsend, C. D.	Wise, Mrs. Audrey
Silverman, Julius	Tuck, Raphael	Woodall, Alec
Skinner, Dennis	Urwin, T W.	Woof, Robert
Small, William	Varley, Eric G.	Wrigglesworth, Ian
Smith, John (Lanarkshire, N.)	Wainwright, Edwin (Dearne Valley)	Young, David (Bolton, E.)
Snape, P. C.	Walden, Brian (B'm'ham, Ladywood)
Spriggs, Leslie	Walker, Harold (Doncaster)	TELLERS FOR THE AYES:
Stallard. A. W.	Walker, T. W. (Kingswood)	Mr. James Hamilton and
Stewart, Rt. Hn. M. (H'sth.Fulh'm)	Watkins, David	Mr. Joseph Harper.
Stoddart, David (Swindon)
NOES
Adley, Robert	Fidler, Michael	Kirk, Peter
Alison, Michael	Fisher, Sir Nigel	Kitson, Timothy
Allason, James	Fletcher, Alexander (Edinburgh, N.)	Knight, Mrs. Jill
Ancram, M.	Fletcher-Cooke, Charles	Knox, David
Archer, Jeffrey	Fookes, Miss Janet	Lamont, Norman
Atkins,Rt.Hn. Humphrey	Fraser, Rt.Hn.Hugh (St'fford&Stone)	Lane, David
Awdry, Daniel	Freud, Clement	Langtord-Holt, Sir John
Balniel, Rt. Hn. Lord	Fry, Peter	Latham, Michael (Melton)
Banks, Robert	Gardiner, George (Reigate&Banstead)	Lawrence, Ivan
Beith. A. J.	Gardner, Edward (S. Fylde)	Lawson, Nigel (Blaby)
Bell, Ronald	Gibson-Watt, David	Le Marchant, Spencer
Bennett, Sir Frederic (Torbay)	Gilmour,Rt.Hn.lan(Ch'sh'&Amsh'm)	Lester, John (Beeston)
Benyon, W.	Godber, Rt. Hn. Joseph	Lloyd, Ian (Havant & Waterloo)
Biffen, John	Goodhart, Philip	Loveridge, John
Biggs-Davison, John	Goodhew, Victor	Luce, Richard
Blaker, Peter	Goodlad, A.	MacArthur, Ian
Boardman, Tom (Leicester, S.)	Gorst, John	McCrindle, R. A.
Boscawen, Hon. Robert	Grant, Anthony (Harrow, C.)	Macfarlane, Neil
Braine, Sir Bernard	Gray, Hamish	MacGregor, J. R. R.
Bray, Ronald	Grieve, Percy	Macmillan, Rt. Hn. M. (Farnham)
Brocklebank-Fowler, Christopher	Griffiths, Eldon (Bury St. Edmunds)	McNair-Wilson, Patrick (New Forest)
Bruce-Gardyne, J.	Grimond, Rt. Hn. J.	Marshall, R. M. (Arundel)
Bryan, Sir Paul	Grylls, Michael	Marten, Neil
Buchanan-Smith, Alick	Hall, Sir John	Mather, Carol
Buck, Antony	Hall-Davis, A. G. F.	Maude, Angus
Budgen, Nick	Hamilton, Michael (Salisbury)	Mawby, Ray
Bulmer, Esmond	Hampson, Dr. Keith	Maxwell-Hyslop, R. J.
Burden, F. A.	Hannam, John	Mayhew, P. (Royal T'bridge Wells)
Butler, Adam (Bosworth)	Harrison, Col. Sir Harwood (Eye)	Miller, Hal (B'grove & R'ditch)
Carlisle, Mark	Hastings, Stephen	Mills, Peter
Carr, Rt. Hn. Robert	Havers, Sir Michael	Mitchell, David (Basingstoke)
Chalker, Mrs. Lynda	Hawkins, Paul	Moate, Roger
Chataway, Rt. Hn. Christopher	Heath, Rt. Hn. Edward	Money, Ernie
Churchill, W. S.	Henderson, J.S.B.(Dunbartonshire, E.)	Monro, Hector
Clark, A. K. M. (Plymouth, Sutton)	Heseltine, Michael	Moore, J. E. M. (Croydon, C.)
Clark, William (Croydon, S.)	Higgins, Terence	More, Jasper (Ludlow)
Clarke, Kenneth (Rushcliffe)	Hill, James A.	Morgan-Giles, Rear-Adm.
Clegg, Walter	Holland, Philip	Morris, Michael (Northampton, S.)
Cockcroft, John	Hooson, Emlyn	Morrison, Charles (Devizes)
Cooke, Robert (Bristol, W.)	Hordern, Peter	Morrison, Peter (City of Chester)
Cormack, Patrick	Howe, Rt. Hn. Sir Geoffrey (Reigate)	Mudd, David
Corrie, John	Howell, David (Guildford)	Neave, Airey
Crowder, F. P.	Howell, Ralph (Norfolk, North)	Neubert, Michael
Davies, Rt. Hn. John (Knutsford)	Hunt, John	Nott, John
d'Avigdor-Goldsmid,Maj.-Gen. James	Hurd. Douglas	Onslow, Cranley
Dixon, Piers	Hutchison, Michael Clark	Oppenheim, Mrs. Sally
Dodds-Parker, Sir Douglas	Iremonger, T. L.	Osborn, John
Dodsworth, Geoffrey	James, David	Page, Rt. Hn. Graham (Crosby)
Drayson, Burnaby	Jenkin, Rt.Hn.P.(R'dgeW'std&W'fd)	Page, John (Harrow, W.)
du Cann, Rt. Hn. Edward	Johnson Smith, G. (E. Grinstead)	Pardoe, John
Dykes, Hugh	Jones, Arthur (Daventry)	Parkinson. Cecil (Enfield, W.)
Eden, Rt. Hn. Sir John	Kaberry, Sir Donald	Pattie, Geoffrey
Emery, Peter	Kellett-Bowman, Mrs. Elaine	Peyton, Rt. Hn. John
Fairgrieve, R.	Kershaw, Anthony	Pink, R. Bonner
Farr, John	Kimball, Marcus	Prior, Rt. Hn. James
Fell, Anthony	King, Evelyn (Dorset, S.)	Pym, Rt. Hn. Francis
Fenner, Mrs. Peggy	King, Tom (Bridgwater)	Quennel. Miss J. M.

Raison, Timothy	Spicer, M. H. (Worcestershire, S.)	Tyler, P.
Rawlinson, Rt. Hn. Sir Peter	Sproat, Iain	Viggers, P. J.
Redmond, Robert	Stainton, Keith	Wainwright, R. (Colne Valley)
Ridley, Hn. Nicholas	Stanbrook, Ivor	Wakeham, J.
Ridsdale, Julian	Stanley, J. P.	Walder, David (Clitheroe)
Rifkind, M.	Steel, David	Walker-Smith, Rt. Hn. Sir Derek
Rippon, Rt. Hn. Geoffrey	Stewart, I. (Hitchin)	Wall, Patrick
Rodgers, Sir John (Sevenoaks)	Stodart, Rt. Hn. A. (Edinburgh, W.)	Walters, Dennis
Ross, S. (Isle of Wight)	Tapsell, Peter	Weatherill, Bernard
Rossi, Hugh (Hornsey)	Taverne, Dick	Wells, John
Scott-Hopkins, James	Taylor, Edward M. (Glgow.C'cart)	Wlnstanley, Dr. Michael
Sims, Roger	Taylor, Robert (Croydon, N.W.)	Wood, Rt. Hn. Richard
Sinclair, Sir George	Temple-Morris, P.
Smith, Cyril (Rochdale)	Thatcher, Rt. Hn. Mrs. Margaret	TELLERS FOR THE NOES:
Smith, Dudley (W' wick&L'm'ngton)	Thomas, Rt. Hn. P. (B'net.H'dn S.)	Mr, Marcus Fox and
Spence, John	Thorpe, Rt. Hn. Jeremy	Mr. Michael Jopling.
Spicer, J. W. (Dorset, W.)	Trotter, N. G.

Question accordingly agreed to.

Resolved, That the Rate Support Grant Order 1974, a copy of which was laid before this House on 14th March, be approved.

Mr. Speaker

We now come to the three Scottish orders—

Mr. Eldon Griffiths

On a point of order, Mr. Speaker. You will recall that during the course of the winding-up speech, a matter of some importance was raised pertaining to the veracity of a Minister of the Crown. I must tell the House now that the explanation which the right hon. and learned Gentleman the Secretary of State for Wales sought to make—

Mr. Speaker

Order. There was nothing out of order in what the right hon. and learned Gentleman said.

Mr. Griffiths

Further to that point of order, Mr. Speaker. My right hon. Friend the Member for Lowestoft (Mr. Prior) raised with you, and, through you, with the Secretary of State, the question whether a personal statement ought to be made to this House, and that is the matter which I wish to raise on a point of order.

Mr. Speaker

The hon. Member cannot raise that as a point of order.