HC Deb 07 August 1975 vol 897 cc800-10

3.30 p.m.

Mr. William Molloy (Ealing, North)

I wish to draw attention to the problems of local government in London. In instancing the manifold problems that face the Greater London Council, I wish also to emphasise the equally disturbing difficulties of 32 London boroughs in general and the London borough of Ealing in particular.

It is clear that in many respects the problems in London are far greater than those in any other part of the country. Between one-fifth and one-sixth of the people in the country reside in Greater London, and Greater London comprises 32 towns of average size. We can therefore begin to understand the difficulties that can face local government in London, whether in the GLC or in the London borough areas.

There is one thing that unites the two major parties in the London area, namely, the danger that some tragedy will befall the capital city and the Greater London conurbation. It is equally fair to say that the concern and anguish affecting all local government politicians in London is shared by all those who serve in the two great parties in this House.

Arthur Mee, in his book "London—the Eternal City" wrote: London will not be destroyed—it is the London of ages past, the London of ages to come. Many politicians in all parts of the political spectrum began their political apprenticeship in the Greater London area. I have served for a decade and a half on the council of a famous London metropolitan borough, namely, the Fulham authority, and for a period of almost 11 years I have been privileged to be a Member of Parliament representing an equally famous London borough—Ealing. Those of us who have served that kind of apprenticeship know what we are talking about when we debate these matters.

The problems that face Greater London, in terms both of the GLC and of the London boroughs, are very great and, regrettably, are becoming greater. The sheer scale of London's problems, which are so daunting, can be illustrated by examining one instant statistic. A total of 60 per cent. of the homeless people of England and Wales are to be found in London. People regard London's 610 square miles as one prosperous whole, but we know that in East London and in other parts of the area there are areas of severe industrial decline equalling anything to be found in development areas. In the last 12 years in manufacturing industry alone London has lost 500,000 jobs. But a mere 25 per cent. of those jobs have been of benefit to the regions. The remaining 75 per cent. have been lost either due to factory closures or because of substantial cut-backs in staffing by London firms.

The situation amounts to an incredible phenomenon for many parts of London. I wish to refer particularly to the situation in the London borough of Ealing. I have made a number of appeals to Ministers in both Labour and Conservative Governments to take action, but with little success. I hope that they will not be so myopic that they will merely wait for disaster to arise before they decide to act. They must not wait until the bomb explodes, probably blowing them to bits, before they decide to do something.

In the northern part of the London borough of Ealing, famous and well-known industries have closed in the past 10 years, and thousands of skilled craftsmen have lost their jobs. Warehouses have mushroomed on virgin land on which new industry could have been built in properly zoned areas. Local planning authorities seem to have almost an obsession about ensuring that if a great industry is lost and thousands of men are put out of work compensation should be made by building warehouses, employing perhaps half a dozen drivers and a few hundred clerks.

That practice has been increasing not only in Ealing but in other parts of London, and London will pay the penalty in vears to come. There is a great danger of the Greenford area in the London borough of Ealing becoming a depository for depositories. I appeal to GLC planners and the Department of the Environment to get together to stop this ugly, wasteful and disturbing cancer of the spread of warehouses.

In the past 12 years London's population has decreased by 900,000, but that bold figure disguises the fact that a very high proportion of that emigration has been made up of skilled industrial workers. We in London have been watching the steady and relentless creation of a capital city of social and economic extremes. A few years ago the Government's Family Expenditure Survey showed that between 1971 and 1973 real incomes of the poorest 25 per cent. of households in Britain increased by 10.1 per cent., yet in London the real incomes of the poorest 25 per cent. of the population decreased by 10.5 per cent.

Unless something is done soon about London's industrial decline, it may become irreversible except at great cost, which even the national Treasury will not be able to afford. If London's industrial economy declines, so does London. No city whose population ranks it as the seventeenth largest member of the United Nations can support itself on the productivity of Civil Service departments and stockbrokers alone. I ask my hon. Friend the Under-Secretary of State to consider that somewhat awesome statement.

London's unique problems are highlighted by the public transport difficulties, which the GLC has had to tackle. The transport services, although complex and extensive, are insufficient to meet the travelling needs of Londoners. As well as necessary improvements and extensions to the transport network, they face the problem of providing a viable transport service in dockland, which is of importance to the viability of Greater London.

The cost to London of its transport system is very high in per capita terms because, of necessity, the network is of a highly complex nature. The Government's intention to scale down revenue subsidies to public transport will mean that the burden on London of running its transport services will be disproportionately high. Any national formula must of necessity have adjustable elements. We are approaching the time, in London, when all daylight hours are crush hours. This is a sad reflection on our capital city. An efficient and reliable public transport system will produce immediate gains and reduce tension for millions of Londoners.

I now deal briefly with what is perhaps the sorest problem of all for everyone concerned with London government—the maldistribution of the rate support grant.

What are London's resources to deal with these immense problems? Between 1965 and 1972, whereas rateable values in England and Wales rose by 23 per cent., in London they rose by only 9 per cent. During the same period, in 14 out of London's 32 boroughs, commercial and industrial rateable values remained static or fell.

But perhaps the single most damaging burden which London bears is the refusal of successive Governments to treat London the same as everywhere else in the distribution of the rate support grant. Men and women who are concerned with the government of London—Conservative, Labour and possibly a few others—are united in their bitterness about this issue. London is deliberately excluded from the needs element formula which determines the rate support grant because, in the words of the Government's own working group, its inclusion would have resulted …in a massive increase in London's share of the needs element total. That exclusion is costing London £250 million in the current financial year. In any language, that is unjust and extremely dangerous.

London is confronted with the dilemma of being a capital city with enormous social problems. It is denied a sizeable proportion of the resources that it deserves if it is to deal with them. I hope that there will be an early examination of this problem and that the Government will see to it that an element of fair play is applied to Greater London in the same proportion as it is applied to the remainder of the country. If it is not, I believe that there will be a remarkable alliance between all London Members of Parliament to force the Government, if necessary—as far as we can, constitutionally—to ensure that Greater London is given a measure of fair play.

I turn briefly to another matter, which is the awful housing problem that we have in Greater London. In our capital city, there are no fewer than 200,000 families who are practically homeless. At the same time, there are large elements of property which are empty. In the language of ordinary people, it is a downright disgrace. If that kind of language does not suit senior civil servants, they will have to get out their ordinary dictionaries. It is a disgrace that Great Britain's capital city should have thousands of homeless people when there are thousands of good houses lying empty in which they could be living.

Are a Labour Government to say in 1975 that there is no room at the inn? They must make that room available quickly, because London's councillors despair of this very serious situation.

Parliament passes legislation all too easily. Then it passes the buck of responsibility on to local authorities. The problems of education are enormous. I have seen councillors in Ealing battling to modernise the education system in the borough. They have done a magnificent job. The fact that they have attempted sometimes to do something brings them into bad repute with the very people they are trying to help. They need much more Government help. Homelessness is a primary scandal, as are transport and unemployment. Together, they are reducing the quality of life of the ordinary Londoner. What is more important is that unless we find the answers there is a grave danger that the future of local government in London will be severely challenged

Will my right hon. Friend agree to meet Sir Reginald Goodwin, the leader of the Greater London Council and some of his leading chairmen? Will he also meet the leader of the opposition on the Greater London Council and some of the leading shadow chairmen? Will he also meet Sir Lou Sherman, Chairman of the London Boroughs Association, and some of his colleagues? These people, with practical experience, are eminently qualified to discuss with my right hon. and hon. Friends the problems and possible remedial measures needed to save London. I do not want to be fobbed off with the statement that a contining conference is in progress. My only comment on that proposition is that it is a dead loss. Let us make a fresh start with a brand new conference to which I believe the people whom I have mentioned, from both sides of the political fence, should be invited.

At GLC and local government level we are facing a battle. The Battle of London is on. All the London boroughs and the GLC are operating in the shadow of a disaster. They have the guts and determination to meet the challenge. The Government must exhibit the same courage and join forces to ensure the future of London and Londoners. The dignity of our capital city must not in any way be damaged We must restore to it the glory to which it is entitled.

3.47 p.m.

Mr. Geoffrey Finsberg (Hampstead)

The House is grateful to the hon. Member for Ealing, North (Mr. Molloy) for initiating this brief debate. I only wish that the calibre of local government councillors coming forward for election were as high as his. I fear that on both sides the calibre of person who is coming forward for election as a councillor is not as good as we have had in the past.

I agree that all Governments in the past have put a burden on local government without spelling out how the costs are to be borne in both money and manpower terms. From a recent speech by the Secretary of State it appears that the Government have accepted that it is wrong for the House to put fresh burdens on local government without first willing it the means.

I shall make two brief comments. The hon. Gentleman was right to expose the failure of the Government to recognise the appalling maldistribution of London's rate support grant. I certainly support him in his demand, not request, that this be altered in time for the fixing of London's rates next year. In the same way as hon. Members on both sides joined forces against the former Secretary of State for Industry over the granting of industrial development certificates, and beat him, the present Secretary of State may encounter the same sort of unholy alliance if he is unable to move the mandarins of Marsham Street into realising that London suffers appallingly from the rate support grant.

The hon. Gentleman mentioned the loss of jobs in London. There has always been bipartisan pressure on the Government to try to keep jobs in London and to bring in fresh jobs wherever possible. The development of dockland should contribute to that objective.

The hon. Gentleman also referred to the scale of London's problems. I believe that the time may now be ripe, after a decade in which the new structure has been in operation, for a review of the distribution of functions between the GLC and the London boroughs. The time may well be overdue. I hope that the Minister will take that point on board.

3.49 p.m.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)

My hon. Friend the Member for Ealing, North (Mr. Molloy) and the hon. Member for Hampstead (Mr. Finsberg) have reminded us of London's unique position. It is one of the world's greatest cities. It is a great attraction to people from all over the world. As a member representing a constituency as far from London as it can be in England, I am very well aware of the great problems that London has but also of its great attractions.

I have lived all my life in my constituency. During the whole of my life my friends and other folk there have found it necessary to come to London to find employment here. Today the situation is different, largely because of industrial decline, the policy of dispersal, and the very severe problems of homelessness.

London's transport problem is severe. At present relatives from the United States are staying with me. They are never tired of telling people here about London's wonderful public transport system. I therefore think that all our complaints are relative. I understand something of the problem. In my stay at the Department of Education and Science I made it my business to meet many London local authorities and I told people throughout the country of the special problems arising in this great city.

To day I shall spend my time dealing with what I sense to be the sorest of the points which my hon. Friend raised. I have heard my hon. Friend speak many times on this subject, both inside and outside the Chamber of the House of Commons. The major point is what he calls the maldistribution of the rate support grant. We are in constant touch with the Greater London Council. On that matter my hon. Friend made some remarks. I assure him that if there were any easy, so to speak overnight, solutions to these problems we should have come into contact with them long ago. There are no such solutions.

I am Chairman of the London Housing Action Group which meets frequently. That position has made me aware of the overall problem. I shall take on board all that has been said this afternoon and read the report of this debate carefully. I shall then talk to my hon. Friend about the need for further meetings—and, indeed, about the need for a new initiative, as he termed it—when we have had time carefully to study what he said.

I come to what my hon. Friend described as the maldistribution of the rate support grant. I wish to put the matter in its correct perspective. The distribution of the rate support grant has three main purposes—to compensate for variations between local authorities in their spending needs; to supplement the rateable base of those authorities with inadequate resources; and to meet the cost to the authority of giving rate relief to householders. It is the first two of these that chiefly concern us today.

The assessment of needs and resources is of course a highly controversial as well as a highly technical matter.

I know of no authority that does not think, and indeed argue vigorously with the Department, that its problems are unique and deserve special recognition by the Department. The issues are discussed at length each year by my Department and a group of local authority treasurers representing the local authority associations and, subsequently, at Minister-Member level. The results of these consultations are embodied in the Rate Support Grant Order on which we have a debate—often a very lively one—in December each year. Throughout our discussions and consultations, both sides bear very much in mind the large number of representations which are received from individual local authorities, directly and through right hon. and hon. Members. London Members are particularly active here.

Those representations come from densely-populated urban areas and thinly-populated rural areas. They come from areas of expansion and from areas of decline. Authorities with low rateable resources complain that we do not supplement their resources enough. Authorities rich in rateable value point out that, if their rate poundages are relatively low, the rate bills their householders pay are none the less very high.

Authorities which come into none of these categories tell us that too much of the grant total is being paid to the special cases. Nor are we allowed to forget the particular needs of authorities in the North, the South, the East, the West, the Midlands, Wales and London. Each of these authorities can produce at least half-a-dozen excellent reasons why they should be given a larger slice of the cake. I have heard of many special cases since I moved to the Department of the Environment. Indeed, there are special cases. This is the terrible problem that we face. We do our very best to investigate the technical merits of these claims and counter-claims and to produce a balanced distribution at the end of the day.

Mr. Molloy

I appreciate what my hon. Friend is saying. What these other authorities are asking for is a larger slice of the cake to add to the larger slice that they already get in comparison with London.

Mr. Armstrong

I ask my hon. Friend to be patient.

We are conscious that no nationally-applied formula can reflect more than very imperfectly the huge variations in the circumstances of individual local authorities.

Of all the issues which we have to face in this process, none is more difficult than the treatment of London and of individual authorities within London. London as a whole is exceptional both in the scale of its spending needs and in the size of the resources it has to meet its needs. It goes without saying that the cost of local services is very high in London. So are the demands and the needs for those services, whether in education, housing or the social services. But London is so different in every way from the rest of the country that it is enormously difficult to assess how much greater are the spending needs per head of their population for the London authorities than for authorities outside London.

Suppose, however, that we have successfully arrived at a measure of London's extra needs. It may seem axiomatic that the needs element of rate support grant should be distributed in such a way as to meet London's extra needs in full. But that would be to ignore the fact that London as a whole possesses a rateable wealth which, in relation to its population, is vastly greater than that of authorities outside.

The resources element of rate support grant is used to supplement the resources of the poor-to-medium-rich authorities, but, even allowing for this fact, London is left with a huge advantage. If nothing were done to counteract this advantage, Londoners would be paying far smaller amounts in the pound in rates while receiving a standard of services fully comparable with, and, some would say, significantly higher than, the standard prevailing in the rest of England and Wales. I appreciate that because the level of valuation is high in London, total rate bills tend to be very high there. That, too, we have to take into account.

For this reason, we thought it only right and proper to give London a share of the needs element this year which, while going much of the way towards compensating London for its extra needs, goes somewhat less than the whole way. Each London borough receives an 8 per cent. supplement to its needs element. If no adjustment had been required to take account of London's high resources, that 8 per cent. would have been a significantly higher figure. We recognise, of course, that London is dissatisfied with this outcome, and we shall be reviewing the position for 1976–77, bearing in mind what has been said in this debate today.

So much for the position of London as a whole. As if the difficulties of deciding on a fair share of the grant for London were not enough, we also have to take account of the very large variations in rateable resources which exist from borough to borough. To some extent, the benefit of the massive concentration of rateable value in the central boroughs is made available to London as a whole. The GLC levies a single precept over the whole of London. This draws in huge sums from the City of London, and relatively modest ones from boroughs such as Ealing. In other

words, the cost of some of the services enjoyed by the commuting householder in Ealing is already subsidised by the rates his employer is paying in Westminster.

None the less, there remain large inequalities in the tax-raising capacity of the individual boroughs. That is why, ever since the London government reorganisation, there has been a London Rate Equalisation Scheme. The form of the scheme has varied from year to year, but the principle has always been that the rich boroughs—rich that is, in rateable value—make contributions to the poorer boroughs. In 1975‖76, under a scheme devised by the London Boroughs Association, the Inner London boroughs are each contributing the product of a 2.5p rate to a pool, which is then distributed among the outer boroughs according to how far their rateable value per head falls short of the London average.

Mr. Deputy Speaker (Mr. George Thomas)

May I remind the hon. Gentleman that he has started to take time from the next debate.

Mr. Armstrong

I am aware of that, Mr. Deputy Speaker. I beg the indulgence of the House for a couple of minutes.

Mr. Deputy Speaker

Not a couple of minutes: one minute.

Mr. Armstrong

We are awaiting the report of the official working group that has been studying grant distribution for 1976–77.

I repeat that I will read very carefully what has been said in the debate. In the longer term, the committee of inquiry into local government finance is reviewing the whole future of local taxation and grants. Its recommendations will have an important bearing on the place of London in any future grant arrangements.

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