LOCAL GOVERNMENT FINANCE

HC Deb 09 April 1976 vol 909 cc809-56

12.42 p.m.

Mr. Tony Durant (Reading, North)

I beg to move, That this House acknowledges the growing public concern at the level of spending by local government and the simultaneous deterioration in the value for ratepayers' money; calls upon Her Majesty's Government to resist further legislation which imposes extra financial burdens on local government; and urges early implementation of cash limits and new methods of financing local government following the Layfield Committee's report. I consider it a great honour that I have been lucky again in the Ballot for motions from the Back Benches. This is the second week that this has happened. Last week I was able to make two speeches on different subjects. This week I shall talk about local government finance. This is a vital subject. People are widely concerned about the present situation in local government. It is right that the House should discuss this matter for a while prior to the local elections that are on the horizon, because people's minds are being concentrated on the subject.

There is no doubt that the rise in rates over the last few years has caused people to look at what they are getting in return for their rates. Although this year the rate increase, in comparative terms, will not be as great as it has been in the recent past—although there are exceptions—rates have risen by nearly 100 per cent, in some parts of the country in the last three years and by more than that in some places. This is certainly a subject which causes people considerable anxiety.

Let us look at local government expenditure in terms of cash and the gross national product since the war. In 1946 local government spent £729 million. At that time that sum was only 8.4 per cent, of GNP. In 1974 the figure had risen to £13,303 million—18 per cent, of GNP. Since then it has risen further. I do not have recent expenditure figures, but I have the GNP figure and local government expenditure is about 30 per cent, of GNP. Bearing in mind the fact that the total of GNP that is spent on Government expenditure of all sorts is nearly 60 per cent., let us ask how much of this is taken up by local government spending, what proportion is local government income and how much comes from the Exchequer.

The present rate support grant from the central Exchequer is 65½ per cent, of local government expenditure and the rest is raised through rates—34½ per cent. The amount of money coming from the Exchequer to local government is £6,852 million. That is a fairly large sum by anyone's standards.

Let us look at staffing. That is always something that people look to immediately when considering local government expenditure. After all, local government is a highly-manned service and requires a lot of people to administer it. On 1st April 1973 the staff figure was 298,644. It rose in 1974 to 312,715. There was approximately a 4.7 per cent, increase in staffing over that period. That has caused people considerable concern.

Mr. Michael Ward (Peterborough)

Will the hon. Gentleman make it clear to the House that he is talking about all staff, including manual and other workers, home helps, and so on, and not only about administrative staff?

Mr. Durant

I am talking about all staff. I apologise if that was not clear. I am seeking to show the growth in staff. I am not necessarily criticising it. I am merely showing the scene and the point that we have reached in this matter.

Let us consider capital debt. That is another anxiety for all local authorities. It is now £22,000 million. That debt must be serviced and repaid before any dustbin is emptied or any street light is lit.

The breakdown of some of these figures is interesting. Education takes the largest share in the rate poundage—40.46p in the pound. I do not deprecate that. I am merely showing the facts. Housing is obviously of top priority. That takes 9.2p in the pound. That is another large figure. Once again, I do not deprecate that. However, it must be paid for. Town and country planning, something that does not seem to be of great importance, takes l.49p in the pound. It is interesting to see how the money is spread around in various ways. I shall return to some of the figures later.

Spending in 1975–76 is about £15,500 million. That is 30p in every pound of public expenditure. It represents a sum of £440 spent by local government for every second of every day that passes. It is a fair sum of money. It works out at roughly £300 a year on average for every man, woman and child. That is another interesting figure.

I have mentioned the vast increases in rates and the fact that this money must be found. I should now like to deal with local government reorganisation, because we are constantly told that the increased expenditure is all due to the reorganisation. I want to get something out of the system right away. There is no doubt that there was pressure to reorganise local government and that whichever party had been in power there would have been reorganisation. When I intervened in the local government debate last week, the Minister admitted that there would have been reorganisation under his party. He was arguing whether the system which had been set up was the best. However, let us accept that there would have been reorganisation in any event.

We are constantly told that it is reorganisation that is mainly responsible for the growth in expenditure. But let us look at the situation of the Greater London Council, which was reorganised not recently but somewhat earlier. The GLC's staff has increased in just the same way. Between 1973 and mid-1975 there was a net increase of 4,500. We can see, therefore, that this matter does not relate merely to reorganisation. It is a growth factor which we must take into account. We must also remember in this whole question of expenditure that other factors have entered into it. We must accept that wages have risen and that fuel costs have meant enormous debts for local government. The interest rates on borrowing are also a strain on the whole system. That is another factor. Therefore, costs would have risen whatever anyone on the Government side of the House might say. Let us face that fact squarely.

The key question that most ordinary citizens ask when involved in local government elections, or any aspect of local government, is "Are we getting value for money?". We must examine the overlapping of some of the services. In planning terms these are matters which were fudged in local government reorganisation. A clearer line should have been laid down where planning begins and ends in terms of different levels of responsibility. Confusion on this score is expensive. If this is put right, I am sure that in the long run it will save money.

It is quite ridiculous that at present every local authority is allowed to operate, for example, a museum of its own. That is another anomaly we should examine. I am not, of course, against the setting up of museums, but that surely is a ridiculous piece of overlapping. Arts and crafts are an important area of activity, but again there is a great deal of overlapping. Those are simple examples, one large and one small, in which there is overlapping of services, and surely that aspect of the problem should be examined.

I must confess that I am an anti-planner. My experience of planning has never been good. I was a member of a planning committee for four years and I sometimes wonder whether some of the decisions we made were right. I look at some of the buildings for which we were responsible and ask myself whether we have in many cases created concrete jungles for people to live in. Again, we need to examine the relevance and contribution of planning in our society.

In our planning we are not sufficiently conscious of the whole environment. The tragedy is that we have set up a whole Department with enormous responsibility for the environment and yet there is far too wide a fragmentation of planning. This fragmentation covers roads, railways, houses, leisure facilities, social services, education, hospitals and many other areas of activity. There is not enough examination of these matters, and too few areas have town plans and overall schemes which the public may examine.

The subject of housing has become a political football. Everybody likes to produce nice figures of the number of houses built, and this is always done with great pride in local government. The local authority says "We have build 500 houses". But the other side says "That is not good enough. You should have built 800 houses". The number of houses is not necessarily the right answer to the problem. We need to look much more closely at improvement grants, housing action areas and housing development of that kind. People do not want to live in remote council estates. I spend a good deal of my time seeing constituents in council estates. People who live in smart new council estates seem to experience far more bitterness, arguments and other problems than do the occupants of the humble two-up, two-down houses in the poorer areas. In those areas there is a community feeling and a spirit of camaraderie; people know each other and they find life worth while.

Are not planners too fond of the bulldozer? Are we not knocking down far too many buildings rather than improving existing accommodation? That is what people need. When "Coronation Street" is screened, the camera first shows a tower block and then pans down to Coronation Street. Many people prefer to live in Coronation Street than in a tower block. My experience of high-rise flats is that most people want to get out of them as fast as they can. This is a major social problem. I look forward to the day when we can start pulling some of them down. I do not think that that is the way in which people want to live.

Let us examine the situation where a council has the opportunity to build a children's playground in a certain area. Let us assume that the idea is accepted as a good one because there are no exist-the playgrounds in the area. What happens is that the playground, once built, becomes the responsibility of the leisure committee. However, such committees are not usually given very much money to operate their activities and eventually the playground becomes a sad area, full of broken swings and other badly-maintained play equipment.

I read of a recent Liverpool review which threw up the interesting fact that out of a large total budget a figure of only £7,000 was spent on playgroups, one of the most important activities in our modern society.

I should like to see much greater use of improvement grants and housing action areas. I believe that people want to remain in their communities. I have in my constituency an area where the conditions are appalling. There are boarded-up houses, incidents of vandalism, and people living in derelict houses by night and stealing out during the day. In the middle of that area are people who own their own homes living in an almost waste area. It is a tragedy and an aspect of planning of the kind we must examine.

Let us examine the situation in the provision of roads. We know that there must be cuts in that service, and I am not against them. I do not regard an enormous road pattern as being the answer to all our problems. I am not sure that it is a bad thing that it takes me 10 minutes longer to reach my destination. If it is a question of homes or roads, I declare myself to be in favour of homes.

We have the extraordinary situation in Reading that we have just been granted permission to build the rest of our inner distribution road. It is surely curious that, in the middle of a financial crisis, we have suddenly been given the go-ahead for a plan that will cost £15 million and will cause an enormous amount of dislocation. That decision has been arrived at for no apparent reason.

Let us turn to the subject of education. Again we must ask whether we receive value for money. Because of the anxiety by the Left to go all out for comprehensive education, we are spending money on reorganisation plans when adequate schools are already being used by pupils. However, we are told that the system must be reorganised and money is being spent in drawing up plans, in the holding of public meetings and all the rest of it. This is happening when people are content with what they already have. In my constituency 33,000 people declared themselves as being against comprehensive education. That is a fair number of people who regard the idea as a nonsense. That view was expressed not necessarily by people from the grammar schools but by people who wanted to defend their schools. I am not seeking to make a political point, but I wish to draw attention to the extravagance in money terms of this piece of educational reorganisation. It is another matter which we should examine.

Mr. Ward

The hon. Gentleman said that he was not making a political point, yet he referred to pressure from the Left for comprehensive education. Will he accept that this is something which has caused divisions even within the Conservative Party and that large numbers of Conservatives, including members of local education committees, endorse the comprehensive principle and gave short shrift to the hon. Member for Chelmsford (Mr. St. John-Stevas) when, a year or so ago, he tried to persuade them otherwise?

Mr. Durant

Since the hon. Gentleman makes that point I shall answer it. There has been slow progress towards comprehensive education throughout the country, but surely the compulsory element in the present legislation is unnecessary. In this debate I am talking purely and simply about money. I agree that many people are in favour of a comprehensive system, but I believe that the system was developing nicely and was being worked on by all those concerned. Now, however, the system is being brought in compulsorily. That will cost money, and that is the nub of my argument.

On the subject of the social services, I sometimes wonder whether we over-administer. That is another area that is ripe for examination. Again we must ask whether we are being given value for money. Let me quote a simple example. It relates to a sheltered housing scheme in which we have tried to secure a three-wheeler for an elderly lady. The application was agreed 18 months ago but has been lost in some official's filing basket. That kind of bad administration is costing money.

On the question of transport, we must make a careful examination of costs. I believe that we have to subsidise public transport. There is no alternative. The people who use public transport are mainly the young and the old, and they are the people who have little money to spare. That is a financial fact. I believe that there is a need to subsidise local transport, and I favour such a proposal rather than that we should encourage the building of more and more car parks costing larger amounts of taxpayers' money. I am not sure that that is the right way to tackle the matter. We should try to make people use public transport more by using financial incentives. Perhaps we should charge more for car parking.

We need to look at local government services and ask whether there is not an argument to be made for imposing higher charges for some of them. I have in mind refuse collection. Should everyone be able to put out as much rubbish as he likes? I know that in some places a charge is made for any rubbish beyond one sack. This is right and wise. I commend the councils who do that.

I should like us to examine town halls much more closely—not council offices, but civic buildings. Surely there are possibilities for private enterprise to run these places at a profit. When I was in local government, we found that there was a cavern beneath our brand-new swimming pool. We let it out under contract and it is operating as a discotheque. The town has made some money out of that. A greater move towards partnership is needed in leisure activities. There is partnership between private enterprise and local authorities in developing town centres. Why cannot similar partnerships operate in the leisure sector to a much greater extent?

There is the problem of extravagance in local government. I could give a simple example—the proposal of the GLC to spend £10,000 to celebrate the anniversary of the General Strike. I do not say that it is wrong for people to celebrate this if they wish to do so, but surely the money could be raised by a voluntary body without calling upon the ratepayers, many of whom do not agree with the principles behind the General Strike.

We have had many debates about direct works departments. I have never been convinced that they can work efficiently and save money. It is always difficult to be specific and to get the facts. In every housing estate that is constructed by a private building contractor there is a percentage of the wages of everyone in the company, including the chairman. I wonder whether there is a little bit of the chief executive's salary in every direct works department contract. This is where we need accurate costing. I welcome the recent guidelines that have been framed by the Government. I know that a working party is investigating this issue. This is a growth area in extravagance which worries me.

There is also waste of money on lush council offices. I have frequently raised in my constituency the question of the cost of the council offices there. I was sent a document from the Birmingham area dealing with my own council offices, saying what a terrible waste of money they were. It was a nice-glossy brochure giving all the details about these beautiful offices. I do not deny that they are beautiful. The council is spending £500 per person in those offices. I have been round them and they are fantastic. Is that the right way to use money at a time of stringency? Should we not manage in the best way we can, as has to be done in business or industry? The furniture which is being bought by my local authority is very good. I was purchasing furniture and I looked at this stuff. I could not afford it. But local government can.

How can we control this cash problem? The local government electorate tends to vote on the national pattern. This is a pity. There are some exceptions, when councillors win seats contrary to the national pattern because they are very good councillors. It cannot, therefore, be said that control over expenditure is a direct reflection of local elections. We must look at ways in which we can control local government expenditure. I know that the Government have made a start in their recent White Paper dealing with cash limits on public expenditure. It outlines the attempts that are being made to deal with the problem.

Should not that effort be extended in some way to the remainder of the rate demand which is beyond central Exchequer money, which the Government are trying to control through cash limits? Perhaps cash limits ought to be put upon local government. We have performance review committees. Are we in this House and councillors doing our job correctly? Our job is to check expenditure and to control the Executive. We have to ask questions. When I first went into local government, a friend and I sat through the whole of the debate on the council's budget and moved a reference back on every item. We kept the council there till about 1 o'clock in the morning. Everyone was annoyed with us, but in the following year the departments of the council had a good look at their accounts because they knew that we would do the same thing again unless there was closer scrutiny.

I do not think that we scrutinise finance sufficiently in local government. This is the job of councillors and performance review committees as laid down in the famous Bains Report. Perhaps this House ought to have a Sub-Committee of the Expenditure Committee to which would be invited for cross-examination the chief officers of leading councils which had gone mad on expenditure. This is all part of national expenditure.

I was interested to note that the Municipal Review made a statement about this question. I shall quote from the March issue of the Municipal Review, which is not a publication which necessarily supports the Conservatives. It says: Improving the public expenditure survey system by involving local government at the formative stage could well bring about a better understanding of the implications of White Paper proposals and make for better and more efficient use of available resources. The planning of any service cannot be done effectively at the national level without knowledge of the effects of those decisions at the point of consumption and only local government can have such knowledge. It would be folly to continue with the present blinkered and secretive system of planning public expenditure so far as the local government element is concerned. Surely the very determined attempts now being made by local government to be involved in the formative stages of planning public expenditure will not be ignored. In other words, we should bring local authorities in at an early stage. At least, they would have the opportunity of being able to control some of their expenditure.

Many of the problems of local government stem from this place. We pass legislation with acclamation and leave local government to pick up the bill. We are partly responsible for the extra cost in local government. The Layfield Report is about to be published. The sooner it comes out the better. Then we can discuss the future of local government finance. I made my maiden speech in this House on the subject of rates and I have been consistently interested in the subject ever since. I feel strongly about the matter. I remember suggesting in my maiden speech that we might consider running lotteries in local government. We seem to have gone some part of the way, but the Government have weakened the proposals put forward by my right hon. Friend the Member for Crosby (Mr. Page). I do not think that the prizes will be big enough. At least, the principle has been established.

In my maiden speech I mentioned the possibility of putting the whole of the teachers' pay bill on to the central Exchequer. The hon. Member for Peterborough (Mr. Ward) earlier raised the issue of education. If we had one system of education, it might be easier to transfer the whole of teachers' pay in that way. It would be a national education service. The teachers would not be averse to that if it gave them an opportunity to change schools and move around.

On that occasion I spoke about the reform of the rating system, and that reform is now about to come upon us. I hope that when the Layfield Committee reports the Government will not just look at the Report and say "That is it" but will have the courage to do something about it. It will take courage. Many people consider that there is no system better than the current rating system in terms of ease of collection of money and administration. There are doubts about whether any other system would work.

Mr. John Cartwright (Woolwich, East)

The hon. Gentleman appears to be assuming that the Layfield Committee will produce a magic new solution to solve the long-running problem of local government finance. What will the hon. Gentleman say if the Layfield Committee reports that in its view the present rating system is the best long-term method of financing local government?

Mr. Durant

I should have to take note of it. I was keen that the Layfield Committee should be set up, so I cannot spurn its view. I should want to look closely at its arguments. The Green Paper on local government reorganisation analysed all the choices and proceeded to knock them down. I hope that the Layfield Committee will not go that far. If it does, I shall be depressed. I shall probably stop talking about the rating system and hide my head in shame. Even if the Layfield Committee reports that the present rating system is an easy way to collect money and there are administrative arguments in favour of it, we should still examine other systems and have the courage to introduce new proposals.

I am a strong believer in the local councils of social service. Some local authorities help their council a great deal and some do not. Some do not like the so-called interference of the council in the affairs of the Department of Health and Social Security. I do not agree with that criticism. Voluntary organisations organised through the local council of social service provide valuable help. By encouraging the voluntary spirit, for which the country is renowned, we could save a great deal of money.

This afternoon I am to visit someone I discovered to be in great difficulty. People who seek assistance often go first to the social services department, but sometimes it is a question not of money but of visiting and taking an interest, and that can best be done by volunteers rather than by officials. Many old people are nervous of officials and do not like them. Often the volunteer can do the job better by finding out what is the problem, analysing it and then bringing in a local or national agency to provide the answer. There is great scope for increased voluntary effort in local government.

Local government is here, it is an essential service and I do not want to knock it. It does the best it can in face of all the burdens we impose upon it. Local government is faced with the burden of the legislation which we pass and the demands of the public, who are demanding more and more, and it has a job to draw a balance. I am a supporter of local government, and the House benefits from the experience of hon. Members who have served in local government.

It is time for a close examination to discover whether we are getting value for money and whether local government priorities are right. There are many devoted people who spend a lifetime in local government, who love the service and work hard for it. We should encourage more people to take an active interest in local government. Business also has a responsibility. More young executives should spend time in local government and bring their expertise to it.

Through no one's fault there often seem to be two social classes in local government, which is a pity, because most of the issues are non-political. My personal friend in local government was a leading Communist from a council estate in my district. He was first class in housing matters and knew his stuff backwards. We need experts and people who have a love for local government to work in it. We must restore the position of the councillor who will ask questions and try to get results for his community. We want value for money.

1.16 p.m.

Mr. David Weitzman (Hackney, North and Stoke Newington)

The hon. Member for Reading, North (Mr. Durant) spent a great deal of time talking about getting value for money. He quoted examples and criticised methods of planning, housing and so on. I have no doubt that there is a good deal in his criticism. Many of us could quote examples where greater value could have been obtained for money spent.

The motion refers to: the growing public concern at the level of spending by local government and the simultaneous deterioration in the value for ratepayers' money". There is a great deal of truth in that, and it certainly is of paramount importance to seek new methods of financing local government.

The clear implication in the hon. Gentleman's call to resist further legislation is that we should reduce the burdens that are put upon local government and resist any further effort to assist councils by legislation. We all recognise that in stringent economic conditions it is difficult to find money to increase local government services, although the need to do so is there. Whatever criticism may be made about specific instances of getting value for money or mistakes being made in organisation, the need is there and when we can do so that need should be satisfied.

The hon. Gentleman referred to the reorganisation of local government by the Tories. I was opposed to that measure. The borough of Stoke Newington was a model borough, small and able to deal with its affairs. Upon reorganisation, that borough was allied to the bigger borough of Hackney. It was said that the citizens would be brought nearer to the town hall. Instead, large organisations have grown up which require large staffs and need to spend more money. That is my criticism of the mistake made by the Tory Government when they em- barked on local government reorganisation.

Mr. Durant

While I accept some of the hon. and learned Gentleman's premises on the subject of local government reorganisation, does he not agree that the Labour Party was rather keen on unitary authorities? I accept that they would have been at one level only, but they would have been big authorities.

Mr. Weitzman

Of course there was need to look into reorganisation and deal with it, but the way in which the Conservative Government dealt with it imposed tremendous burdens on the community and meant a great deal of unnecessary work and staffing. We can see the results today in the work that is done and, indeed, in some of the criticisms the hon. Gentleman himself made about planning, housing and so on.

I am always amazed by the way in which the Opposition demand that the Government should cut public expenditure without saying where it should be cut, yet when any local project is mooted—such as a new hospital or a new school, or an increase in social service provision, or a need for schemes which will increase employment—they press the Government to provide the money. If ever there was a hypocritical attitude, it is that.

I want to refer to three spheres where a local authority functions. The first is housing. In Hackney, part of which I have the honour to represent, despite the great efforts by the council, we have a waiting list of some 14,000 persons. We are not unique—most local authorities have the same problem. Housing is one of the most dreadful headaches from which we suffer. We all know heart rending cases brought to us in our surgeries—constituents living in inadequate and often dreadful conditions, on the housing list for many years, in many cases giving up in despair. Surely what is needed is the greatest effort we can make and can possibly afford to assist local authorities to deal with the housing problem. That must mean the provision of more money by the Government, through legislation and otherwise, contrary to the wording of the motion.

Secondly, I took an active interest in the Chronically Sick and Disabled Persons Act 1970, promoted by my hon. Friend the Under-Secretary of State for Health and Social Security who is responsible for the disabled. I have taken a keen interest in the implementation of the Act. It put a heavy madatory burden upon local authorities for the care of the disabled—ascertaining where they were, establishing a register, and catering for their needs.

A great deal has been done by local authorities but, unfortunately, not enough by a great many. Very much more remains to be done. That requires money, and there again such money can be provided only by the Government or from the rates. This may well mean legislation or other practical assistance by the Government. Yet the hon. Gentleman asks us to cut down on legislation which assists local authorities. I am sure that he would not be so unworthy as to suggest that the efforts of local authorities in the provision of help for the disabled should be curtailed.

Mr. Durant

The hon. and learned Gentleman said, first, that I had urged further expenditure. I am subject to correction, but I do not think I did. Secondly, he asked where I would cut. I mentioned as an example the road scheme costing £15 million in my district. That was a practical example. Thirdly, he said that legislation to assist the old and the disabled, for example, was already in existence. Of course some local authorities are not carrying it out, and it may be necessary to send out another circular urging them to do so. But the law is already there.

Mr. Weitzman

The law may be there but the requirements still exist and are not being fulfilled. The clear implication in the motion is the cutting down of legislation. I say that what is wanted is more assistance, not curtailment of our efforts. We all recognise that economic conditions make it very difficult, but we should press not for a diminution of effort but for such assistance to the greatest amount possible.

Indeed, our social services generally demand such assistance. They play an immense part in assisting the sick, the needy, the unemployed, the pensioners, and so on. The Government have not hesitated to recognise that fact in their measures. However, I often feel that the class most neglected are the mentally sick. Their need is pressing. I know that the Government appreciate the need to assist them, and I hope that they will continue to do so.

My third topic concerns the class receiving social services aided provision—day nurseries and playgroups. In Hackney we have 18,000 children under the age of five. About 1,000 of them enjoy facilities provided by the local authority. There are 18 nursery classes and one nursery school. About 800 of the children are looked after by registered daily minders. Some of these minders are aided in a small way by the social services.

About one-seventh of the total number of these children have their care and education looked after, to a greater or lesser extent, by the local authority. But what about the other six-sevenths? This means for them no provision except that provided by their homes, which is a desperate position for many mothers. Many mothers have to work at home, machining or doing other work, or they have to find a little job where the child can go with them. Usually, they have to work at the lowest rates of low rates of pay. The same problem exists in many other areas.

We need more day nurseries, places where the children can play under registered minders, places where mothers can go with their children, where there is supervision of play by the children and facilities for the mother. Our children are perhaps our most treasured asset. This problem has been neglected, and it needs to be tackled. Does the hon. Gentleman wish to curtail efforts in that direction? I am sure that he does not.

I have only touched upon some of the activities of local government. The points I have made are equally applicable to many others. The proper attitude to adopt is to say that, within our means, every effort should be made to assist local government in discharging the burden upon it. By all means let us consider new methods of financing local government so that it can carry out its work as fully as possible while meeting its obligations to all the ratepayers. I agree that we must strive to get value for money by examining the methods used and seeing where we can economise—but not by cutting down the value of the services. The motion merely serves the purpose of drawing attention to the need to encourage local government to make greater efforts, not to do less, in many directions.

1.30 p.m.

Mr. John Cockcroft (Nantwich)

I should like to speak briefly and in general terms about what I take to be the spirit of the motion. I am much concerned about the proportion of the national income which is taken by government, whether it be local or central. In total it forms a frightening portion of the national income, and in that sense we are well on the way to the Orwellian situation of being pensioners of the Sate, and perhaps pensioners of local government as well.

Radical steps will have to be taken eventually, by tax incentives and other methods, to persuade people to make greater provision, in such matters as education, for their own needs. This will be good for them, good for their families, and certainly good for the taxpayer and the ratepayer.

There certainly had to be changes, of course, in local government organisation. There were far too many small units, some of which were inefficient, but I believe that the changes of 1974 were made too quickly and often with insufficient consultation.

Vast units of local government and different tiers of local government are a standing invitation to extravagance. Moreover, a great opportunity was lost, I am sure, to reform local government finance at the same time as the structure of local government. The answer is not to ask central Government to bear an even greater share of the burden of local government expenditure. That would be to encourage extravagance by local authorities. Money must be raised mainly locally if it is spent locally. The alternatives are local income tax or local sales tax.

In certain states of the United States of America there is a local income tax. Some States have a local sales tax. The analogy is not very close, because in the United States there are much larger units of government. The states are not directly analogous to our councils here. But we have that choice. Personally, I should prefer the local sales tax if it could in some way supersede or be superimposed upon the other taxes which now exist, because I am absolutely in favour of people paying when they spend rather than having money deducted at source.

Cash limits are obviously sensible in the country's present very serious economic situation. I have no need to remind the House of the anguish caused, even in relatively wealthy counties like Cheshire—part of which I represent—by the present cuts in local government expenditure, particularly in matters such as education, which is so essential to the future. The anguish is real and great, and to some extent it is unexpected.

We must hope that things will improve, but there will have to be drastic changes in the whole structure of financing local government if we are to get out of our present difficulties. The present situation is quite untenable.

1.33 p.m.

Mr. John Cartwright (Woolwich, East)

I am glad to see a rather better representation on the Benches opposite than at this time last week when we discussed local government without a single Conservative Member present until the very last minute, when the hon. Member for Reading, North (Mr. Durant) made a somewhat breathless appearance. Perhaps that was because last week we were discussing a motion which reaffirmed the belief of the House in the importance of local government. This week we are discussing a motion which is somewhat more critical. Perhaps that explains the rather better attendance on the Benches opposite.

In moving his motion, the hon. Member for Reading, North said that he was not seeking to knock local government. He could have fooled me, because we had the usual candidates who have frequently run round this course, whipped by the hon. Gentleman opposite, when we have been debating local government.

We had the usual references to over-staffing, without any attempt to break down the staff structure or to indicate how many of these people were the awful pen-pushers who are always being criticised, and how many were the very useful people such as teachers, home helps and social workers, and others who are providing services to the public. We heard the usual references to extravagant spending, as if only local authorities ever indulged in extravagant spending.

In view of the hon. Gentleman's references to the need for an adequate and tight performance review of local government, I point out that my experience in the local authority which I had the honour to represent for three years was that the monitoring of spending, the comparison of output in relation to the budget and the original plan, was very much tighter than it is in this House.

We had the almost obligatory references to direct labour, as if this again were a very substantial area of waste in local government. Thinking back to the 1972 and 1973 situation, I know that many local authorities, particularly in London, would have had no housing programmes at all if they had not had direct labour departments. At that stage private builders were all very much too busily engaged in building shops and offices, luxury hotels and things of that sort, to be able to undertake housing construction for focal authorities.

The last of the obligatory references to local government came with the suggestion that all town halls are lush. I think that was the expression used. My own experience is that for every lush local council office there are at least twice as many which are very much less lavishly appointed. I know of some local authority staff who are working in the most appalling conditions. When I hear talk in this House about lush offices, I confess that the office I have now in the Norman Shaw, North building is very much more lush than anything I enjoyed when in local government.

The hon. Gentleman attempted to knock down the allegation, frequently made on this side of the House, that the reorganisation of local government has been a major factor in the rising cost of administering local government services. He quoted the Greater London Council as an example. The GLC in its present form was not necessarily a creation which many of us in London local government welcomed. It was once again a creature of a Conservative Government. It was a piece of Conservative Government reorganisation. Many of us in London object very strongly to the degree of confusion and duplication of effort and responsibilities which exists in London local government on the basis of the sort of example the hon. Gentleman was quoting.

The GLC is a housing authority, and the boroughs are also housing authorities. The GLC and the boroughs both run parks. The GLC and the boroughs both maintain roads and highways. Both the GLC and the boroughs support the arts and recreation. There is a measure of duplication in the two-tier system which substantially adds to the cost of running it.

All I would say about the reorganisation perpetrated in the 1972 Act—I noticed that the hon. Gentleman did not exactly go overboard in defending it—is that it was not the most imaginative way of reorganising local government. As to what he alleged to be a demand for reorganisation in local government, my recollection is that it was a demand not for reorganisation but for reform. There is a measure of difference between the two.

The motion refers to a growing public concern about the level of spending by local authorities. I concede that there certainly is a growing public concern. On the other hand, my own experience leads me to believe that there is also a growing public demand for the services that local authorities provide. When I was leading a London borough I well recall having a steady stream of pressure groups knocking at my office, constantly demanding and arguing that services in particular areas ought to be improved and extended. Every pressure group—ranging from Age Concern, arguing about the needs of the elderly, to the Pre-school Playgroups Association, arguing for the needs of the very young—said that its particular service ought to have the maximum priority, whether it was housing, services for the handicapped, leisure provision, the provision of services for children or for the elderly.

One of the difficulties about local government is the setting of priorities. Clearly, not all these services can be priorities, and it is extraordinary how the people who press hardest for extensions of local council services and demand improvements in those services object very strongly at the end of the day when it means an increase in rates and to having to pay the cost of the services they have demanded.

The hon. Gentleman referred to a number of areas in local government where he seemed to be suggesting that we were not getting value for money. I shall not follow him through all of that, but I shall take just one or two examples. I was interested in his references to local council housing. I would have thought that was an area where, by and large, we were getting value for money. As I understand the Conservative attitude, it suggests that the average council tenant is getting too much value for money since rents are not high enough. In many areas that I know of in South London much-needed urban renewal has taken place only on the basis of local authority housing development.

I accept that perhaps we have on occasion been too keen to use the bulldozer and totally to redevelop when refurbishment and rehabilitation would have been an alternative solution. But it would still have been the local authority which undertook that refurbishment and rehabilitation. This is not an area where private enterprise capitalism has been eager to take up the burdens of urban renewal, particularly in housing.

It would be wrong to suggest that everybody who lives on a council estate is unhappy and miserable and given to tensions and all the rest. There are certainly some problem estates. My "surgery", however, leads me to believe that many of our council tenants are extremely happy with their council homes and are satisfied with the value for money they get.

Mr. Durant

I go all the way with the hon. Member's thesis that not all are unhappy on council estates. I was talking about the tower block, the concrete jungle type of estate. The individual unit estate with nice council houses is, as he says, agreeable to the tenants.

Mr. Cartwright

The attitude to high-rise flats greatly depends on the policy of the local authority. Many authorities take the view that it is wrong to put families with young children into high-rise flats. If that view can be achieved, it goes a long way towards meeting these problems. Some council tenants are very happy to live in high-rise blocks. Those whose children have left them and who have reached middle years and who want some peace and quiet are usually happy with that type of accommodation. My local authority has seven 24-storey blocks and it has no difficulty about letting them. There is, however, some resistance to the lower-rise four or five-storey accommodation.

The other area in which local authorities give extremely good value for money is in services for the handicapped and the disadvantaged. These services are extremely good not only for the individual recipient but for the entire community. Services such as home helps, meals-on-wheels and the local authority lunch clubs enable the elderly to live in the community in the comfort of then-own homes rather than being herded into a local authority residential home. There are also the services referred to by my hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman) and provided under the Chronically Sick and Disabled Persons Act. For example, there are the very costly adaptations which are undertaken by local authorities to enable the handicapped to live in their own homes or in specially converted council houses. Some of the cases with which I have been associated have involved adaptations costing thousands of pounds simply to enable these people to operate in their own homes rather than going into hospital or some special form of accommodation.

Telephones represent another area where local authorities have undertaken extensive schemes under the Act to meet needs. My authority, like many others, operates holiday hotels for the elderly and the handicapped, and the ratepayers value these services very much. It is not just that the elderly and the handicapped enjoy holidays. Much younger people welcome the fact that they are making their contribution to the local authority and that it is being used in a way which benefits people in later years, people who otherwise would never be able to enjoy a holiday in the usual way.

There is then the whole question of concessionary fares. In the Greater London area this scheme enables the elderly to travel free on London buses. It has been a tremendous advantage to them, not just helping them to travel but opening up opportunities for them. This has been a tremendous step forward for the elderly in London. Spending like this on the least advantaged in the community offers extremely good value for money and is accepted by the whole community.

The hon. Member for Reading, North suggested that there should be new ways of financing local government. I felt that he was echoing the views, aspirations and hopes of some people who seem to have pinned everything on Layfield producing some magic solution which will reduce the burden of rates on ordinary domestic householders while allowing local council services to expand, and enabling local government to retain its financial autonomy.

I am not sure that that sort of magic solution is available or will come from the Layfield Committee. If people want high levels of local authority service, they must be prepared to pay for it. I always put that view before the electors in any local government election that I have fought. Perhaps I may give an example of what I mean. My constituency will contain two-thirds of the new town of Thamesmead. It will lie in the London borough of Greenwich. The other third will be in the constituency of Erith and Crayford in the London borough of Bexley. Already residents on each side of the boundary are making comparisons about the level of services provided which is very much higher in Greenwich than in Bexley. Ratepayers recognise that the higher level of services must be paid for.

The last 18 months or two years have witnessed heavy criticism of local government. Local authorities are democratic institutions and they should be shot at when they make mistakes. There has, however, been an orchestrated attack upon them which is not justified by the circumstances. I want to call for a moratorium on the bashing of local councils and local councillors. We should encourage local government to get on with the job it has been elected to do.

1.48 p.m.

Mr. Keith Speed (Ashford)

I wish to congratulate my hon. Friend the Member for Reading, North (Mr. Durant) and all those who have taken part in this helpful debate. I agree with the hon. Member for Woolwich, East (Mr. Cartwright) that better services have to be paid for. A point to which I hope the Layfield Committee has addressed its mind, al- though we should not over-inflate the importance of what it may say, is that there are 16 million households and 25 million employees. The trick is to ensure that all those who are receiving services and who are in employment should pay for them in a more direct way than as householders who pay rates or as commercial ratepayers.

The debate has revolved around money and value for money. It might be helpful to give one or two examples of local authorities which have been saving money without reducing their services or introducing enormous redundancy programmes, and working with the full cooperation of the trade unions. One such example is Leeds City Council. When my party became the largest party on the council last May, although it did not have overall control, it started a cost reduction programme. The leader of the council, an old friend of mine, is Mr. Irwin Bellow, who, with the chief executive, sits once a week to approve or defer personally every application for a job, no matter how junior. The result has been a net reduction of 750 staff employed without any question of sacking people and with the full co-operation of the unions.

Leeds believed that it needed to take a long, cool look at its overtime bill, which was running at £2½ million a year. That is a great deal of money. As a result of that long, cool look, it has already saved over £1 million on overtime. It has removed over 100 telephone extensions, which is a considerable saving, cut its massive fuel bill and made significant savings on transport and postage. That is the kind of good housekeeping which any housewife has to do, particularly now when costs are rising and incomes are limited. Leeds has been a very good example of what can be done. The result was a reduction of 6.3 per cent, in its direct rate, and it is going on, because this is an ongoing process.

The Leader of the Council, Councillor Bellow, in his budget speech, given to the Leeds City Council a few days ago, said: the reality is that overmanning, especially in large organisations and in the public sector, has now become a national sickness. I do not by any means think that we have reached the end of the road in careful management of our staff resources, overheads, and so on. There is still much more which can be achieved Councillor Bellow is entitled to say that, because he and the Leeds councillors and, indeed, the staff have done something about it.

I turn now, in a different area, to another Conservative-controlled council—the Metropolitan District of Sefton on Merseyside. Just before Christmas, I had the great privilege of opening the door of a new council housing estate which is being built there—the Marsh-side estate. Sefton has adopted a different procedure, and I should like to quote from the chairman of the housing committee, because I am trying to give practical examples, not generalities. Councillor Watson said that the scheme would provide basic houses in half the usual time, cut the capital cost by up to 20 per cent., make yardstick problems seem like a thing of the past and correct the social injustices of higher subsidised standards in the public sector than in the private. The Department of the Environment estimated that the cost of the Marshside housing scheme would be about £2,300,000. Sefton is doing it for about £1,700,000—a saving of about £500,000 or over 20 per cent. It is also saving between nine and 12 months in construction time on the scheme.

I have seen the houses and spoken to some of the first tenants. The estate comprises detached, semi-detached, terraced houses and old people's bungalows. They are of a more attractive design than I have seen in almost any other local authority, and the tenants are delighted with them.

That is a practical example of saving over 20 per cent, on cost, speedier construction, and design which is pleasing and attractive to the tenants. The scheme, which was carried out with the cooperation of the Department's regional office in the North-West, involved reductions in the Parker Morris standards in certain ways, because the houses were designed by a private builder. However, they are designs of some quality. I hope that the Minister will endorse his regional office's approval of that scheme. This could be one way of saving a great deal of money in the construction of council houses, which at present runs into hundreds of millions of pounds a year.

I turn now to a much smaller, but important, authority in the North-West—Stockport. That authority has embarked on a staff and cost reduction programme with the full co-operation of the unions. My latest information is that it has reduced staff by nearly 300 without basically affecting services in any way That, again, is good housekeeping.

I come now to my own area—Kent. The Minister, like myself, is a Kent ratepayer. Indeed, I passed his house this morning on my way to the station, and it was in good order.

Kent has carried out a number of imaginative experiments in social services. I do not know whether these experiments will be the final answer. Indeed, Kent is honest enough to say that it does not know. Last night I was speaking to the leader of the Kent County Council. He is convinced that, from the financial and social services point of view—social services are about compassion and looking after people—what Kent is doing is worthy of examination.

For a start, the usual procedure with children who have been difficult to look after—they may be disturbed or they may have come from upset families—is to put them in local authority children's homes. That is extremely expensive. No matter how loving the care they may get from the dedicated staff, those children are in institutions.

Therefore, Kent, on an experimental basis, has been paying foster parents considerable sums of money—over £40 a week—because there is a special problem with certain children. Previously it had been almost impossible to place these children in the care of foster parents. However, the council is now finding that not only are these children having expert attention and loving care in ordinary homes, but it is at the same time making a saving of about £1,000 a year on each child so placed.

If it were just a question of finance, I should not endorse that scheme for a moment. Nor, I believe, would Kent. But, because these children can get individual care in private homes, which is desperately important, and because there is the added bonus of saving £1,000 a year on each child, I believe that the scheme is worth looking at and pursuing further.

On an experimental basis, Kent is also bringing in a community care project. That involves paying substantial sums to people to look after their aged parents in their own homes. I say "substantial sums" because I am talking about £30 a week. This scheme enables aged persons to remain in their own homes with their families. The saving is again about £1,000 per year per person.

I am not suggesting that this is the solution to the problem throughout the country. There are many difficulties. Indeed, this scheme is still in the early experimental stages. However, I suggest that these are two practical examples of what can be done by forward-looking local authorities not only to save money, but to get a better solution to the problems facing them. I hope that many other local authorities—we know how hard pressed social services departments are—will look at these experiments.

My hon. Friend the Member for Reading, North dealt at some length with what I should describe as the reorganisation myth. Indeed, another hon. Member referred to the same theme. I should like to get one or two points clear. I have noticed already that in the election literature being put out by the Labour Party for the district elections on 6th May local government reorganisation features large in the apologia for what is going on under this Government.

I presume that we can take it that, whatever had happened in the 1970 Election—whether the Labour Party or, as happened, the Conservative Party, was returned—there would have been some form of reorganisation of local government. I understand that the Labour Party, as well as the Conservative Party, was committed to reorganisation. I understand that the Labour Party would have favoured the larger unitary authority solution, for which there is no evidence that it would have been any more efficient. Indeed, there is a great deal of evidence that it might have been less democratic in rural areas where councillors would have had to cover large numbers of villages, unless we were to finish up with councils of 200 to 300 members. But there is no difference between the parties that there had to be some change. It had been talked about and Royal Commissions had been set up and had reported. Therefore, local government could not have gone on as it was with this sword of Damocles hanging over it.

My hon. Friend the Member for Reading, North fairly pointed out that London reorganisation took place 13 years ago. If, as the Labour Party argues and as has been argued today, the 1972 reorganisation is responsible for all the problems of local government, the increase in staff and expenditure, it is presumably fair to say that London should be immune from these symptoms, since not only did its reorganisation take place a long time ago, but, for eight of the last 13 years since it took place the Labour Party has been in Government. Therefore, if the Labour Government thought that we had the system wrong in the 1963 reorganisation of London government, they could have done something about it between either 1964 and 1970 or February 1974 and now. However, they have chosen not to interfere with London government in that way.

The House knows that London boroughs and the Greater London Council have seen their rates and costs go up at much the same rate as in every other local authority. Indeed, over the past couple of years, the rates in one or two London boroughs have gone up by more than they have in most local authorities. May we please, therefore, get that out of the way?

One thing that I am prepared to concede to the right hon. Gentleman—and this was mentioned by my hon. Friend and by the hon. Member for Woolwich, East—is that there is a duplication of functions and services, particularly in planning and consumer protection. The right hon. Gentleman and I served on the Standing Committee at the time and he will recall the difficulty facing not only the Government but the Opposition because there were different lobbies cutting across party strands at that time. There was the county borough lobby, the district council lobby, and the strong county council lobby. They all had views about where the planning functions and development control should go. I was the Whip on that Committee, and I had the job, as Whips do, of delivering the business at the end of the day, and I freely admit that the final solution on that Bill was not perfect.

We have to look back to four years ago. We did not then have the rate of inflation that we have enjoyed—if that is the right term—during the past two or three years. Deeply felt views on the duplication of functions and other aspects of that Bill were cutting across party strands. The result was that the edges were blurred and there was an element of duplication which in an ideal world I should not like, which my right hon. Friends the Members for Worcester (Mr. Walker) and Crosby (Mr. Page) would not like, and which I know the right hon. Gentleman would not like, but we had to arrive at a solution, and it was a compromise.

It is now two years since the implementation of that measure, and more than two years since it was passed into law. It is time to look again at the duplication of services, not least because we are now in a much more inflationary situation and facing greater economic difficulties than we were facing then. It is clear that unnecessary duplication in local government services is a luxury which local government, central Government and the economy cannot afford.

This is something at which we should take a long hard look to see whether we can get it right. If we could cut out the duplication, there would be substantial savings not only in terms of money, amounting to millions of pounds, but in terms of staff time in both central and local government. There would also be more time for the clients, the people who make the application and have to wait while they are shuffled backwards and forwards between the various agencies of local authorities and the Government.

My hon. Friend said something about cash limits, and one or two other hon. Members came in on this. Does the right hon. Gentleman, with his great knowledge, and as a member of the Cabinet, think that he, the Chancellor of the Exchequer, or the Government can go on for ever with no cash limit on public sector housing? The other day at Question Time the Minister for Housing and Construction had an exchange with my hon. Friend the Member for Aylesbury (Mr. Raison) about this. Although almost every other sector of Government expenditure has a cash limit, there is apparently no limit on this one.

The White Paper on Cash Limits on Public Expenditure, Cmnd. 6440, which has just been issued, contains an interesting statement in paragraph 11. It says: Under the present statutory arrangements, local authority current expenditure cannot be directly controlled by central Government. Cash limits are however being placed on the amount of financial assistance provided to local authorities by the central Government through the rate support grant and supplementary grants. We debated this on the rate support grant orders earlier this year. I like the phrase "Under the present statutory arrangements".

It is the view of my hon. Friend the Member for Reading, North that we have reached the stage at which there should be the power to impose cash limits on overall local government expenditure. Whether one exercises that power at any given time may be a matter for debate, but within that much tighter overall control there should be greater freedom for local authorities to determine their own priorities. In view of that wording, which I find interesting, it would be helpful if the right hon. Gentleman would give us a better idea of his thinking and that of the Treasury because, as I am sure he will agree, this is an important question.

Having referred to the Treasury, I should like to put another question to the right hon. Gentleman and if he is not able to give an answer today, I shall understand. It would be interesting to know how many chief officers or senior executives in local government have the right, subject to the view of their local authority, to borrow money at low rates of interest—or at a lower rate than the commercial one—to buy a motor car because they need a car for the job. Do I take it that these low interest loans will be subject to the new and increased tax arrangements announced by the Chancellor of the Exchequer? These could fall within the business perk situation to which the Chancellor referred.

The use of direct labour was mentioned by my hon. Friend and by others. It is no good the hon. Member for Woolwich, East saying that we go through ritual incantations about this. We shall keep on with this subject until we get the Government to be more forthing. One can quote the examples of Newcastle and Southwark, where considerable sums of money have not been managed as well as they might have been and the ratepayers have had to pick up the tab. We are talking about value for money. The Secretary of State has set up a committee to examine this problem. It is likely to sit for a long time. I know that it has nobody on it from outside industry, but every time we ask the Government to accept the recommendations of the Chartered Institute of Public Finance and Accountancy, the reply is that they have set up a departmental committee and it would be wrong to do anything in advance of that committee's report being received. That would be fine if the Minister for Housing and Construction were not roaring round the country making speeches about the extension of direct labour in advance of the findings of the committee.

We are not against direct labour, provided it is needed for the authority, it is efficient, works on a properly accountable basis and complies with the various recommendations that that CIPFA has put forward, but we have the greatest reservations because many local authorities, unfortunately, do not take the same view as CIPFA does about competition, proper accountancy or comparing like with like. I am engaged in correspondence with the Minister about a council in Manchester that wishes to award a contract for council housing to the direct works department although its quotation is £40,000 more than that of an outside contractor and the time that it will take to build the houses will be considerably more.

That sort of thing is wrong at any time. At a time of financial stringency it is certainly not the way to do things, and we shall continue to press this matter unless, even today, the right hon. Gentleman says that not only does he accept but will recommend the acceptance by local authorities of CIPFA's recommendations at least on an interim basis until his committee reports. If he were to do that there would be a common approach on this problem, and that would be a good thing.

In his closing remarks the hon. Member for Woolwich, East hit the nail on the head to an extent when he said that the public have a duty to do what they can to help bring about economies in local government. I am sure that every hon. Member has received letters complaining about the level of rates and taxes, and found in the same letter demands for even better schools, the replacement of out-of-date old people's homes, the building of new roads, and so on.

The simple message that has to go out from this debate, if from nowhere else, is, first, that there are not likely to be any major increases in service standards over the next few years because the country cannot afford it, and, secondly, that it is possible to make considerable savings by adopting some of the procedures that I have outlined today. Some Conservative local authorities are making savings without necessarily affecting standards. They are making savings in both money and staffs.

Much innovation is going on in local government. The more hon. Members understand local government and get close to it, the more they realise that this House itself is one of the major factors which can put back local government by giving it more burdens than it can carry.

The Chronically Sick and Disabled Persons Act was a wonderful Act, but it gave local government a virtually open-ended commitment, and then we start complaining because its staff increase and its costs go up. We must think, before we pass that kind of legislation, what the burden will be, otherwise we shall only delude ourselves and our electors, and we shall deny the resources to central or local government to meet those aspirations.

Next month there will be district council elections throughout the country. The citizens will be looking at the record of local authorities to see how they are discharging their obligations and trying to make economies. I hope that two things will happen. First, that there will be a higher turn-out at the district elections than we have had in the past. No one can be satisfied with a turn-out of 25 per cent, or 30 per cent. Such a situation is wrong and I hope that it will improve.

Secondly—here I echo the remarks made by my hon. Friends—I hope that industry and commerce will release more people to stand as candidates for local authorities. I do not care whether they stand as Conservative, Liberal, Labour, Communist or whatever. We want greater expertise. We want people who have made their mark in industry, whether on the shop floor or in management. It is no good industry or commerce complaining about local government and the way it is run and at the same time denying to many of their brighter young men and women the chance to do public service in local government and perhaps improve the efficiency of the work.

I congratulate my hon. Friend on what has been a helpful debate. I have tried to be constructive and not too political in my remarks. I shall await with interest the Minister's reply.

2.13 p.m

The Minister for Planning and Local Government (Mr. John Silkin)

I welcome the fact that the hon. Member for Reading, North (Mr. Durant) has raised this important subject today. A pattern in my life seems to be emerging over 13 years in the House. Suddenly, round about April, one begins to get a Private Member's motion on local government. I am sure there must be some connection which I have missed. However, it has been a very useful debate and one which was extremely interesting. The hon. Member will not expect me to agree with every single suggestion he made, particularly not in April, but nevertheless he gave us a stimulating speech and we are all grateful to him.

Whether one likes it or not, local government today is facing a more searching examination than at any time in its history. It has had to face a barrage of hostile comments, most of them unfounded. I know that my hon. Friend the Under-Secretary referred to this in the debate which took place last week. Today, however, we are looking particularly at local government finance, an area in which criticism is more passionate than it is elsewhere.

Let me begin, as I must in such matters, by producing some figures. It is true that local authority expenditure on goods and services, including staff, has taken an increasing share of the gross domestic product over the last 25 years, rising from about 8½ per cent, of the total in 1949 to about 9½ per cent, in 1964 and over 12 per cent, in 1974. Provisional estimates for 1975 indicate a further growth to about 13 per cent.

There has been a particular rapid growth in overall current expenditure in recent years. In the decade to 1963 the average annual growth rate in volume terms was just under 5 per cent. However, in the two years 1973–74 and 1974–75 the rate of growth was 9 per cent, and 10 per cent, respectively. In 1975–76 the rate of growth has moderated to about 5 per cent, and a complete standstill has had to be sought for 1976–77.

But figures on their own mean nothing: the important thing is to remember what the money is spent on and why the amount is rising. If I have to go over some of the same ground that my hon. Friend went over last week, I make no apologies. The facts of the matter deserve the widest possible audience. Local authorities today provide an enormously wide range of services to meet the needs of the community. Some services which used to be provided by local authorities have been transferred to other national agencies, but the range and quantity of local authority work has nevertheless continued to expand. This is obvious when we consider, for example, the enormous expansion, since the Second World War, of education, the social services and housing—to mention but three, as my hon. Friend the Member for Woolwich, East (Mr. Cartwright) dramatically pointed out when he dealt in his interesting speech with the cost of services in his own borough.

These services have expanded because the public have demanded wider services and better services. Local authorities have responded to these pressures which have been exercised on them not only by their own electors but by successive Governments of both persuasions. I have already said that I do not apologise for hammering home these facts. I shall continue to do so.

Neither am I sorry that the school leaving age has been raised and that educational standards are better. Are we sorry that we have aimed for better welfare services, more roads and more houses? These are all aspects of higher living standards and, provided we can afford them, they are proper and desirable aims.

Where has the pressure for all these improvements come from? In part, it has come from this House. Parliament over the years has added immensely in all these areas to the duties and responsibilities of local authorities. Local authorities themselves have taken initiatives, too, in transport, in housing and in social services. All this costs money.

Are we to believe this has happened in a vacuum? Central Government and the local authorities have only been reacting to massive and continuous public demand for more and better services—but not always more, in the sense of something new. Spending has also been increased by individuals taking up, perhaps for the first time, their proper entitlement to services provided by the local authority. We have heard very recently what the hon. Member for Ash-ford (Mr. Speed) called the myth of the increased expenditure caused by the reorganisation of local government. I do not want to enter into a long argument with him about this.

Mr. Speed

I certainly would not claim that there was no increased expenditure as a result of local government reorganisation, but all the problems which local government is at present lacing and the massive problems it is facing as a result of inflation are being laid at the door of local government reorganisation.

Mr. Silkin

I agree with the hon. Gentleman that not everything bad which has happened is due to local government reorganisation. I have great respect, admiration and affection for the hon. Gentleman, and I think it only right that he should be allowed now to have a say on local government reorganisation, because during those weary days and months in Committee on local government reorganisation I watched him silent like a peak on Darien.

Does the hon. Gentleman remember the most humorous aspect which I remember about that long series of episodes? I wonder whether he remembers the Financial and Explanatory Memorandum of the 1972 Bill which stated with a categoric imperative that the great benefit that reorganisation would give us was that there would be a reduction in staff in local government throughout the country and a great saving in money. I have it written on my wall at home, and I intend to be guided in a somewhat opposite direction so far as that is concerned. Of course local government reorganisation, as the hon. Member for Nantwich (Mr. Cockcroft) said, has been responsible for a considerable increase in expenditure, although I agree with him that it has not gone all the way.

While I am about it, Mr. Speaker, I cannot help commenting, as I see you in the Chair, that in the long days and nights of that Committee stage I thought that any of us who survived to the end must go to heaven. I find instead that we are either in the Chair or on our respective Front Benches again.

Mr. Speaker

Order. May I say that any reference to my parliamentary past is between the Almighty and myself and is not a matter for the House?

Mr. Silkin

Possibly that goes beyond the sphere of local government, Mr. Speaker.

This growth in local authority services, which is what I was talking about before I was slightly deflected, could not continue for ever. The growth in spending far outstripped our wealth as a nation and was increasing. There is no alternative now but a period of retrenchment and consolidation. I take no pride in this.

We would all prefer to see further improvement to the services which local authorities provide. But at least, as my right hon. Friend the former Secretary of State for the Environment said, a period of standstill gives local authorities the opportunity to look at their priorities. The hon. Member for Ashford gave various instances of where they might make economies. I do not want to go into them individually. He is at liberty to make what points he wants.

I agree with the hon. Member in his general principle, however, that what we must see now is that local authorities, looking at their priorities, are able to improve the value for money received by those who pay for the services. I do not think there is any dispute between us there. Of course, we all pay for local authority services. The rate support grant, after all, is funded from national taxation. That is what I see as a very important part of value for money, getting a clear idea of what the priorities are and seeing that the money goes to them.

What of the future? Local authorities next year are faced with a strong challenge. The rate support grant settlement approved by this House provided for a standstill in current expenditure, and, as my right hon. Friend said on 15th December, we had hoped that there would be room for some growth in local authority current spending next year.

In his Budget Statement last year the Chancellor of the Exchequer provided for an increase in 1976–77 of about 1½ per cent. But later information has shown that local authorities are spending somewhat more this year than was allowed for in last autumn's rate support grant settlement. Spending last year is likely to reach the level which we had planned for this year. We cannot hope, therefore, in present circumstances to find additional money for local government this year. That is why we had to call for a standstill this year in local government spending.

To achieve a standstill, local authorities will have to take a long, hard look at all their present priorities. They will have to define their priorities rigorously and ensure that every penny is spent to the best effect. Even given the maximum attention to priorities and efficiency, a standstill will still have some unpalatable implications for services. The Government have given every help and guidance they can. They have given guidance in a circular on the rate support grant settlement. In the last resort, however, the decisions are and must be for the local authorities themselves. They, and not the Government, best know their own local circumstances, and they, and not the Government, must take the final decisions on priorities in the light of those circumstances.

Since the rate support grant settlement was made for 1976–77 we have, of course, had the White Paper on Public Expenditure, and it was very natural that this should have been referred to during the debate today. It sets out the Government's proposals for public expenditure for five years ahead. In broad terms, the outlook for 1977–78 and beyond is for a very small reduction in current expenditure for two years with some movement in 1979–80 back to the level of expenditure planned for 1976–77. There will need to be a continuation of the sort of constraints associated with the standstill in current expenditure already announced for 1976–77. The trend in capital expenditure follows that already established for 1975–76 and 1976–77 with some easing of the pace of reduction at the end of the period covered by the White Paper.

For the years 1977–78 onwards, the figures are a firm expression of the Government's intentions about the total amount which should be spent on local authority services out of the approved totals of public expenditure for those years. I would emphasise—it has been emphasised before—that within that overall constraint there is increasing flexibility in the plans towards the end of the period. The Government recognise the extent to which local authorities are co-operating in limiting the growth of their expenditure and achieving a very modest rise in rates this year. For our part, we have assured local authorities that we shall not add to their burdens and that we shall do our utmost to avoid doing anything which might require them to spend more money, unless we can show how that money could be found without raising net expenditure.

I assure the House that before the introduction of a Bill my right hon. Friends and I have submitted it to close scrutiny to ensure that it will be acceptable to local authorities, I believe on a consultation basis never seen before in the history of this country. Often the local authority associations are consulted during the preparation of legislation so that we can be sure that their members will be able to implement it within the financial guidelines to which they have agreed during the rate support grant negotiations.

I have already referred to the work that local authorities will be doing to review priorities. They are also continually reviewing the way in which they run their affairs. Greater efforts are being put into co-ordinating purchasing policy and management efficiency. The Government are also working with a number of local authority agencies to see what further improvements can be made.

The hon. Members for Reading, North and for Ashford referred to cash limits. The hon. Member for Ashford raised the specific question of cash limits on housing. I can only say about housing that, as he knows, the housing finance review is with us and will be with us for a little while, but when it is finally completed we shall all have a chance to study it. In general terms, a cash limit on rate support grant was announced by my right hon. Friend as early as 21st November last year. We must now wait and see what is spent in 1976–77. The House may be assured, however, that the Government meant what they said when they set the cash limit on grants. But I rather gather that the hon. Member for Reading, North, who at the moment is not in his place, wished to see a cash limit on expenditure and not on grant. As has been said many times, under the present constitutional arrangements this is not possible. The existing relationship between central and local government is a partnership. It is a matter of a very delicate balance. The Government have set out clearly what they are asking local authorities to do in the coming years. It is for individual authorities to use their own expert knowledge in meeting those requirements.

Mr. Speed

Perhaps I read the White Paper wrongly, but since it underlines what the right hon. Gentleman has said—that it is not possible under the present arrangements—I assume that it does not preclude changing those arrangements in the future. I wondered whether that might be in the Government's mind, in view of the tenor of the White Paper.

Mr. Silkin

Perhaps I may deal with that point by implication as I go along. I shall be turning to something which perhaps subsumes that point. Perhaps the hon. Gentleman can guess what I mean. If my right hon. Friend took powers to control either the level of expenditure or local authorities' rate levels, this would radically alter the basis of the present partnership between central and local government. In my view and in the Government's view, it would be quite wrong to contemplate a step of that kind, and certainly not while the Layfield Committee was still studying local government finance.

The hon. Member for Reading, North calls for early implementation of … new methods of financing local government following the Layfield Committee's report. I find it somewhat odd that the hon. Gentleman does not ask that these methods should be fair, that they should be efficient, that they should foster local democracy or that they should promote local accountability. All he asks in his motion is that they should be new.

This quest for novelty is not, if I may say so, something which one generally associates with Conservatives, and one is forced to the conclusion that there must be some very special reason for them to be departing from their past practice of burying their heads in the sand and hoping that the problems of local government finance will go away.

In his speech—admittedly, a rather different part of it—the hon. Gentleman deplored wholesale demolition. It was only in 1971 that the Conservative Government brought out a Green Paper on local government finance which was itself a fairly expert demolition job—a demolition job on almost every new idea which had been advanced on the subject during the past century. However, to make assurance doubly sure, they came back in 1973 with a consultative document which administered the finishing touches to the few fragments of original thinking which had somehow survived their intellectual bulldozers. Having, as it were, levelled the whole site to the ground, they then told us that the rating system—this was said by the right hon. and learned Member for Hexham (Mr. Rippon) himself—was the most perfect imaginable source of local revenue in the best of all possible worlds.

It is not for me to say whether that conclusion was right or wrong. We have just received a weighty—weighty in both senses of the word—independent report on the whole subject, and, of course, it would be quite wrong for me to deliver any sort of instant verdict. My purpose is rather to remind the House of the remarkable effect which its two defeats in 1974 exercised upon the Conservative Party's powers of thought. As soon as the responsibility of actually having to do anything was lifted from its shoulders, we witnessed the most astounding transformation. I remember my right hon. and learned Friend the Secretary of State for Wales describing it, in appropriately colourful, if somewhat mixed, metaphor, as "a deathbed conversion on the road to Damascus".

Suddenly the right hon. Lady the Member for Finchley (Mrs. Thatcher), the Leader of the Opposition, announced that her party would abolish the domestic rate—that very same rate which had been so highly praised by her right hon. and learned Friend the Member for Hexham. We all waited with bated breath for the right hon. Lady to tell us where the £1,500 million which this modest proposal would cost was to come from, and the silence was broken only by the sound of the right hon. Member for Crosby (Mr. Page) tearing up all the speeches he had made as Minister and converting them into lottery slips.

It is difficult to resist the conclusion that the Opposition pledged themselves to abolish the domestic rate simply because rates had gone up and had consequently become unpopular. The same would have been true of any other tax, national or local, which could have been used to finance local government expenditure during the crisis of 1974–75 which followed in the train of the disastrous economic policies of the Conservative Administration. I am sure that the Conservative Party would have told us to abolish local income tax or sales tax and replace them with rates if income tax or sales tax had been the source of local revenue during the period.

What made the pledge to abolish the domestic rate all the more extraordinary was that we had already set up the Lay-field Committee, its terms of reference being to review the whole system of local government finance in England and Wales, and to make recommendations.

Mr. Durant

Will not the right hon. Gentleman accept that during that period, before the Layfield Committee was set up, there was tremendous pressure on both sides of the House to deal with the rating situation because of the sudden upsurge in rates? Therefore, it is somewhat misleading to say that things were all right because the Layfield Committee was there. It came about as a result of pressure from both sides.

Mr. Silkin

I think that the hon. Gentleman has not quite got my point. Of course that was so, and the Layfield Committee was set up in response to pressure from everyone asking "What is all this about?" My point was that the right hon. Lady's promise to abolish the domestic rate at the cost of a mere £1,500 million was given in full knowledge that the Layfield Committee had been set up. After all, the Committee was established in the summer of 1974 and my right hon. Friend had announced its initial membership as early as 30th July. Nine days later the Committee held its first meeting, and in less than 20 months it had completed its Report.

During that period, there were some who seemed intent upon harrying the Layfield Committee with constant complaints about the time it was taking. It was seriously suggested by some that the Committee ought to get the job over and done with in six months—in six months, when the Committee was asked to undertake the first comprehensive review of local government finance for over half a century. Of course, I felt that that criticism was totally unfair.

My right hon. Friends had gone to a great deal of trouble to find men and women of the standing and experience appropriate to this task. We found some magnificent examples, including my hon. Friend the Member for Woolwich, East, at the start. I pay a tribute to all those who served on the Committee, and above all I pay tribute to Frank Layfield himself. The House knows of the outstanding work which he did as chairman of the greater London development plan inquiry, and, once again, he has made an immense contribution to the work of this Committee.

As I said earlier, the hon. Member for Reading, North wants early implementation of the Report. I know that he will not expect me to make any promises before the report is published and we have had time for full public debate. But I assure him that we shall welcome the comments of all interested bodies and individuals, especially, if I may say so, from the hon. Gentleman himself. As I have said, I do not agree with a great deal of what he said, but he has wide experience of local government and his approach to it is thoughtful and constructive.

If I have had occasion during the past few minutes slightly to pull the hon. Gentleman's leg, and to pull his party's leg somewhat harder, this, if I may say so, is because both legs deserved to be pulled somewhat. However, that does not mean that we do not all have a constructive rôle to play when the report is published and we come to consider it in the House. After all, we have to decide which parts of the present system, if any, ought to be done away with, how we shall replace them and by what means. I hope that the report, when it comes out, will be of great assistance to us in what will be an important task.

2.38 p.m.

Sir George Young (Ealing, Acton)

I regard myself as fortunate in having an opportunity to take part in this important debate initiated by my hon. Friend the Member for Reading, North (Mr. Durant). I am reminded of the story of the ratepayer who, at about this time on a Friday afternoon, went into his local town hall and found the place deserted, apart from a lady who was cleaning the town hall steps. "Good Heavens", he said, "Do they not work in the afternoon?", to which she replied "No, the mornings is when they do not work, and in the afternoons they do not come in". Those of us who have served on local authorities know that that impression, which, alas, too many people have, is simply not true, and as Members of Parliament we have a lot to do to remedy the bad image which local authorities have some how acquired.

My constituents do not, unfortunately, have an opportunity this year to vote in municipal elections. However, we had a municipal by-election in Ealing last night in a ward held by the Labour Party. I am sure that hon. Members on the Government side will be interested to know that there was a swing of over 8 per cent, to the Conservative Party, and we won a ward which we had not held since 1968. Any illusions which hon. Members may still cherish that their new Prime Minister or, by some chance, the Budget will improve their electoral fortunes have been dashed by that splendid victory which my friends achieved yesterday.

However, turning to the debate, I want to touch on a number of subjects which affect my constituency and which relate to value for money in local government. The first is the issue of planning blight. In my constituency we have two town centres, Ealing and Acton, both of which have been historically prosperous trading areas, well supported by the local community. However, in the last 10 to 15 years a cloud has overshadowed both of them, created entirely by the local authority, under the control of both major political parties. As a result of this planning blight, there has been a tremendous loss of rateable value and misuse of the housing stock, and the local authority has acquired land with loans on which it has to pay interest but for which it has no current use.

The most serious problem in my constituency is one that could be most easily avoided if only we could speed up the planning process. What has gone wrong in this particular instance is that the local authority, the Greater London Council and the Department of the Environment all have slightly different policies. The Department of the Environment has made it absolutely clear that it is not in favour of schemes which involve wholesale demolition of property which could have been usefully rehabilitated. It made that clear in a document last year.

The GLC has made it clear that it does not have the resources to invest in major roads in London. Yet the local authority is proceeding with a scheme which is wholly dependent on the GLC providing a new spine road through Ealing, which the GLC has made clear it cannot afford. The local authority is proceeding with the demolition of two or three residential roads the houses in which could be perfectly well rehabilitated. It is set on this course although it is absolutely clear that it will not get the consent of the Minister or the money from the GLC.

It fills one with a sense of despair that there is nothing that one can do to lift the planning blight whch is gradually killing the two town centres in my constituency. This is a self-inflicted planning blight and it is reducing the resources of the local authority and increasing its expenditure, on interest because of land which it has acquired.

The most basic problem that comes through to a Member of Parliament is the gap between the rising cost of the services provided by local authorities and the falling quality of service. Many in my constituency would be happy to dip into their pockets to pay more to the local authority if they were convinced that they would get better quality of service, but at present they are having to pay more for less. The number of broken paving stones in my constituency would keep the Parliamentary Liberal Party busy writing letters for well over a year.

The Layfield Committee is considering fairer methods of raising money, but we would be misleading ourselves if we thought that Layfield would tackle the underlying problem of the growth of local authority expenditure. We must warn those who are calling for other methods of financing local government that those who are protesting loudest under the present system are likely to be those who would have to pay more under a new system. We must ask ourselves why the cost has risen so much. I have put that question to the person who has the privilege of representing me on my local authority—who happens to be my wife.

There are four basic reasons for the financial crisis in local government. The first relates to financial discipline. The chairman of the finance committee in local government is a substantial figure. His authority over his colleagues in no way resembles the authority of the Chancellor of the Exchequer over his spending colleagues in the Cabinet As a result, there is not the same financial discipline in local government as one has in central Government.

Secondly, there is the problem of reorganisation. If one rereads the Redcliffe-Maud Report, one sees that it is absolutely clear that the economies that it so confidently predicted simply have not been achieved. The reorganisation of local government was greatly to the financial advantage of local authority employees and greatly to the disadvantage of ratepayers. In my view, inadequate forethought and attention were paid to the new structures of local government, and opportunities to rationalise, streamline and achieve economies were abandoned in favour of softer and rather expensive options.

Thirdly, while local government was reorganised, local councillors were not. The new authorities require skills and disciplines which were not required in the old and smaller authorities and which have not yet been acquired by individuals. The skills to control the large corporate bodies that now run local government are difficult to acquire. Local councillors who are struggling to earn a living during the day simply do not have the time or often the energy to acquire the skills and disciplines needed to keep this very large and uncontrollable beast in order.

The last reason that I should like to mention is that referred to earlier in the debate: that local authorities have had to implement labour-intensive legislation passed by the House. That is mentioned in my hon. Friend's motion. There is a measure of truth in this, but it would be quite wrong to think that local authorities had this legislation wished on them against their wishes. In many cases they themselves were calling for this legislation and the House responded by giving them powers.

However, turning to the positive side, how can we try to reduce the cost of running local authorities and get value for money? Local authorities could discharge their responsibilities to ratepayers with a significant reduction in staff if they made economies in three particular fields—housing, planning and social services.

On housing, the Minister must forgive me if I tread on politically sensitive ground in what has otherwise been a fairly neutral speech. However, while I accept the need for local authorities to build new accommodation to solve the tremendous housing problem, I do not accept that they should hang on to that accommodation once it has been built. There is a whole bureaucracy in local government which is now needed to run local authority housing but which could be got rid of if only that property could be transposed to owner-occupation.

When one considers the number of people involved in collecting rents for local authorities, the army of valuers, the procedure for appeals on rent, the machinery for revising rents at yearly or even twice-yearly intervals and the army of manual workers who have to repair local authority dwellings—repairs which in many cases would be done very willingly by any self-respecting owner-occupier—one can see that a whole bureaucracy has been built up which is totally irrelevant to the basic task of providing new accommodation. There are substantial economies to be made in that field.

Secondly, on planning departments, I personally regret that some of the recommendations of the Dobry Report were not implemented. There were suggestions there that would reduce delays in planning departments and reduce the number of staff required. We have lost an opportunity there in not implementing some of those recommendations.

The third area in which we could get better value for money is in the social services. The social services departments of local authorities are trying to do, at enormous public expense, much of the work that can best be done effectively by families. The best probation officer, social worker, education and welfare officer and career officer is a parent who will do the job free. We have encouraged the belief that the responsibilities of parents can be discharged by other people, and in so doing we have weakened the family as an effective social unit. It is absolutely clear that we cannot solve this country's social problems by simply recruiting more and more social workers. Economically we cannot afford it, and morally I do not think we can afford it. Therefore, there are those areas for economy in local government.

Perhaps I may refer to one other matter which may not be quite so serious. Yesterday I had the privilege of launch- ing a campaign for Cyclists—"Fair Deal for the Cyclist". Here is an opportunity for local authorities to save money on transport. If only they could make proper provision for cyclists and tempt some motorists out of their cars, perhaps there would not be so much need for new roads in our cities, and the money saved could be spent on cycle routes and paths for those who like to travel around London on two wheels.

My hon. Friend is to be congratulated on initiating the debate. I hope that local authority employees, who I am sure will study our proceedings with interest, will go through the Report to achieve the economies that I am confident can be achieved.

Question put and agreed to.

Resolved, That this House acknowledges the growing public concern at the level of spending by local government and the simultaneous deterioration in the value for ratepayers' money; calls upon Her Majesty's Government to resist further legislation which imposes extra financial burdens on local government; and urges early implementation of cash limits and new methods of financing local government following the Layfield Committee's report.