HC Deb 26 April 1978 vol 948 cc1551-60

'In pursuance of the making of financial provision for the needs of inner urban areas, any amount deducted under section 1(2)(a) of the Local Government Grants (Social Need) grants that might be paid under section 1 of the Local Government Grants (Social Need) Act 1969 shall not exceed £10 million in any year.'.—[Mr. Alison.]

Brought up, and read the First tune.

Mr. Alison

I beg to move, That the clause be read a Second time.

We have the opportunity to consider an important new clause that gives us the chance again to think about the figures involved in the Bill. It is some importance that we should get the topic aired, discussed and on the record.

The engine room of this measure, which the Government feel is important and which we have supported so far—we did so pretty systematically in Committee—and helped the Minister to improve, is in the last analysis how much hard cash will be available. I am bound to remind the House that there is a good deal less gold than glitter. The sums involved are not dramatic by any stretch of the imagination.

The cash does not begin flowing until 1979. There is no great leap-off to grapple with the inner urban area problem as a matter of immediate urgency. We have quite a long time to go—well after the Bill has received Royal Assent—before the moneys start flowing. Even in the most needy sector to be covered by the Bill, the partnership areas, the sums are pettifogging. I am not saying that they are not valuable and welcome, but they are pettifogging in relative terms.

On my calculation, we have £66 million a year from 1979 to the end of 1981 to be spread over the seven partnership areas, which between them have a population of about 5 million. The per capita sum available is exactly £13 per head of population. These are not large sums in relation to the needs of the inner urban areas. The sum that the Secretary of State told us on Second Reading would be available for the second 15, for the programme areas, is £25 million per annum from 1979. If we make an allocation so that each area receives a proportionate sum, that is £1½ million per programme city from 1979. This is pettifogging money. It is less than the product of a penny rate for a number of the authorities, which they would be free to spend themselves.

However, to make such sums as are available appear in an even worse light, and one that I am bound to remind the Minister the Government have been at some pains not to publicise widely, all the sums allocated for this measure are to come out of the urban programme. That is what the Financial and Explanatory Memorandum told us in the Bill as originally presented. In the public expenditure White Paper, Volume 2, column 19, we read the following gloomy statement: The increased provision for the urban programme"— which is the source of the Bill's finance— has been found from a re-ordering of priorities within existing expenditure programmes Therefore, the urban programme is being increased to provide these modest sums for the activation of the Bill at the expense of a whole range of other Government expenditure on public spending programmes which are being fleeced to make provision for the urban programme. It is simply a re-ordering. Nobody will be not better off in terms of public spending at the end of the day because no real increase in resources is being made available.

However, that is by far the least serious and undesirable aspect of the financial provisions of the Bill. Having made it clear that the sum for this measure is to come from the enhanced urban programme and having discovered that the enhanced urban programme is being topped up from other spending programmes in the Government's public spending cornucopia, we find a most damaging provision in the way in which the urban programme operates. Perhaps I may now come to the specific wording of the new clause to draw attention to what exactly is involved. The new clause refers to any amount deducted under section 1 (2) (a) of the Local Government Act 1974". Part I of the 1974 Act deals with rate support grants. Section 1 of the 1974 Act provides that after assessing the total aggregate amount per grant the Secretary of State shall make certain deductions. By virtue of section 1(2)(a), these include specific grants. One of the specific grants in respect of which the Secretary of State makes deductions from the rate support grant totals is the urban programme. Therefore, we find that the enhanced urban programme, which the public expenditure White Paper tells us is to be topped up by recourse to other programmes, will be topped up by recourse not to the whole range of public spending but necessarily, because of the way that the urban programme works, to rate support grant moneys. The enhanced urban programme will get all its extra money from the rate support grant aggregate sum. That, in effect, means from the non-metropolitan counties and those areas which are not getting a particularly good deal out of the rate support grant programme.

That is not only undesirable in itself, but directly against the interests of the kind of areas that the Government are concerned to try to help. Some of the programme areas—Middlesbrough, Hull, Leicester and Nottingham—are in non-metropolitan counties. Non-metropolitan counties are in fact receiving 20 per cent. below the average which is being made available for the needs element for the whole country. Therefore, non-metropolitan counties, which include some of the very places that the Government are trying to help, as a result of the rate support grant settlement this year, are receiving 20 per cent. below the national average for the needs element.

The effect of the financial provision in this measure is further to take sums from the overall rate support grant aggregate sums available—in other words, from the shire counties—to feed into areas of special need. But the Minister is cutting his nose to spite his face because, as I said, some of the very cities designated as programme cities for the purposes of the Bill will have further damage inflicted upon them from the way in which the urban programmes soak up funds from the overall funds available for rate support grant.

Indeed, it is worse than that if we look at one or two important towns and cities outside the 15 programme areas. Of course, they may be brought in later. The level of unemployment in the cities of Bristol, Plymouth and Gloucester is substantially higher than it is in Leicester, for example, which is one of the cities to benefit under the programme group of 15. Plymouth has an unemployment rate of 9 per cent., nearly double that of Leicester. Plymouth, as a city in a non-metropolitan county, will not only be excluded from the provisions of this Bill because it is not one of the programme towns, but, being a town in a shire county, will contribute some of the sums made available under the Bill towards helping a city like Leicester with half its unemployment level. That is a totally unsatisfactory result, but whatever the Government do, they must not allow themselves to take yet more out of the overall rate support grant aggregate to top up the urban programme for this special operation.

For that reason, we have produced this reasonable new clause to make it impossible for the Government to take more out of the rate support grant aggregate than the existing programme of £10 million a year takes out of it. If they are to take more money to finance this operation, and to enhance the urban programme, it has to come from sources within the broad Government expenditure outlay, exclusive of the rate support grant aggregate.

I hope that the Minister will look at this new clause with sympathy and understanding and will accept it.

Mr. Steen

Our concern and that of the partnership cities is to learn this evening from the Minister whether they are to receive any hard cash in the next three years. The second question to which they want to reply is whether that cash is to be simply by way of more loans or by Government grants. They not only want to know whether the money will conic from the shire counties. There are fears among people in the outer cities who used to be in the inner cities that an increasing part of the domestic rate will be used to prop up the deficient rate base of the inner cities.

Most inner city areas covered by partnership agreements are short of rates, largely because of the amount of vacant land in them which produces no income. The result is that there is a deficiency of money from that area to pay for services which people remaining in inner cities rightly demand. The question is whether the Minister is proposing, not only to pinch from the counties, but also from people living in the outer areas.

The purpose of the new clause is to limit the amount of money which the Government can take from other sources and pump in through the urban aid programme. I am a great supporter of the urban aid programme which I regard as one of the most enlightened moves to bring new money to the ailing areas. It has done a lot of good and has given a great deal of help with capital and revenue expenditure. I am critical of the process by which it is given, and of the processes by which people affected are involved in the decisions. That is far from satisfactory. There have been one or two useful experiments in which people and local authorities were engaged in deciding a list of priorities but the Home Office, and now the Department of Environment, makes the final decision.

The question is whether the sole source of finance for the Bill in relation to the partnerships is determined by paragraphs 93 and 94 of the White Paper on resources. Will it come solely through a revamped and increased urban aid programme? In the White Paper, the Minister says that no fresh money will be made available. Where will the money come from?

12.15 a.m.

I hope that the Minister will not fall into the trap of letting the money that would go to the outer cities, where the people with many of the problems live, be diverted to the inner cities where there is a deficiency of population. One in eight of the population in the city of Liverpool is on the outskirts rather than in the inner area. The difficulty in Standing Committee was that we could not understand whether there was any fresh money, and if so, where it was to come from. Will the Minister explain, in language that our constituents can understand, where the money will come from?

I understand that a total of £30 million will be put into Liverpool in the next three years—£10 million a year. That is based on an urban aid formula. Will the Minister say whether the clause will help to put a ceiling on the amount to be spent? There would be a limit that would prevent a local authority going beyond its inner area. It would prevent a local authority switching more money than it would otherwise do.

The Minister may feel that some formula could be built in to protect the outer areas from the potential problems of the inner areas.

Mr. Guy Barnett

I shall try to answer some of the specific points put by the hon. Member for Liverpool, Wavertree (Mr. Steen). I am aware that there has been some confusion on the subject of finance.

I begin with the basic proposition that there is not extra money. We cannot draw extra money from some source out of the sky. We must reallocate resources within the community to benefit areas of great social need.

The main source or finance to assist inner urban areas is through the rate support grant. That is not as a consequence of arbitrarily shifting large sums of money from the shires to the inner city areas to the disadvantage of the shires. It means that, according to the method by which the needs element is assessed, proper recognition is taken, and has been taken increasingly for some years, of the grave social problems of various areas, whether they be rural or urban. We should ensure that local authorities are given the necessary resources to cope with their problems. That has had the effect of benefiting the cities at the expense of areas which have fewer social problems with which to cope.

The hon. Member for Barkston Ash (Mr. Alison) pointed to the problems of certain cities which exist within the shire counties and which might be said to have existed as a consequence of the needs element. That is not quite true. In the national distribution through the needs element, we also expect local authorities to ensure that within their areas they shift resources to the areas of greatest need. For instance, in Lambeth which is a partnership area, the authorities would want to shift part of their own resources into the areas where the problems are greatest. The same might be true of Nottinghamshire and other counties.

It is important that I should begin with the RSG and the allocation of expenditure programmes by the local authorities because that is the bulk of the money with which we are dealing.

In the past I have referred to the enhanced urban programme as the icing on the cake. It is a relatively small part of the expenditure, and it is wrong to give the impression that this enhanced urban programme is the funding which is available to finance the sort of expenditure which is being discussed in the Bill. That is not the case, because the urban programme will continue to support community projects and environmental projects which may not be directly related to the objectives of the Bill.

Expenditure may come from the urban programme or it may come from a key sector or a locally determined sector for expenditure of the sort that we are discussing. The sum of money mentioned in the Bill is required because it is the sum of money which indicates the total level of public expenditure that we expect to arise under the Bill. The Bill does not specifically vote a set sum of money for the purposes of the Bill.

I hope that I have given some explanation as to where we expect the money to come from. It will come from the reallocation of programmes at both national and local level, and additionally from an enhanced urban programme. It is for this reason that I cannot recommend the House to accept the new clause. Its effect would be to restrict the urban programme to only £10 million a year, and I am sure that that would not be the intention of Conservative Members.

Mr. Eyre

Will the Minister explain the significance of the loan sanction arrangements which are made for the local authorities, for the large sums of money they would be required to borrow, and how that obligation will fall on the general body of ratepayers within the cities to which these schemes apply?

Mr. Barnett

If the local authority borrows money the loan would have to be serviced from the revenue of that authority. It would be a charge on that authority. It is for that sort of reason that the needs element in these areas which we have selected, and where extra expenditure is needed, will take account, we hope—and in most, if not all, cases has taken account—in the indicators that are used, of the special extra need to spend money in these areas.

It is for this reason that I must ask the hon. Gentleman to withdraw his new clause. If it is not withdrawn, I suggest to the House that it should not be accepted.

Mr. Alison

The Minister has given a perfectly frank account, and I appreciate his frankness in analysing the financial philosophy behind the financial provisions in the measure. He has told us that he means the whole operation to be a further factor in shifting the balance of advantage within the broad rate support grant ambit, unsatisfactory though many people consider the rate support grant arrangements to be at present.

It is a great pity that the Minister has not touched on the reason why it was necessary for the enhanced urban programme to draw its funds exclusively from this narrow sector of public spending. Why should not the Government have made up their mind to increase the sums available in the rate support grant settlement this year or for the next three years, 1979, 1980 and 1981, from resources taken from other programmes?

After all, the Department of the Environment and other Government Departments command vast, almost unimaginable, resources of public spending power in relation to this narrow sum of money. Why should not the extra sums be taken from other programmes outside the whole rate support grant system, in order to make extra money available for the rate support grant, so that extra money could be made available for the urban programme at the expense of priorities which are much less pressing and important?

The reason that I shall not press the new clause to a Division is that I hope that, in the light of this short debate, the Government will, when the Bill gets to another place, in tune with the consideration they have been giving to arguments throughout the course of the Bill, consider the possibility that, if there is to be a re-ordering and re-allocation of resources within public spending programmes, in order to increase the enhanced urban programme, there is at least an arguable case for saying that the skimming of the cream of public spending in order to top up the urban programme should be done on a wider canvas of public spending than simply the rate support grant.

I hope that the Minister will at least undertake to consider whether there might be advantage in seeking resources for this whole programme rather than simply a further rejigging of the existing unsatisfactory balance within the rate support grant arrangements. That disadvantages the non-metropolitan counties and, at the same time, disadvantages many cities in the shires with serious social and employment problems. On that basis, and in the hope that we may get further consideration, I shall not press the new clause to a Division.

Mr. Guy Barnett

Obviously it is not my business to say how one would reorder Government programmes—whether one would cut expenditure on defence health, education or other forms of public expenditure in order to benefit the urban programme. It would not be possible for me to do that.

But in defence of the present position, the first thing I would make absolutely clear—I do not think the hon. Gentleman was clear about it—is that the urban programme money does not come totally from the rate support grant money. Money was made available to enhance the urban programme from funds other than the rate support grant money itself.

Secondly, it is worth mentioning that the rate support grant percentage—61 per cent.—has been maintained, which, by and large, has been of benefit to some local authorities. Thirdly, when talking about the urban programme money, we are talking about a relatively small sum of money in terms of the rate support grant as a whole. Therefore, to claim that this relatively small sum of money—as it has been called frequently during the debate—is of grave disadvantage to those parts of the country which do not receive it is perhaps a little unfair.

Question put and negatived.

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