Domestic Rates (Hansard, 6 December 1978)

§ 12. Mr. Sainsbury
asked the Secretary of State for the Environment what estimate he has made of the likely average increase in domestic rate in 197–0 as a result of his rate support grant settlement.

§ 17. Mr. Durant
asked the Secretary of State for the Environment what will he the rise in domestic rates in 197–0 as a result of his rate support grant settlement.

§ Mr. Shore
The settlement is compatible with the national average of domestic rate increases remaining in single figures. I am assuming that local authorities will think it right to link their rating for contingency allowances to the assumptions made in the cash limits, and to plan to make some drawing from balances. It is for individual local authorities to decide increases in domestic rates, but I assume that the authorities will act with their accustomed responsibility.

§ Mr. Sainsbury
Is the Secretary of State aware that the local authority associations and, indeed, most informed and independent observers are predicting that, inevitably, rate increases will be well up 1407 into double figures? Does he not recognise that, at least in part, this is a direct consequence of allocating the rate support grant largely on the basis of past patterns of expenditure by local authorities, so that inevitably those authorities that are wasteful and extravagant are encouraged and those that are prudent are penalised?

Hon. Members
Hear, hear.

§ Mr. Shore
Do I hear a note of dissent from London and metropolitan Conservative Members to those cheers? However, I turn to both questions.
I put it to the hon. Gentleman that treasurers and other commentators often make a gloomy prediction about the rates. Indeed, they almost make a habit of it. I believe that they will have an opportunity to reflect more carefully upon the situation as it affects their individual counties before they actually determine and strike the rate for the year 1979–80.
As to the hon. Gentleman's second point, he is really on to the usual and familiar problem of the proper distribution of the needs element of rate support grant between county, city and town. When we talk about an average national figure for rates, we mean an average. That means that some areas, although they have been greatly helped by the 2p safety net and other devices that we put in, will have to increase rates above the average. There should be no doubt about that in anyone's mind.

§ Mr. Durant
Is the Secretary of State aware that in spite of the new system in the needs element Berkshire ratepayers will have a rate rise well into double figures? Is he further aware that the local authorities feel that he has provided insufficient resources to cover future pay awards, which is something that puts pressure on the rates? Will he resist the proposed pay increase for manual workers which appears as though it may go above 5 per cent?

§ Mr. Shore
The pay question is, of course, a factor. But we have made plain our expectations in this area. The Government's pay and counter-inflation policies are implicit in the rate support grant settlement. In regard to Berkshire, I do not know what the local circumstances are which will lead to changes. The hon. Gentleman should remember 1408 what I said earlier, namely, that this is the first time that there will be a direct payment of the needs element to the districts. That may well mean that counties will have to precept more. But it does not mean that that totality of rates in the area will be greater.

§ Mr. Spriggs
Prior to completing his assessment for the next financial year, will my right hon. Friend take into account local authorities such as St. Helens which have demolished hundreds of houses which were unfit for human habitation in order to provide decent homes for people?

§ Mr. Shore
My hon. Friend can rest assured that housing factors which are relevant to the establishment of differential needs per head will be tested and included in the rate support grant system. Indeed, a housing factor is included in the package this time.

§ Mr. Alison
The Secretary of State talked about gloomy forecasts. Does he recall that, although he forecast under double figures rate increases for this year, some rate increases were above that level? Wigan was a case in point, where the rates went up by 18 per cent., and in York they went up by 21 per cent. If, as Secretary of State, the right hon. Gentleman has a concern for the ratepayer, does he accept that he cannot deal in averages and that he must address himself to the problem of people who suffer massive rate increases? If there are to be rate increases of 15 per cent. or 20 per cent. this year, how can people be expected to accept 5 per cent. wage settlements?

§ Mr. Shore
It is ridiculous for any Secretary of State, taking account of all the different circumstances of local authorities, to attempt to couch his forecasts in anything other than average national terms. An average is an average, which means that some increases will be below and some will be above. I therefore put it to the hon. Gentleman that in looking at particular figures—it may well be that this year, as in past years, and under previous Governments, there will be swings at both ends of the range—he should look at the total circumstance, including the actual size of rate bills which are paid on average in the areas concerned.

§ Mr. Flannery
Will my right hon. Friend accept that there is deep feeling about the disparities in the rate support grant? For instance, in Sheffield, where I come from, where a good council has husbanded its resources very carefully over the years, people feel that they have been very ill done by. This is the talking point throughout Sheffield. Will my right hon. Friend look at this a little more carefully and explain more clearly the criteria on which he bases his judgments?

§ Mr. Shore
I am aware that Sheffield, unlike most of the major cities, has had a small reduction in its rate support grant this year. There are reasons for that which, frankly, lie in the particular package of needs factors which have been identified. But, as my hon. Friend knows, I am willing to meet representatives of his city—they have already been in touch with me—to discuss the whole matter with them just as soon as we are free of the rate support grant debate.