Rates

HC Deb 04 April 1979 vol 965 cc1292-8

3. Mr. Hardy

asked the Secretary of State for the Environment if he will give his forecast of the average domestic rate demand per head for 1979–80 or, if that figure is not yet available, the average demand per head in the current year in Wales, in the shire counties and in the metropolitan areas of England.

15. Mr. Sainsbury

asked the Secretary of State for the Environment what is his latest estimate of average level of rate increases by non-metropolitan district authorities.

17. Mr. Rathbone

asked the Secretary of State for the Environment what is his latest estimate of local government rate increases.

Mr. Shore

A full return of rates for 1979–80 has not yet been made to my Department. However, the latest estimate available to me of the average domestic rate demand per head, as opposed to the average domestic rate bill, for 1979–80 is: in Wales. £36.33: in non-metropolitan districts in the shire counties, £55.28; and in the metropolitan districts of England, £49.10.

The latest estimate available to me of the average increase in local government general rates in 1979–80, compared with 1978–79, is: in non-metropolitan districts in England, 13.66 per cent.; in Wales, 16.75 per cent.; and in England and Wales, as a whole, 13.24 per cent.

Mr. Hardy

Does not the situation reveal such a disparity that it suggests that major changes in local government finance will have to be introduced during the next two or three years? Further, does not that reply make it clear that the Conservative Party's reorganisation of local government in 1973 must be regarded as one of the major disasters of the twentieth century?

Mr. Shore

There are still quite important disparities in the rate burden in different parts of the country. To some extent, of course, we are seeking to change this through our use of the needs element in our annual rate support grant allocations. What my hon. Friend has said about the reorganisation of 1972 to 1974 is hardly a controversial matter in the House. I have not met anyone who believes that the 1972 solution was the correct one, and I am certain that the proposals that we have put forward for organic change will command the support of both sides of the House.

Mr. Sainsbury

Does the Secretary of State now appreciate that his forecast of single-figure rate increases can be joined with the forecast of his right hon. Friend the Chancellor of the Exchequer of 8.4 per cent. inflation as outstanding examples of Socialist statistics? Does the right hon. Gentleman realise that as long as he goes on assuming that expenditure is the best measure of need he will go on encouraging the extravagance of Socialist authorities, from which so many ratepayers are now suffering?

Mr. Shore

No, Sir, I do not. I think that expenditure across the country, and not confined to just a few authorities, is the only proxy for need that we can have. Any other method which sought to examine the individual budgets and requirements would lead the House, and any hon. Member who followed it, into a quagmire from which I do not believe there could be any escape. Therefore, I am not in any sense repentant about the method that we have used.

As to what the hon. Gentleman said about the rates, my answer is that the average domestic rate—which is not quite the question which I was asked, which was about the average rate previously—will, on the basis of more than 90 per cent. of the returns, turn out at about 18½ per cent. That is clearly well in excess of the single figure which I had hoped would be achieved.

That estimate was given to the House on the basis of the continued effect of counter-inflation policy, but the Opposition, more than any other group, destroyed that by their vote on 13 December. Secondly, it was based on assumptions about the pulling down of balances, which were at a very high level, which in fact local authorities have not done.

Mr. Madden

Is the Secretary of State aware that a number of Tory-controlled local authorities, including the Calderdale district council, are simultaneously substantially increasing rates and cutting services? Secondly, will my right hon. hon. Friend give his view on whether, after five years of studied silence, the Tory Party is likely to offer the electorate, as it did in 1974, the uncertain prospect that it will abolish rates if it is returned to power? What is the Tories' current policy on the rating system?

Mr. Shore

I am aware that some authorities have managed, as my hon. Friend said, both to increase rates and to cut services, but I do not believe that the cuts in services will be a general feature of local authority activity during this year.

My hon. Friend referred to the Opposition. This is probably a uniquely favourable occasion for them to make plain what they have in mind. Will they pursue a policy of abolishing domestic rates, which they have put forward so many times in the past—we are entiled to know—or have they other ways of raising revenue? For example, will they turn to a compulsory increase in rents, which is, of course, one way of reducing the rate burden?

Mr. Godber

Will the Secretary of State acknowledge that the real change in the rate burden arose from the act of his predecessor, Mr. Crosland, in switching a higher proportion of the rate burden from urban to rural areas, which the right hon. Gentleman has continued, and will he repent on this matter?

Mr. Shore

On this occasion, and unusually, I think that the right hon. Gentleman does not have the full facts. As the House well knows, the architect and author of the switch to this fairer system of regression analysis in determining the needs element was the right hon. and learned Member for Hexham (Mr. Rippon) who, very late in the day, saw the wisdom of making this change and saw that the previous system discriminated harshly and unfairly against the cities, where the greatest needs existed.

Mr. Heseltine

As the Secretary of State has been discriminating in favour of the inner cities by adjusting the needs element of the RSG, how is it that the Labour-controlled London boroughs of Hackney, Islington, Lambeth and Southwark have raised their rates by 49 per cent., 39 per cent., 39 per cent., and 27 per cent., respectively? Is it the truth that because they are Labour-controlled boroughs they have very little interest in the level of domestic rates?

Mr. Shore

This can be argued both ways. I think the House will recognise that the boroughs which the hon. Gentleman has cited are, by any standard, among the dozen or so most hard-pressed urban areas in the country. There is no question about that. It is not a matter for me, and I have never attempted either to condemn or to give my blessing to any particular local authority's rate increase. It is a matter for the authorities. That is for them to do and to justify to their electors. It would be an equally fair inference to draw from the hon. Gentleman's question that I have not moved the RSG sufficiently in favour of hard-pressed boroughs—rather the opposite.

9. Mr. John Hunt

asked the Secretary of State for the Environment if he will list those Greater London boroughs which have conformed to the guidelines for rate increases for 1979–80 as laid down in his Department's circular 6/79.

Mr. Shore

The setting of rates is a matter for local decisions by elected members in the light of their assessment of local needs and circumstances. Of the 33 rating authorities in London, rate increases in seven—Bromley, City of London, Greenwich, Hammersmith, Kensington and Chelsea, Wandsworth and Westminster, are in single figures. One—Croydon—has yet to report, and the rest are in double figures.

Mr. Hunt

Is it not ironic that, with the sole exception of Greenwich, the London boroughs which the Minister mentioned as having met the Government's target, and which have managed to keep their percentage rate increases in single figures, are all Conservative controlled? Is not the clear message from that that Conservative government, both locally and nationally, means sound budgeting and real concern for the interests of ratepayers and taxpayers?

Mr. Shore

The answer is "Not necessarily so". There are many areas of the country of which one may legitimately say there is underspending, just as others may argue that there are areas in which there is too much expenditure, at least in the short-term. That is perfectly reasonable. This is a matter for local judgment. Before the hon. Gentleman is carried away with the enthusiasm of his own rhetoric, let me point out to him that there are two other authorities in the London area which I did not mention. One of them is the GLC, which levied a rate in double figures, the other is ILEA. which is wholly Labour controlled and which achieved the distinction of a nil increase in the rates precept this year.

Mr. Molloy

Is my right hon. Friend aware that the Tories in temporary control of the London borough of Ealing have adhered strictly to the guidelines of Conservative Central Office and have achieved the ideals of that office by increasing rents and rates and running down services?

Mr. Shore

I am most disturbed to hear that the Conservative Central Office should seek to interfere with the affairs of any borough. I am sure that we shall hear a denial of that from the Opposition Front Bench—at least, I hope that we shall. In a number of outer London boroughs there have been sharp increases. Those took place under Conservative rule.

Mr. Geoffrey Finsberg

What advice does the Minister have to give, for example, to the ratepayers of Camden, where the rates have gone up nearly 20 per cent. as a result of the local authority breaking the national negotiating machinery and paying NUPE every penny that it demanded? Will he suggest that that matter should be referred to the district auditor?

Mr. Shore

That is not a matter for me to decide. I emphasise my view that in the great range of negotiations with the unions the local authorities are well advised to adhere to the national agreements. There is a margin for local negotiations which it would be foolish to deny, but in general it is far better to stick to national negotiations.

Mr. Jay

Is my right hon. Friend aware that the Tory-controlled local authority in my area has been able to keep down the increase in rates solely because of the generous increase in rate support grant that it received from him?

Mr. Shore

I am aware of that. As my right hon. Friend knows, I live in his borough. I am also aware of some pretty sharp increases in rents that have taken place there.

Mr. Heseltine

Is the Minister aware that as five out of the six lowest increases are in Tory boroughs and four out of the four highest are in the Labour boroughs there is only one inescapable conclusion to be drawn, and that is that the Labour Party is profligate with expenditure in the public sector?

Mr. Shore

The opposite explanation is that these areas, often with their large Labour majorities, constitute areas of the greatest need in the country and in our inner cities. That is the alternative, and probably the correct, explanation.

The hon. Gentleman should not become over-enthusiastic about this list. The City of London, Kensington and Chelsea and Westminster—which account for nearly half the number—came under the special inner London arrangement, which resulted in them having a low domestic rent increase, although they still made their major contribution within the inner London distribution scheme out of their general excess rateable value.