§ Mr. John Wheeler (Paddington)Last week Mr. Ken Livingstone, leader of the Greater London Council, announced a 120 per cent. rise in the GLC rate precept. Next year GLC rates will be 54p in the pound, against 25p at present. This is a matter of such consequence that it must be raised in the House.
As Sir Horace Cutler, the GLC opposition leader, has said, the consequences of Labour taking over the GLC last May are now becoming apparent. The refusal of the GLC to make reasonable economies in expenditure to meet Government targets imposed in the interests of sound finance, together with the proposed reduction of 25 per cent. in London Transport fares, has already led to the announcement of a supplementary rate of 11.9p being levied. That is an additional levy of £60 per year on the average London household.
Now, our worst fears are being realised. The last Labour-controlled GLC promised free London transport, and within two years had doubled fares. Mr. Livingstone's Marxist group have much worse in store. The 120 per cent. rise is just the first instalment. As I told the House on 28 April this year, the real cost of Mr. Livingstone's determination to waste other people's money is likely to be a tripling or quadrupling of London's rates bill.
I should like to give the House two illustrations from my own constituency of what it will mean to ordinary people. The first is a house and garage in Oxford Square, Paddington. The conjectural rates for 1982–83 will be £3,199.68—an increase in 1982–83 over 1980–81 of £1,624.29. The increase in 1982–83 over 1981–82, including the supplementary rate, will be £831.03. That does not include any proposed increase in the ILEA, the Metropolitan Police precept or the Westminster city council rate.
My second illustration is a flat in Hyde Park Place, where the rates for 1982–83, taking into account the proposed 120 per cent. increase, will be £2,479.68. That is an increase in 1982–83 over 1980–81 of £1,258.79. The increase for 1982–83 over 1981–82, including the supplementary rate, will be £644.03. That is the measure of the mad Marxists' control of the Greater London Council.
A small part of the rates increase is attributable to the loss of Government grants—a penalty for refusing to curb expenditure—but the Government's determination to curb total Government spending must be welcomed. In particular, the total Government contribution to Greater London, under the new block grant system, according to last week's Civil Estimate, will be £1,316 million. Under the old system it would have been £1,424 million. That is a decrease of 5.6 per cent.
The decrease must be seen against the background of the whole economy. We must create wealth to get the nation's economy on to a sound footing, and that means selling goods and services at home and abroad to people who want to buy them.
Excessive public current expenditure is a luxury that the nation cannot afford. It has to come from taxes or from borrowing money, and, either way, it drains the wealth creators upon whom we ultimately depend. It has a stranglehold on the nation which, unless checked, will choke us to death.
1456 In trying to bring about a reduction in public sector expenditure, local government must be one of the prime targets. It now accounts for almost one-third of total Government expenditure, and has increased dramatically in the past 20 years. For example, in 1980 local government employed the equivalent of 2,060,000 full-time workers, which represents an increase of 55 per cent. since 1960.
Almost all those jobs have been bought at the expense of jobs in the wealth-creating sector, which can succeed only by satisfying customers. At its most simple level, a rate increase of £10,000 to employ an additional local government worker means that a private company will have to lay off another person to pay the rates.
However, far more disturbing than the general increase in local government expenditure is the proportion of that expenditure which is current as opposed to capital expenditure. In 1978–79, direct net current expenditure was £12 billion. In real terms, that is double the level in 1960. In contrast, direct capital expenditure increased in real terms by little more than 10 per cent. over the same period. Capital expenditure can often be justified. Only local government can initiate the building of roads and bridges, the improvement of sewerage systems, the introduction of street lighting and the renovation of inner cities, which are all essential elements in creating an economic framework in which private enterprise and the wealth-creating sector can thrive.
The expenditure is often in the form of contracts to the private sector, and in the case of the construction industry, which has spare capacity coming out of its ears, involves the creation of real jobs. The Government proposal to invest £65 million in the new London Docklands Development Corporation is an example of that kind of investment.
Local government expenditure will now be financed under the Government's new block grant system, which is based as far as possible on an objective view of what a typical standard of local government service costs. It has moved away from the reliance on past expenditure as a measure of need.
Whereas the majority of local authorities have shown thrift and responsibility in the way that they spend other people's money, some Labour councils have continued to be guided by callous dogma and to spend as if there were no tomorrow. That money will now have to be raised from the ratepayer. Although I sympathise with the luckless ratepayers of Camden, Lambeth and Islington, I also believe that, as a matter of principle, the electors who elected those councils should foot the bill.
I am confident that under the new system, where the relationship between a council's spending and rate rises is much closer, the ratepayers of profligate Labour councils will say that enough is enough. There was a significant swing against Labour's infamous Ted Knight at the recent GLC election, and we can expect a similar fate for other spendthrift Labour councillors at the local government election in May 1982. Indeed, there is even a possibility that Labour borough councillors will try to persuade Mr. Livingstone to curb his expenditure. They face re-election just one month after the increased rates bills are sent out next April, which is not a happy prospect for them.
I applaud this kind of democratic control, but it has one substantial drawback. More than 60 per cent. of London's rates are paid by commercial ratepayers who have no vote and thus no voice in spending plans. The staggering extra 1457 precept which Mr. Livingstone intends to raise next April will drive many London businesses to the wall, with inevitably disastrous consequences for employment in London.
I cite some examples of what this will mean in central London. The conjectural rate, allowing for a 120 per cent. increase, proposed by the mad Marxists of County Hall will mean that British Home Stores in Oxford Street will pay £353,409.60 in 1982–83—an increase over 1980–81 of £141,261.01 and an increase over the 1981–82 rate, including the supplementary rate, of more than £78,000. That cost will be passed on to the customers. The price of goods in the store will increase. The price of food will increase. Even the pensioner who receives a rate rebate will therefore he paying the rates that this man Livingstone inflicts on the people of London.
Coming closer to the home of the Labour Party, the comrades may not be pleased to find that the conjectural rate for Transport House in Smith Square in 1982–83 will be £168,759—an increase over 1980–81 of £75,147.39 and over 1981–82 of £37,524.06. Perhaps it will be docked from the levy.
I cite the further example of a small takeaway food shop in Warwick Way, SW I to balance the picture. Under the proposed increase, the rates for 1982–83 will be £2,077, an increase over 1980–81 of £925, and over 1981–82, including the supplementary rate, of £461. Everybody will be affected.
Already many businesses are indicating that the size of the rates burden is a crucial factor in determining whether they continue. For the giant Shell company, which currently pays nearly £6 million in rates on its South Bank headquarters, Mr. Livingstone's latest demands will total £1.4 million, even before Lambeth decides how much extra to charge.
The GLC Labour councillors try to blame the Government for unemployment in London, but it is they who, through these monstrous rate bills, are driving jobs out of London. The Government have asked local authorities to reduce their spending in real terms by £5.60 in every £100 over a period of three years. More than half of the local authorities have either done so or are within striking distance of doing so. Yet the Marxists in control of the GLC are determined flagrantly to disregard the overall public interest. They are callously indifferent to business and employment prospects in London and to London ratepayers.
The situation is now becoming so severe that the Government should seriously consider the abolition of the GLC. The Government came to power with a mandate to get government off the backs of the people. The GLC is a prime example of a redundant bureaucracy where this mandate could be fulfilled.
Looked at in detail, it is difficult to see what role the GLC fulfils. It was intended to be a strategic authority for the whole of London, but it is the Government who take major strategic decisions affecting London. It was not the GLC which was given the responsibility for deciding whether a third London airport was required and, if so, where it should be sited. That decision was made by the Government. The GLC was not directly involved in so relatively minor a matter as the move of the Covent Garden market from Westminster to the South Bank. Responsibility for even that central London matter was retained by the Ministry of Agriculture, Fisheries and Food.
1458 At the other end of the scale, particularly in planning and traffic management, the GLC exercises parallel and often overlapping powers with the borough councils. That makes for a great deal of duplication of effort and administration and provides fertile ground for dissension.
Moreover, besides having no identifiable role, the GLC pays its members little. Consequently, it attracts a large number of young politically ambitious members who are using their membership only as a stepping stone for higher planes. The new Labour group at the GLC has an average age of under 30. In effect, the GLC has become an expensive institution without a role, where ambitious young Marxists have a platform and can cause as much havoc for everyone else as they like.
If the Government are determined to reduce public expenditure and to get Government off the backs of the people, it might be advisable to abolish the GLC. The truth is that here in London we are both over-governed and over-taxed. We should strike now to rid ourselves of an unwanted burden.
Last Wednesday the whole capital and the whole nation rejoiced at the Royal wedding. It is ironic that over at County Hall the republican Marxist blew up his black balloons on his own. The people of London celebrated in their homes and in the streets, and he got the biggest comeuppance that any nation can inflict on extremists. Let us complete that job by removing the GLC and let us be sure to hold the rates in check. Unless we do so, it will be the people of London who lose, through higher costs, higher charges, higher prices and fewer jobs. I look forward to hearing the Government's response.
§ 5.7 pm
§ The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg)I congratulate my hon. Friend the Member for Paddington (Mr. Wheeler) on raising this subject and the way that he has dealt with it this afternoon. I know that he speaks for millions of people in this country—householders and business men, taxpayers and ratepayers—when he expresses concern about local government expenditure and the burdens that it imposes though the rates.
My hon. Friend has spoken particularly about London, a subject on which he is very well qualified, but many of the points that he made apply equally elsewhere, although there are not so many areas that have experienced the temporary mental aberration of electing a leader such as the GLC has—for a short while.
There are some respects in which it can be argued that the rating system itself is in need of some basic revision. Much of the reason for disquiet over rates in many parts of the country, however, including London, is simply that ratepayers have been faced with rate demands which appear to be excessive and which, all too often, are the result of excessive expenditure by local authorities. Concern for what people and businesses can afford to pay so often seems to be of little consequence these days.
It is true that London's increases have been somewhat higher than those outside the capital. After a number of years in which the previous Government made repeated increases in London's share of the rate support grant, some correction of that bias had to take place. Even so, had not been for overspending by London authorities—I emphasise that because the matter was within their control—London's share of the rate support grant would still be higher than at any time before 1978–79.
1459 During the period when London's share of the grant was increasing, some boroughs used the extra money to increase their spending, while others used the grant to keep down the rates. In those areas, rate increases over the period of the Labour Government were much lower than the average for the rest of the country, and rate poundages still tend to be below average. At bottom, however, rates are decided by what authorities decide to spend.
That is why the Government, as part of their strategy for controlling public expenditure as a whole, have taken measures to try to secure a reduction of 5.6 per cent., compared with 1978–79, in the volume of local authority current expenditure. The Government regard a reduction of this order in local government spending as a vital element of their policy of public expenditure reductions to help restore the health of the economy and increase the present scope for real investment on the future.
Some authorities, however—quite irresponsibly in my view—so far have not been willing to co-operate with the Government in pursuing this aim. This year the initial budgets prepared by local authorities showed that they were planning to spend about £800 million—5.3 per cent.—above the target level that the Government had set. Now it has been suggested that this is a matter for the local authorities themselves to decide, and that the Government are not entitled to take a view.
I reject that entirely. During the quarter century that I spent in local government in London, local authorities accepted—irrespective of the party that controlled Parliament or them—that it was right for the Government to take a view on how much local government as a whole should spend. It is surely fundamental that any Government have a right—indeed, a responsibility—to decide how much of its available resources the country can afford to devote to local authority services. Equally, local government has a responsibility to observe the limits set by the Government, and authorities in the past have prided themselves on doing so.
So my right hon. Friend the Secretary of State announced to the House on 2 June that he was asking all English local authorities to re-examine their budgets and to revise them to conform to the Government's targets. At the same time he warned that, if the response was not satisfactory, he intended to ask Parliament in the autumn to reduce the total of rate support grant for 1981–82 by about £450 million.
My right hon. Friend will be looking at the revised budgets very carefully, and the results of his consideration of those budgets, and of other representations that have been put to him, will form the basis of the judgments which will underlie the supplementary report that he will lay before the House in the autumn.
The subject of high-spending policies brings me naturally on to one of the central points of my hon. Friend's speech: the spending plans of the Marxist-controlled GLC.
Although it is interesting that there are members of the controlling group at County Hall who would run 10,000 miles to get away from the label of "Marxist", they have not yet had the courage to stand up and say what they mean in public. I think that they may. Some of them may be biding their time, but I have sufficient confidence that 1460 some of them will recall that they had a decent past in local government and will not allow it to be sullied by those who now lead them.
On 22 July, just a week ago, the leader of the GLC was reported as having told a meeting of leaders of Labour-controlled London boroughs, just as a throw-away remark as he slipped away at the end of the meeting, according to the press, that next year's GLC rate would be approximately 54p in the pound compared with 25p at present—a staggering increase of 120 per cent. With that prospect in view, I find it easy to understand the reaction of my hon. Friend when he called for the abolition of the GLC as an institution, though I know he will understand that all that I can say to him on that point is that I shall ensure that my right hon. Friends are aware of the views he expressed in his eloquent proposition and the factors that have led him to put it forward, not for the first time, as was inaccurately suggested in a leaflet circulated by "Dopey the Dwarf" at County Hall, Mr. Livingstone, who could not even get the spelling of his name right on the leaflet. I suggest that my hon. Friend continues to make known his views on this point.
I think, though, that it is even more instructive to look at what Mr. Livingstone's party colleagues in the boroughs had to say publicly when they were presented with his announcement. Councillor John O'Grady, the Labour leader of Southwark, said that there were "gasps of astonishment" from the meetings of Labour leaders. Quite why they should have gasped, I do not know. Everyone has been warning them of what would happen, but they chose to think that perhaps it would not happen. As I said in the House a few days ago, Councillor O'Grady added, understandably,
the GLC is in a Walt Disney situation.It is most interesting that I have had several telephone calls from those who are active participants in the Labour Party, all saying what an interesting choice of Walt Disney characters I pinned upon Mr. Livingstone.Another Labour deputy council leader, who asked not to be named, was quoted by The New Standard on 23 July as saying:
What the hell does Livingstone and his lot think they are playing at? I have now got to pass on a massive increase to ratepayers one month, and ask for their vote the next".Councillor Roy Shaw, the Labour leader of my own borough of Camden, said, in a neat piece of understatement,This will cause considerable problems for the boroughs".He should know all about the problems caused by Mr. Livingstone. He had to fight him off for three years or so when Mr. Livingstone was trying to challenge him for the leadership, both in actual and philosophical terms, of Camden council. Roy Shaw succeeded in doing so, but at great cost.Nor is it only Mr. Livingstone's party colleagues in local government who do not see eye to eye with him. I observed a quotation in today's edition of The Sun from a Labour Member of Parliament advising him
to belt up, at least in the interests of the Labour Partyand accusing him of "spouting nonsense" in urging GLC councillors to refuse to make spending reductions.But, really, no one should be surprised—my hon. Friend has said it, and I repeat it—at the bizarre excesses and attitudes that we are now seeing almost daily from the Marxists who masquerade under the name of Labour at the GLC. Developments of this sort were clearly predicted by hordes of people before the GLC elections in May—by 1461 many of my right hon. and hon. Friends, by those in commerce, by Sir Horace Cutler, and by many others, including myself, in debate in this House. My hon. Friend's feelings about the plans of the Labour GLC are shared by many people, inside and outside this House, and not least by the domestic, industrial and commercial ratepayers, who will have to bear the cost of these appalling and irresponsible proposals.
My hon. Friend mentioned the problems posed for businesses in his constituency because of the burden of rates. It has been argued by those who defend high spending policies financed by high rates that rates represent only a small proportion of business costs and that, by implication, we should not worry unduly about the burden that excessive rate demands represent to industry and commerce. That argument, as I am sure my hon. Friend agrees, wholly misses the point.
At a difficult time when it is vital for the economy of the country to encourage the establishment of the prosperous and competitive industrial base that we need in order to produce wealth to generate employment and support realistic and effective local services, any excessive or avoidable burden on firms that are striving to achieve or maintain viability is one burden too many. It is crystal clear that high rates, like high costs of any other sort, can have a telling effect on prospects for jobs and for industrial development, and this is illustrated by the examples that my hon. Friend has cited today.
Those who try to pretend that this is not so, with the inevitable serious effect on employment, ignore the growing mass of evidence which shows what is happening. For the present, I cannot offer my hon. Friend any instant solutions to this problem. I assure him, however, that it is very much in the Government's mind.
I remind him, too, that when my right hon. Friend on 2 June announced to the House his intentions in relation to action this autumn on rate support grant he said that the 1462 Government were also considering further measures, including the possibility of legislation next Session, which may be necessary to bring home to individual local authorities, including, of course, those which raise their finance through the precepting system about which my hon. Friend was so concerned, and to their electors the consequences of high-spending policies.
The Government are, of course, aware of the importance of giving a fair deal to the domestic ratepayer. In their consideration of the whole field of local government finance, the Government are concerned not only with the consequences of excessive expenditure but with the extent of the inequities in the way in which local revenue is raised at present through the rates. My right hon. Friend has therefore announced that the Government will issue a consultative document in the autumn on the alternatives to domestic rates. The broadest possible range of potential alternatives is being examined, and none is being ruled out at this stage.
Consultation will be very wide, and we shall certainly look forward to receiving the views of my hon. Friend and other hon. Members on the document when it appears. This document will concern domestic rates, as I have said. The replacement of non-domestic rates by some other form of revenue is not envisaged. Nevertheless, the domestic and non-domestic systems are, of course, closely interrelated and the Government will keep the problems and interests of non-domestic ratepayers very closely in mind as our thinking develops.
My hon. Friend has done the House a great service in drawing attention to this problem. It has been a very timely debate. My hon. Friend made a sensible and thoughtful contribution on a topical subject. I hope that what I have said has reassured him that the Government are thoroughly aware of the points that he has put forward and that we are determined to take the action that is needed to tackle the problems that exist in the area that we have debated today.