Rate Support Grant

HC Deb 14 December 1982 vol 34 cc161-218 5.44 pm

The Secretary of State for the Environment (Mr. Michael Heseltine)

I beg to move, That the Rate Support Grant Supplementary Report (England) (No. 2) 1982, a copy of which was laid before this House on 28th July, in the last Session of Parliament, be approved. This measure is supplementary to the Rate Support Grant Report (England) 1980. Its purpose is straightforward. It proposes selective grant reductions for authorities that failed to achieve the current expenditure reductions for which we asked in 1981–82. Reducing spending on day-to-day consumption has been a central principle on which much of our policy towards local government over the past three and a half years has rested. It is a principle that the Labour Government were forced to accept only under the overwhelming pressures of external forces. Presumably the memory of it is so bitter that so few Labour Members have come today to join the lonely crusade of the right hon. Member for Manchester, Ardwick (Mr. Kaufman) who apparently has alone thought fit to protest against this eminently reasonable policy that the Government are now proposing.

From May 1979 there should have been no possibility of any misunderstanding of our objectives. Indeed, it is not unreasonable to say that there was no misunderstanding about our objectives because by and large Labour Members appear to be fully satisfied with what the Government have done and obviously wish the report well. The paramount need was to stop, and then to shift on to a downward trend, the previously ever-increasing levels of current spending in the public sector. The House will be aware from its memories of the results of the Labour Government that failure to do that would only have prolonged the savage reductions in the capital programmes of local government that the Labour Government used to finance the rising staff bills under current consumption.

In the six years since 1974–75 authorities' capital expenditure has been halved while they have maintained excessive levels of manning and pay. In reducing current spending, we wanted to act in co-operation with local government. That was very much the basis on which we started and, indeed, we were assured by local government representatives that we would have that co-operation. It was only when those assurances proved to be worthless that we adopted the selective policies that are the subject of this debate. It was essential to develop effective incentives for the high-spending authorities to make the necessary reductions and to exempt historically low-spending authorities and those who met our targets from the consequences of overspending by the less responsible authorities.

Certain facts must be borne in mind and bear repeating as we once again return to this subject. I have no doubt that in the debate we shall hear again special pleading about the impact of so-called savage cuts on services. The truth, of course, is quite different. An objective analysis of the consequences that have flowed from the past few years now shows the validity of what we are trying to do. On any reasonable analysis the cuts that we have sought in current spending could have been secured by sensible management, put in hand sooner rather than later. Indeed, the majority of authorities have proved the reasonableness of our requests by achieving cuts on the lines that we have oulined. However, sensible management and prudent use of resources was not the course adopted by some authorities. Some of them were quite prepared to accept Government targets as long as they were increased year after year. As soon as the Government asserted the right to set the guidelines in a downward direction, there was no longer a willingness on the part of some authorities to co-operate.

For 1980–81 I asked for a reduction of 2 per cent. from the outturn of two years before, 1978–79. For the next year, 1981–82, the year that is the subject of the report before the House, I asked for cumulative cuts for England of 5.6 per cent. That includes the 2 per cent. of the previous year. There is therefore no question of any authority being justified in complaining that there has been insufficient notice.

For 1981–82 the individual targets were given to every local authority in January 1981, but the broad trend of reductions had been made clear in the summer of 1979, so no one can argue that he did not know broadly what the Government had in mind. No one can argue that he did not have the time in which to make the dispositions and take the decisions that would have enabled him to move in the direction that we indicated.

Competent planning, especially planning of recruitment, in the preceding 18 months, would have enabled all the authorities that wanted to hit the targets to succeed in doing so or to make substantial progress in that direction. However, even a start made in January 1981, before the year to which we are referring began, would have enabled most, if not all, authorities to get very close. Not only would we have achieved the results but we would have done so without resorting to the much more intricate and detailed procedures that followed. We would have continued to achieve those results against the background of voluntary co-operation that had characterised the relationship between local authorities and the Government until then.

I have no doubt that the Opposition will continue their campaign of seeking to misrepresent the effects of making expenditure reductions in 1981–82. One cannot pick out any one year and point to the effects of expenditure reductions for that year unless one takes that year in the context of other years preceding it, so that one can see precisely the level that expenditure had reached.

The simple fact is that in 1979–80 local authorities spent more in real terms on current consumption than in any previous year in their history. They employed 3 million people, which was more than ever before—it was over 11.2 per cent. of the nation's labour force. We started our quest for economy, efficiency and value for money from a base position at a historically high level. There was massive potential for spending reductions. The reductions that I asked for averaged less than 2 per cent. for a single year. After all, in the life of the Labour Administration, local government increased its current expenditure by 6½ per cent. in real terms.

In one year the Labour Government were forced by the International Monetary Fund to face reality. Their response when faced with local government not delivering the aggregate expenditure reductions that were asked of it, was to make an across the board reduction in the total grant. The House will remember 1976. I think that I am right in saying that Labour Ministers had no hesitation in taking substantial action to secure reductions in local authority current expenditure. They were prepared to do so by withdrawing indiscriminately and across the board grant that then reverted to the central Exchequer.

Because of the legislation that we inherited, we had no option but to follow that example when in 1980–81 local government in general did not meet the aggregate target. Therefore, in our first year the precedents for reductions in local authority current expenditure, set by the right hon. Member for Stepney and Poplar (Mr. Shore) and the Labour Party, were followed by us. They can criticise us, but only with the hypocrisy of Opposition Members who are trying to pretend that life is different on the Opposition Benches.

We reduced grant across the board by £200 million in that year. I said at the time that that hit those authorities that had made the economies, including those that had long started the process of reducing spending, but were already spending at comparatively low levels. Therefore, the system was unfair because there was no attempt to recognise the economy that has been practised in an authority. Consequently, it was the Government's intention, which was made clear before the election, to produce a more sophisticated and equitable system. Our aim was to see that grant was held back from high-spending authorities that consciously chose not to meet their expenditure targets.

In June 1981 budget returns showed overspending during 1981 to be £800 million. We still did not act, even faced with that substantial projected overspend, without full and fair advance warning of what we had in mind.

First we gave local authorities a chance to revise their budgets. We made it clear that grant would be reduced selectively for authorities that were not making the necessary reductions to meet their targets. Furthermore, we had explained to local authorities six months previously that authorities hitting targets could expect to be exempted from the effects of any grant reductions. The grant reductions proposed in the report apply only to high-spending authorities that ignored that advice and our requests for restraint. There can, therefore, be no justification for the argument that the measures in the report are retrospective. The notice was more than adequate. The intention was crystal clear. The implications of refusing to co-operate in a national policy objective were apparent to every local authority.

It is clear that when the proposals were published in detail in June 1981 certain authorities—of course, principally Labour-controlled—chose to ignore them. Some chose to increase their budgets. The councillors took those decisions in the full knowledge of the consequences. It was their choice to put the full burden on their ratepayers. In too many cases that meant levying substantial supplementary rates.

As a result the Government were left to hold back grant on a selective basis, as they said they would. There can be no case for the continued full support of the taxpayer for the lack of co-operation and in some cases for the profligacy or incompetence of authorities that choose to ignore the policies that have been set by the Government. Again, however, it is important to put in perspective the claims about swingeing reductions to which the grant abatement led in individual authorities.

Mr. John Heddle (Lichfield and Tamworth)

Does my right hon. Friend agree that before May this year Birmingham city council fell within the category of the profligate local authority that he has described, but since the change of political control in the city it has concentrated on finding economies within its present budget? Will my right hon. Friend endorse the decision of the city's refuse collectors, under threat of having refuse collections put out to private contractors, to find savings of £3.3 million, which is a 40 per cent. saving, so that not one extra penny will be provided by the rate support grant?

Mr. Heseltine

My hon. Friend provides only the latest, and perhaps one of the more dramatic, of the common examples of how economies can be achieved without reduction in service simply because the authority is properly managed and the costs are properly scrutinised. The tragedy implicit in my hon. Friend's intervention, which I much welcome, is that if the same rigour had been applied across the country by local government looking at service after service, by now we would already have achieved the economies sought by the Government and more resources would be available to pursue policies that would commend themselves to all hon. Members on a wide basis. I support the welcome initiatives that my colleagues in the Conservative Party have taken in Birmingham, since they gained control of that authority.

I was going to set the amount of reduction that we sought by way of grant abatement in the context of the overall scale of local authority spending. The total reduction is £201 million, which is spread over 107 authorities. That is on a total aggregate Exchequer grant for 1981–82 of more than £11,000 million. We are therefore discussing rather less than 2 per cent. Those authorities that meet their expenditure targets are fully protected from holdback. We have also recognised the circumstances of those authorities that have tried—but have perhaps not quite achieved it—to reach the targets that we set. For those authorities that come close and spend between 2 and 4 per cent. above their target, the full grant abatement scheme is reduced by 40 per cent. For those authorities that spend less than 2 per cent. above the target—those that get even closer—the abatement is reduced by 75 per cent. Those authorities that spend 4 per cent. or more above the target receive no protection at all.

I hope that the House will accept that not only have we given adequate and reasonable warning but, even when authorities have not fully achieved their targets but have tried and begun to do so, we have abated the penalty to recognise that they are going in the direction that the Government want.

We have also tried to protect low-spending authorities. Authorities that spend below the grant-related expenditure are generally among the lower spending ones. Their lower base line meant that the 5.6 per cent. reduction was relatively more difficult to achieve. We provided full protection from holdback for those authorities.

We listened to representations that were made; we recognised that cases for other aspects where we could help were pleaded and that we could accept them. There were two other forms of expenditure that we disregarded when deciding the level of holdback. We decided not to count increases in inner city expenditure by those authorities with the worst urban problems—those local authorities in the partnership or programme categories. Nor did we count inescapable costs that some local authorities had to cope with when dealing with the civil disturbances in the summer of 1981. Once we have the information, we shall not count the extra costs of dealing with the problems of the 1981–82 winter.

In those ways we made every conceivable effort to aid those authorities that were trying. We also made every conceivable effort to make special provision for those authorities that faced difficult and inescapable problems.

It is illuminating to go through the list of those already high-spending authorities which, notwithstanding the options that are open to them, spent more and therefore lose grant.

Mr. W. Benyon (Buckingham)

My right hon. Friend is saying that expenditure on inner city redevelopment is disregarded. Does he agree that there is a case to be made for new towns, that are taking a large part of the population from those areas and therefore face considerable extra expenditure, also having some such disregard?

Mr. Heseltine

My hon. Friend is on to an important point. One of the exemptions that we made was for local authorities below GRE. My hon. Friend will recognise that a significant number of the authorities that he might have in mind would have achieved exemption in that category. I do not wish to anticipate what I hope to announce soon but we cannot automatically assume that all such authorities at the lower end of expenditure are outside the general quest for economy and efficiency. With regard to the point that my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) made, Birmingham is a classic example of the new opportunities in local government that are emerging every day in areas that might have been considered as having been scrutinised effectively but which obviously have not been.

More than 60 local authorities chose to exceed their spending targets by 4 per cent. or more and also did not qualify for a GRE exemption, and another 40 fell within the group that spent less than 4 per cent. above the target. The devastating consequence of the attitudes of councillors who take the decisions is best illustrated by examining the impact on those who must foot the bill—the ratepayers. I hope that the figures are the cause of equal concern to the Opposition who face the substantial unemployment levels that flow directly from those decisions.

In South Yorkshire, the council spent 17¾ per cent. more in 1981–82 than the target. That means that there was an increase in its cash current spending of nearly one fifth over the previous year. For the average ratepayer in the county, the rate bill increased by about 29 per cent. In the West Midlands, the target was exceeded by nearly 30 per cent. That means that current spending over the previous year increased by nearly one third. For the average ratepayer in the West Midlands, the effect was a 30 per cent. increase in the rate bill. The pattern was much the same in West Yorkshire, which overspent by nearly 25 per cent. Expenditure increased by nearly one third over the previous year and the ratepayers' bill increased by more than 25 per cent.

Mr. John H. Osborn (Sheffield, Hallam)

My right hon. Friend mentioned South Yorkshire as one of the offending counties. Would he direct his attention to the city of Sheffield? Is he aware that business people in Sheffield cannot go on? Their houses are too heavily rated and their businesses are in such a condition that they cannot go on. What direct representations has my right hon. Friend had from them, bearing in mind the fact that I have recently referred many cases to him?

Mr. Heseltine

I am most grateful to my hon. Friend. It is one of the curiosities of life that I happen to have the figures for Sheffield with me. It is a metropolitan district rather than a county and the figures I have strongly suggest the trend about which I have been talking. Its expenditure in 1981–82 was 20 per cent. higher than the year before and the rates increased by 36.6 per cent. That is a classic example of what happens when authorities decide that extra expenditure should be pursued, regardless of the Government's policies and the economic recession, and disregard the consequent effect upon the levels of unemployment and the burden that is placed on their industrial, commercial and domestic ratepayers. I do not know where else one should turn for a more graphic example of the consequences.

Sheffield was not alone. In Sandwell, a 10 per cent. overspend on the target was accompanied by a 32 per cent. rate increase. In Walsall, the ratepayers had to find 30 per cent. more in 1981–82. The ratepayers of Wolverhampton got off relatively lightly—rates increased by only 21½ per cent.

Mr. Harry Greenway (Ealing, North)

Will my right hon. Friend deal with the increases in London?

Mr. Heseltine

It just so happens that I have some examples of what happened in London. Ratepayers in the 10 Labour-controlled boroughs in London suffered the most. The record, if "record" be the right word, is held by Brent which increased the rates by nearly 55 per cent. The ratepayers of Newham, Hounslow and Lewisham had to find 40 per cent. more than the year before. It must come as something of a surprise that Lambeth was in there with only a 16 per cent increase.

It is for those authorities and those increases and the policies that lie behind them that the Opposition are trying to enlist support. I was about to say "support of the House" but that would be a gross exaggeration, as sympathy for the Opposition is conspicuously absent on any scale. I can only assume that they have got wind of the horrendous record of Labour Party rate increases that I was about to read to the House, have reckoned that discretion is the better part of valour, and have absented themselves from supporting the right hon. Member for Ardwick and his dwindling band of Front Bench colleagues. They know that there is not much of a case for him to plead and that it is so embarrassing that they will not listen to it.

Perhaps I may help. I have a few more minutes to go. Perhaps the right hon. Member for Ardwick can whip up support in the Corridors of the Palace of Westminster. Meanwhile, I shall keep the show on the road. That will give him time to muster something by way of vocal support for when he repeats the misleading misrepresentations that we are used to.

Mr. Stephen Ross (Isle of Wight)

I am sure that the right hon. Gentleman would like to pay tribute to the Liberal-controlled Isle of Wight county council and the Liberal-controlled Medina borough council, which did a Birmingham before Birmingham did it. It reduced the number of its waste disposal vehicles from 13 to eight, reduced the number of operatives and kept the service within the council. Perhaps the right hon. Gentleman would like to say what those councils' rate increases were. He will know that they were much in keeping with local government increases in the South.

Mr. Heseltine

I am interested that the hon. Gentleman should be so lacking in information about his own authority. As he is leader of the authority, he should not need to ask my advice about the policies that he puts to it. Nevertheless, if it will help to refresh the hon. Gentleman's memory, my right hon. Friend the Minister for Local Government and Environmental Services, in replying to the debate, will make good the lapse in the usual standards that we expect from the hon. Gentleman. We shall ask those who keep a close record of these things to investigate the hon. Gentleman's authority so that we can provide him with the brief that is obviously not available to him now.

Doubtless the right hon. Member for Ardwick will be back with the usual scare stories about the facilities that have had to close down and with the claims that so often appear in the headlines in advance of the event, which are so rarely justified in retrospect because no one goes back to see what happened as a result of the policies as opposed to reporting their effect in advance.

The figures illustrate the true reality in all the authorities that have lost grant. Two thirds of the authorities that were subject to full holdback made real increases in their expenditure instead of reducing it. It cannot be argued that they have tried to be tight with their expenditure patterns when they were actually increasing them. Over 30 authorities increased their real expenditure by up to 10 per cent. and another 10 authorities increased their real expenditure by more than 10 per cent.

Mr. Tony Durant (Reading, North)

Is my right hon. Friend aware that the hon. Member for Isle of Wight (Mr. Ross), who praises the Liberal cause in his area, has omitted to draw the attention of the House to the actions of the Liberal group on the Berkshire county council, which forced a 27½ per cent. rate increase on my electors against the advice of the Conservative group? However, the Liberals put the increase through. We were saddled with a 27½ per cent. increase because of the action of the Liberals.

Mr. Heseltine

The experience in Berkshire is characteristic of the Liberals wherever they have a decisive influence in local government. I cannot say that they manage to exceed the record rate levels that have been established by the Labour Party but they do their best to make a passable imitation of them in significant areas. They conspicuously seek to resist lower rate levels that Conservative groups try to introduce in areas where there is a three-party influence.

I have illustrated the devastating and deliberate effect of the refusal by Labour-controlled councils to respond to Government policies. They have acted as if money is not in short supply. They were willing to spend it on manpower and services. The only place where money is in short supply is in the bank accounts of the poor ratepayers, who have to finance the ever-rising level of expenditure.

There is no doubt that if the local authorities had intended to meet their expenditure targets they could have said so in the budget returns that they made in the autumn of 1981. It has been suggested that it would be proper to base the detail of holdback on new and more up-to-date outturn data. I accept that where authorities have an outturn figure in 1981–82 which is lower than their revised budget submission, and they have therefore improved their position, they should be entitled to the benefits. I assure the House that we shall introduce a further supplementary report to ensure that this happens as soon as full outturn data are available. This will be in the normal way in which these matters are dealt with by supplementary reports from time to time.

Since 1981–82 we have kept up the pressure. I am in no doubt that the policy that we have adopted on targets and grant holdback is becoming increasingly effective. Since taking office we have started to reverse the growth in local government current expenditure. The majority of local authorities have made considerable efforts to meet their targets. The House may not be fully aware that the manpower levels of local government are now back to those of 1974–75. We have nearly eliminated all the growth that followed the reorganisation of local government. The benefit at the end of the day goes to the ratepayer and taxpayer. Those ratepayers include commercial and industrial ratepayers. The Labour Party is prepared to see them cut their productive work force to finance the staff bills of local government.

The lessons learnt during 1981–82 and 1982–83 will be reflected in the proposals for next year, which I shall announce on Thursday. The clarity of the underlying message remains. The setting of individual targets backed by a rigorous grant regime is a necessary and increasingly successful part of our policies to reduce local government current expenditure, and we shall continue to consolidate the gains that we have made.

6.15 pm

Mr. Gerald Kaufman (Manchester, Ardwick)

Any hon. Member who had had no previous experience of the Secretary of State for the Environment might wonder, after listening to him today, why anyone should make a fuss about the rate support grant supplementary report which he is asking the House to approve. The report will remove £201 million in rate support grant penalty from 104 local authorities. The right hon. Gentleman referred to 107 authorities, but he was including Camden, Crawley and the City of London, none of which will receive any rate support grant for the year and from which even he is incapable, therefore, of removing any further grant.

The right hon. Gentleman made it all sound so simple and straightforward. In his holdback exercise during the summer of last year he gave a warning to local authorities that they must cut their budgets for the financial year 1981–82 to 5.6 per cent. below their 1978–79 expenditure and that they would be penalised if they did not do so. In his version of what then took place, some local authorities obeyed his orders, and as a result they have escaped unscathed. Some compounded their wickedness by increasing their budgets. They are being suitably chastised in the report, as are other councils which either did not make cuts or did not cut enough.

The Heseltine version goes on to tell us that by making use of the same powers which authorised him to order councils to cut their budgets the Secretary of State is now fulfilling his warning. The report is the result. Everyone was warned and no one has the right to complain—QED.

The truth is not quite like that. The report is not as straightforward as the right hon. Gentleman would like us to think or has sought to illustrate. It is the parliamentary equivalent of the three-volume novel by Miss Laetitia Prism which features so prominently in "The Importance of Being Earnest", and whose authoress summed up its contents as follows: The good ended happily, and the bad unhappily. That is what Fiction means. According to that definition, the report is not some dry-as-dust parliamentary document but a work of fiction. Moreover, it is a work of fiction that, to quote Lady Bracknell's description of Miss Prism's novel, is "more than usually revolting". The speech with which the Secretary of State introduced it was a tissue of distortions and misrepresentations from beginning to end. Even by his standards it was "more than usually revolting".

To begin with, the authorities that are being penalised did not overspend. It is a fact—it was confirmed by the Chancellor of the Exchequer only last week in the House—that local authority expenditure as a proportion of public expenditure has been falling steadily since the Government came to office. It is now 24.5 per cent. of public expenditure compared with 28.2 per cent. of public expenditure four years ago. It is the Government who have been overspending, and we all know what they have been overspending on. Financing unemployment is now costing the taxpayer £15,000 million a year.

Local authorities did not overspend in the past financial year. They spent more than the right hon. Gentleman wanted them to spend, which is a very different thing. The authorities had a legal right to incur that expenditure. On the other hand, the right hon. Gentleman had no legal right to order them to reduce their expenditure or to threaten them with penalties if they disobeyed him. Far from having any legal power to take these steps, the right hon. Gentleman was acting unlawfully when he did so and instituted a holdback exercise in June of this year. As usual when we consider any action perpetrated by the Secretary of State, detectives must be called in to trace his movements. Sufficient evidence to secure conviction has been accumulated and the House has a right to hear it.

Exhibit No. 1 is the statement made by the Secretary of State to the consultative council on local government finance on 2 June last year, in which he gave notice of his holdback exercise and declared: my proposal would be to ask Parliament to approve in the autumn a Supplementary Report which would reduce the total of grant". "Autumn" meant autumn 1981. In case it has escaped anyone's attention, we are now at the end of autumn 1982.

A circular from the Department of the Environment to chief executive officers of local authorities, dated 25 June 1981, warned: The Secretary of State intends in the autumn to submit to Parliament for their approval a Supplementary Rate Support Grant Report. Once again, that circular referred to autumn 1981.

On 3 September 1981, the holdback exercise was complete, and it turned out, in the Secretary of State's own word, to be "disastrous". Local authorities increased their aggregate budgets instead of reducing them. The right hon. Gentleman told local authority leaders: This is a disappointing overall result, and the Government will be obliged to propose reducing the total of block grant by means of a Supplementary Report to be presented to Parliament in the autumn". Once again, he meant autumn 1981. That autumn 1981 supplementary report, to which the Secretary of State and his officials referred repeatedly, is the supplementary report that the Secretary of State is asking the House to approve. Why has there been such a long delay?

The simple answer is that the Secretary of State could not present the report to the House at the time he intended because it was not then a lawful document. That was admitted in the rate support grant main report, which was presented to this House in February this year. Paragraph 9 of the main report refers to the holdback scheme that we are considering. It declares: Clause 4 of the Local Government Finance (No. 2) Bill currently before Parliament is intended to clarify the powers under which such a scheme could be operated. "Clarify" is Heseltinese for "to make legal retrospectively that which was illegal when it was originally done by the Secretary of State for the Environment". Anyone in doubt should study the sixth report from the Select Committee on Statutory Instruments, which said about the main rate support grant report: The Committee … considered it unusual that the Secretary of State was apparently relying on legislation yet to be enacted to give the target figures an air of legal force, whereas in fact they have none". Those extremely severe strictures by the Select Committee applied equally to the holdback targets that we are belatedly considering.

This report, which has the Secretary of State's name at the end of it, amounts to a signed confession. Paragraph 10 of the report gives the game away: It was not entirely clear however whether section 59 of the 1980 Act by itself gave sufficient powers to the Secretary of State to determine the protective multipliers he proposed in June and September 1981. He therefore considered it right, before implementing his proposals, to seek an express power from Parliament to determine multipliers for this purpose. The words It was not entirely clear however whether … the 1980 Act … gave sufficient powers to the Secretary of State are Heseltinese for "it was perfectly clear that the 1981 Act did not give the Secretary of State sufficient powers". The words in the report He therefore considered it right … to seek an express power are Heseltinese for "He was told by his legal advisers that if he did not introduce legislation to indemnify himself he would lose any court action that a penalised authority brought against him".

The Secretary of State's lawyers advised him in no uncertain terms that he was behaving unlawfully. The Local Government Finance Act 1982 retrospectively makes lawful the Secretary of State's previously unlawful penalties and targets and even his previously unlawful consultation with local authorities on this matter. The Act does that in section 8. Clause 4, to which I referred earlier, was left behind because the Secretary of State had to continue to amend the Bill to get each part right, if indeed it is right now. In section 8 he introduces a concept previously unknown in British statute law and in human behaviour—restrospective consultation.

The Act blazes a trail in another sense. In carrying out all the retrospective manoeuvres to legitimise the illicit acts of the Secretary of State, it achieves something that was previously believed to be impossible. It makes an honest man of the Secretary of State—retrospectively, of course. In this report the righteous chastiser who acted unlawfully punishes the wrongdoers who acted lawfully. But does he? In his statement on 2 September last year the Secretary of State complained: A small number of authorities have ignored the Government's request for economy and have actually increased their expenditure plans by a substantial amount. Those authorities clearly deserve punishment—or at least that was the impression that we got from the Secretary of State's speech this evening. But do they? Many councils increased their budgets. However, 34 of them—31 of which are Conservative controlled—are not listed for punishment in the report that we are considering. Far from it. Such are the zany follies of the Secretary of State's methodology that all but one of the 34 councils in this special category were requited for increasing their budgets in a somewhat unexpected manner. They were rewarded with increased grant. Northamptonshire responded to the Secretary of State's call for reduced expenditure by increasing its budget by £4½ million,. The Secretary of State reciprocated fearsomely by increasing his grant to that council by £2,150,000. It is an adventure to investigate the reasoning behind the penalties in this report.

For example, this is the formula for calculation of the holdback being imposed in this report. Expenditure below the threshold is defined as GRP = GRP^**+0.6(Total expenditure-GRE)/Population") Expenditure above the threshold is defined as GRP = GRP^** + (0.6 × Threshold) + 0.75 (Total expenditure-GRE/Population)-Threshold ) "Threshold" is the threshold for the relevant class of authority. "GRP^*" is the GRP for expenditure equal to the GRE for the relevant class of authority given above for the estimated close ending schedule. "GRP^**" is the GRP for spending equal to the GRE for the relevant class of authority given above for the estimated grant reduction schedule.

Then we have the "ET" factor. Ever fashionable, the Secretary of State has introduced the diminutive extraterrestrial into this report. In paragraph 14(8), E is the current expenditure budgeted for the authority and T is the expenditure guidance issued by the Secretary of State. That leads to the stunning equation. Disregard = E - T(E - e)/T - t It is good to have a little space person with us in this debate because the Secretary of State resembles him in several ways. Like "ET", the Secretary of State comes from an alien world and he arouses revulsion as soon as people set eyes on him.

Like "ET", he blunders around causing confusion and trouble wherever he goes. There are even greater differences between the Secretary of State and the extraterrestrial. After all, "ET" is a being of higher intelligence. He is lovable and people shed tears when he goes away. What may happen when the Secretary of State goes away is something to consider. "ET" needed an interpreter. The Secretary of State has been found to need one because the Select Committee on Statutory Instruments considered this report. After pondering it in puzzlement, the Select Committee asked for a memorandum explaining the report in terms intelligible to the layman". The Department of the Environment obliged as best it could, and as it was seeking to represent accurately the Secretary of State's mind, in paragraph 4 it produced what one might call a charitable mis-statement. It said: It is intended that the proposed reduction in block grant will fall on the individual authorities responsible for the overspending". This is simply not true. A total of 174 local authorities were guilty of what the Secretary of State called "overspending", but only 104 have been punished with grant holdback; 70 have not. Local authorities that are responsible for spending more than £186 million above their aggregate targets get away scot-free. They benefit from the GREA exemption.

When the Secretary of State examined the list of overspenders, he found to his discomfiture that nearly half of them were Conservative-controlled councils. His industrious officials were set the task of finding an escape route. They discovered that a considerable number of Tory authorities that had budgeted above their volume targets happened to have budgeted below their grant-related expenditure assessments.

The House will recall that the GREA is the national statistic invented by the Department of the Environment to illustrate what services the Department believes each local authority ought to be able to provide at the given rate poundage. The Secretary of State decided to exempt from penalty all local authorities whose budget was below their GREA even if they were spending above their target. It does not matter that the Minister for Local Government and Environmental Services had promised the House during the passage of the Local Government, Planning and Land Bill: Grant-related poundage and grant-related expenditure is in no sense a prescriptive definition by central Government of what the local authority should spend."—[Official Report, 8 July 1980; Vol. 988, c. 304.] No matter that that same Minister told me last year that grant-related expenditure assessments relate to the 'total expenditure' of each authority, whereas the volume targets relate only to current expenditure. They cannot, therefore, be directly compared.—[Official Report, 16 March 1981; Vol. 1. c. 46.] GREAs were the escape route for Tory authorities, and that was far more important than any past undertakings given to this House. That is why 70 of the 80 Labour authorities that have spent above their targets are penalized and 10 are not, while 21 of the 75 overspending Tory authorities are penalised and 54 are not. That is why Labour Avon at 5.5 per cent. over target is penalised while Tory Cambridgeshire at 9.1 per cent. over target—-nearly double Avon—is not penalised. That is why Labour Tameside, at 1.9 per cent. above target, is penalised while next-door Tory Stockport, at 3.7 above target—again nearly twice as much—is not penalised. That is why Labour Manchester, at 2 per cent. above target, is penalised while Tory West Wiltshire, at 19 percent. above target, is not.

Not only are the victims of these penalties selected quite illogically but the penalties imposed upon them are equally illogical. Merseyside, convicted in this report of an overspend of £36,356,000, is fined £5,140,000, a punishment 14 per cent. the size of the crime. Bedfordshire, shown to have overspent by £4,778,000, is in this report fined £4,194,000, a punishment 88 per cent. the size of the crime. I should add that Merseyside is a 23.5 per cent. overspender while Bedfordshire's overspend is 3.3 per cent. Bedfordshire is being punished six times as severely as Merseyside for a crime one seventh as great. All overspenders are equal, but some are 42 times more equal than others.

Bedfordshire escapes lightly compared with Watford and Adur, to take two examples of local authorities which, believe it or not, face a grant penalty larger than the amount of money they are accused of overspending. In the case of Watford, the fine is 53 per cent. higher than the overspend. The authorities I have mentioned are advised to count their good fortune compared with certain others which are being fined for overspending when they have not overspent a penny even according to the Secretary of State's own criteria. One local authority is North-West Leicestershire upon which this report imposed a grant penalty of £120,000. North-West Leicestershire has done its accounts, and when all the returns had been entered for the financial year covered by this report it was found that it actually underspent by the small but sufficient sum of £77. Far from congratulating the prudent authority on its economical housekeeping, the Secretary of State is penalising it because its budget was above its target even though its outturn expenditure was not. So bizarre is the Secretary of State's approach to finance that he is far less interested in what this authority actually spent in September 1982 than in what it thought it would spend in July 1981.

Mr. Heseltine

Had the right hon. Gentleman listened to my speech, he would have heard me say that that is exactly what I was not going to do.

Mr. Kaufman

I shall come to what the right hon. Gentleman said he would not do. The right hon. Gentleman had better be careful about saying what he is not going to do. This report does it. This report is taking money away in holdback from the North-West Leicestershire.

The right hon. Gentleman slipped in the claim that he is going to put it right, but in a moment or two I shall explain what the right hon. Gentleman's version of putting it right means to the ratepayers of north-west Leicestershire. The right hon. Gentleman is less interested in what that council actually spent than in what it said 18 months ago it would spend, even though it did not spend it.

The chief executive of north-west Leicestershire has complained to the Department of the Environment but he has given the brush-off in a letter from a junior civil servant which that junior civil servant did not even bother to sign himself. It says that north-west Leicestershire has been penalised by what the Department of the Environment likes to call "the latest consistent information". I allege nepotism in the Department of the Environment. Any official who writes absurd rubbish like that must at the very least be a relative of the Secretary of State.

The House has become somewhat weary of the Secretary of State parading around and proclaiming what he is doing for Merseyside. One of the most deprived local authorities in Merseyside is Knowsley. The Secretary of State makes a tremendous point of telling us of all the initiatives he is taking to help Knowsley. I will tell the House what his initiative in this report is doing for Knowsley. The Secretary of State is fining that authority the massive sum of £1,577,000 in rate support grant holdback, yet Knowsley should not be fined at all. It took careful steps to qualify for the GREA amnesty and it has succeeded in cutting its expenditure below the GREA. Far from being fully protected, as the Secretary of State claimed this afternoon, and far from being pardoned, Knowsley is being punished.

This is what the borough secretary said in a letter to the Secretary of State: You will appreciate the efforts made by my Council to both maintain the existing level of services in the area and to improve the environment and encourage employment initiatives, with the support of the Merseyside Task Force. Obviously the severe restrictions imposed by Central Government on local authority expenditure and the prospects of incurring grant penalty restricts the Council in meeting the needs of the area. The further loss of revenue by the withholding of grant and the resulting deterioration of cash flow pending the re-determination of grant entitlement later in the year only serves to exacerbate the Council's financial position in the current year". That is what the Secretary of State meant when he intervened a moment ago. In the case of north-west Leicestershire and Knowsley, he intends to refund the grant penalty when he asks Parliament to approve a further supplementary report on rate grant support about a year from now.

For a year, those authorities will be deprived of large sums of money to which they have a legal right. For a year, they will lose the interest accruing to those sums of money. When they eventually get the money, it will have been devalued by a year's inflation.

Mr. Den Dover (Chorley)

The right hon. Gentleman said that local authorities had reduced their spending from 25 per cent. to 23 per cent. of total public expenditure. Is he counting only current expenditure, in which case the Secretary of State is to be congratulated on reducing it, or is he combining current with capital, in which case the reduction is due to the capital reductions?

Mr. Kaufman

I advise the hon. Gentleman to refer to the answer that the Chancellor of the Exchequer gave in the House last week. Whichever way it goes, the Secretary of State is not to be congratulated on having reduced this expenditure, because among other things he has said that the outcome of his holdback exercise has been that on aggregate the budgets have been increased.

What is happening to authorities such as north-west Leicestershire, Knowsley and others that I shall mention is all due to the fact that the Secretary of State's legislative juggernaut is beyond even his own control. Yet the system whereby the Secretary of State takes away large amounts of money in grant penalty on the promise that in a year's time he may refund it is the system that he boasted today was "sophisticated and equitable". Truly, the sorcerer's apprentice has gained possession of the book of spells and incantations.

It is not simply individual authorities that have been made to suffer in this way. The Secretary of State promised—he repeated it this afternoon—that expenditure as a consequence of the riots in the summer of 1981 and of the severe winter a year ago would be excluded from target and exempt from penalty. But paragraph 20 of the report tells us that he is no longer doing so. Instead, in a year or so, he will introduce a further supplementary report when, as he puts it, audited information is available for all authorities". With the right hon. Gentleman it is a case of "Heads I win, tails you lose". As to removing penalty from north-west Leicestershire and Knowsley, which tell him that they are underspenders on their expenditure figures, he retorts that he prefers to deal with them on the basis of advance estimates. However, when it comes to relieving the other authorities of penalties, he tells them that he cannot rely on advance estimates and that he must await final expenditure figures.

All authorities, be they underspenders, overspenders or GREA exempt, and whether they provide final expenditure figures or rely on their budget submissions, lose grant as a result of paragraph 14(2) of the report, to which the Secretary of State did not refer at all, and which steepens the slope of the taper. That is the mechanism that reduces grant automatically when authorities spend beyond the threshold above their GREA. This device will increase by 7 per cent. the amount of grant loss that is automatically imposed on authorities that spend above the threshold.

Nor are these matters simply formulae of abstract mathematics that are meaningless to ordinary individuals. All these pettinesses, algebraic equations and breaches of faith have a devastating effect on the quality of local services.

The Secretary of State says that on these matters the Opposition provide the House with sob stories. I shall provide the House with two. I shall give two examples from the 21 Conservative-controlled authorities that have failed to slip through the net of GREA exemption.

East Sussex, scarcely a bastion of Socialist profligacy, is increasing the price of school meals and meals on wheels. It is reducing the number of home helps. It is cutting youth services and adult education. It is reducing cleaning standards in schools. It is cutting fire services. It is closing old people's homes. The Secretary of State would call those scare stories, but the fact is that, while adopting all these damaging measures, East Sussex is suffering grant holdback of £1,807,000 for an overspend of £1,432,000.

The Secretary of State's own county of Oxfordshire is another authority which, according to the right hon. Gentleman is profligate and whose assurances are worthless. Oxfordshire is scrapping child guidance specialists from school psychology services. It is getting rid of the school museum service. It is reducing the number of home helps. It is closing children's homes. It has closed old people's homes where the average age of the residents is 86. At the same time, it is reducing domiciliary care. It is cutting meals on wheels services and increasing the charges for them. That is the profligacy and incompetence which the Secretary of State has denounced in local authorities that are overspending.

This evening, when the right hon. Gentleman and his colleagues vote to approve the report, they will be voting to take £1,526,000 away from Oxfordshire in grant penalty for a £1,270,000 overspend. The Secretary of State is punishing Oxfordshire because he says that it has failed to provide sensible management. The Opposition certainly agree that the details I have given do not provide evidence of sensible management, but our reasons are very different from his.

Mr. Stephen Ross

Is the right hon. Gentleman aware that other counties such as Kent have tried to do away with the school meals service and have found themselves in trouble with industrial tribunals? In fact, they cannot dismiss their school meals supervisors and workers.

Mr. Kaufman

Indeed. One of the problems we have always anticipated is that local authorities that have been forced by the Secretary of State to make cuts will not be able to fulfil their statutory duties if they do so.

It is no wonder that local authorities are looking forward with the keenest anticipation to the forthcoming Cabinet reshuffle in the hope that the Secretary of State will be removed from the Department of the Environment. There are press reports that he is likely to become Secretary of State for Defence. It is undeniable that if that takes place, and if he treats the Soviet Union in the way that he has treated our local authorities, Mr. Andropov will speedily be hoisting the white flag from the Kremlin walls.

It will be a grimmer prospect if he treats our Armed Services in the way that he has treated the local authorities. If so, presumably he will impose spending targets on every regiment, ship or RAF squadron, with penalties for those that fail to conform. If they exceed their targets while they are in action, presumably they will have to stop in the middle and negotiate an armistice. The Army will be required to sell barracks at discounts of up to 50 per cent. to Service men with more than three years' accumulated service. The Royal Engineers will be required to achieve a 5 per cent. rate of return on an annual basis or be closed down.

Each of our Armed Services, before going into action, will be required to invite tenders from private mercenaries to see whether they can do the fighting more cost effectively. All Service men, whether they travel by tank, aeroplane or ship, will have to pay the full economic fare with no subsidy. In line with his spend, spend, spend policy, the Secretary of State will instruct all commanding officers to examine their files to see whether they have any war plans. If so, they will be asked to fight the wars immediately, provided that they are won before the end of the financial year, and provided also that they have no current expenditure consequences. This will be known as the fight, fight, fight policy.

Any commanding officer who refuses to obey will be failing in his fiduciary duty. He will be surcharged with the cost of any military action that the district auditor considers he has brought about unnecessarily and he will be banned from being killed or wounded for five years.

If the Secretary of State for Defence were to treat our Armed Forces in that way, he would be tried for treason. But that is precisely the way in which the present Secretary of State has been treating our local authorities, men and women, elected councillors of all parties and officials, and their work forces, who seek to serve their communities and are harassed and penalised for so doing. That is why it is time that the Secretary of State left the office which he has filled with so much discredit for almost four years. Ft is why we shall be voting against the Government tonight.

6.51 pm

Mr. John H. Osborn (Sheffield, Hallam)

I will not follow the comments of the right hon. Member for Manchester, Ardwick (Mr. Kaufman) and his cynicism towards my right hon. Friend the Secretary of State because many people look to my right hon. Friend and, indeed, any successor in his post, to relieve them of intolerable burdens. The speech of the right hon. Member for Ardwick will have given them no consolation.

I shall try to be fair. The problem for Western society is "How does one make ends meet?" We all want everything, but sooner or later we must pay for it. That applies within a nation and within the regional sectors of that nation. Coming as I do from Sheffield it is to me a much more penetrating issue not only in the Sheffield district council but in South Yorkshire, which my right hon. Friend has mentioned.

There are inherent dangers in a high level of public expenditure. I shall not comment on the consequences of the Clegg report and factors outside it. I shall bear in mind that such recommendations lead to inflation and the high interest rates that have been devastating to industry. I have discussed these issues with the International Monetary Fund and other organisations as a member of the Council of Europe Committee for Economic Affairs and Development. The tragedy in all Western countries is that while the backbone for raising funds for public expenditure—the private sector of industry—has contracted, the public sector both in local government and nationally has been as avaricious as ever. This has been one of the problems facing Britain. Twenty-five per cent. of total public expenditure has been local government expenditure. Because, on the whole, this has been a heavy and a rising amount my constituents want a reduction in the levels of public and local authority expenditure.

I shall support the order. The background statement to the document says: Since taking office, Ministers have repeatedly stressed that a reduction in the volume of current expenditure by local government is central to the Government's overall economic strategy. That lesson is understood by my constituents in Sheffield.

The response from local authorities, however, has varied. The majority have reduced their expenditure at the rate suggested; some have reduced their expenditure, but at a slower rate; and others have actually increased expenditure. Because of the extent of the overspending, the Secretary of State proposes to withhold an amount of block grant from local government. It is an excellent report. The right hon. Member for Ardwick had his fun dealing with the mathematical formulae. It must be accepted that there always has been a complicated formula on the basis of which all Governments have for decades worked out how much the rate support grant should be. There is an interesting comment in the First Report of the Select Committee on Statutory Instruments. It states: The amount of block grant an authority receives is the difference between their total expenditure and their local contribution. An authority's total expenditure is broadly the expenditure they have to meet out of their rate fund less their specific and supplementary grants … The local contribution is the amount that the authority is assumed to raise from their ratepayers to finance this expenditure. The Secretary of State referred to the areas where an increase of 4 per cent. had fallen on the ratepayers. My constituents in Sheffield expect to see some action on this front from a Conservative Government. The position in Sheffield is not only making the Government look insensitive and silly but is causing some consternation among the Conservative supporters in the city, whether voters or members of the Conservative Association.

Sheffield has had a Labour-controlled council for about 50 years—with the exception of one year under Alderman Harold Hebblethwaite in 1968. Socialism in Great Britain and in other countries has tended to be hostile to industry and has regarded it as there to be fleeced, although the record of Socialism in town planning—I have in mind the Labour Alderman Jim Sterland—has aroused admiration from many visitors and citizens.

In recent years there have been different pressures on the Labour Party constituency and ward associations. Moderate Labour leaders have been replaced with those who support the Tribune group, Marxists and other extremists. If some moderate councillors have not been reselected, so have the right hon. Member for Sheffield, Park (Mr. Mulley) and the hon. Member for Sheffield, Heeley (Mr. Hooley) been equally unfortunate. Four or five years ago, the Sheffield city council caused concern to a Labour Government under the former Prime Minister. I attended a number of meetings about the complicated formula for industrial areas such as Sheffield. There is undoubtedly a divide in this industrial city.

What has been the cause? I have discussed this with Councillor Heslop, the Conservative leader on the Sheffield city council. Over the years Sheffield Socialists have pursued many policies. I should like to highlight two of those. First is the council housing programme. This has meant cheap rents and heavy subsidies from the rate fund or central resources. There are about 90,000 council houses in the city. The sale of council houses might reach 2,000 immediately, and the maximum would not exceed 5,000 or 5 to 5½ per cent. of the total in due course.

The result has been that too many of the citizens of Sheffield have become accustomed to cheap and subsidised housing—not recently but over decades. The concept of paying an economic price for housing has eluded them. Too easily they turn to local Socialists to give them "Owt for nowt", an expression understood in Yorkshire. It follows that the majority of voters do not expect to have the pride of ownership. Therefore the housing account in Sheffield has had to be topped up.

I can list other problems in Sheffield at the moment. It appears that the rate increase could be about 10 per cent. Local authorities now depend on the statement of the rate support grant and have to make their own decisions of what the cost of housing will be. Sheffield has chosen to spend vast sums on reorganising its housing administration. That cost will fall on the ratepayer and is of concern to Conservative councillors.

The Transport Bill is before the House at the moment. Public transport is a south Yorkshire problem, but falls on all the district councils, including Sheffield. As the secretary of the Sheffield chamber of commerce put it, "Do you want cheap bus fares or jobs?" The figures are well known to hon. Members. The income from fares in south Yorkshire is about £15 million. The costs are about £75 million, and therefore the subsidy has been about £60 million. As a result of the Transport Bill, that sum will fall to £40 million. Those who live in rented houses expect Socialists to keep the rents cheap. Similarly, wage earners, some of whom live in council houses, are used to the subsidies that have for decades been given to public transport. The majority of the voters who live in council houses and who use buses are being subsidised by industrial ratepayers and perhaps by those domestic ratepayers who live in residential areas and who own cars. They can easily be drawn into perpetuating an anomaly in local democracy. Too many—the majority—are given a subsidy for housing and transport at the expense of others, including industry and commerce, which from now on will be at the expense of their jobs.

Mr. Stanley Newens (Harlow)

Is the hon. Gentleman really saying that low fares and rents have damaged Sheffield? He attributes iniquities to the Tribune Group and to the Left wing, but he does not say that the Government's policies have done far more to damage industry in Sheffield and in most other parts of the country than any burden on the rates.

Mr. Osborn

I rather wish that I had not given way, because that is the sort of poppycock that unfortunately disturbs people. The fact is that Sheffield is broke because people are not used to paying their way by paying an economic price for public transport and council housing, for instance.

Ratepayers object to the waste of money. I have before me a pamphlet entitled "Why 140 Local Authorities Believe In Being Nuclear Free". It is available in Sheffield city libraries. I wrote to the Minister responsible and the Under-Secretary of State Lord Bellwin replied saying: whether expenditure by local councils on propaganda campaigns of this type is really likely to persuade the public at large that they should be given even greater freedom to spend public money, I must leave it to you to judge". The subsidisation of public transport gives rise to concern, because ends do not meet. I have received many letters from industrialists, from the chamber of commerce and from the chamber of trade. I have received letters from those who run industry. They are on their knees. The report offers them the hope that the city will not be extinguished because of the profligate expenditure that is being undertaken. The Under-Secretary of State again wrote to me as follows: I note the extreme concern … about the level of rates in Sheffield. I am sure I need not repeat to you our determination to secure reductions in the level of local government expenditure, by increasing the pressure, through the grant system, on authorities like Sheffield, to reduce their expenditure. Of course I realise that Sheffield is not inclined to heed our call for economy and has in the past merely passed the grant penalties it has incurred by its irresponsible spending decisions on to the ratepayer. However, I believe our strategy is the right one … I very much sympathise with those who are having to bear the cost of Sheffield's determination to defy the Government". Another letter referred to South Yorkshire county council and added: you can see only 46.8 per cent. are ratepayers or potential Conservative voters. It is a situation of a dictatorship". Another constituent of mine referred to a circular entitled "How You Spend Your Money" and said: I … find it very hard to believe that domestic rates are only worth 3 per cent. of one's weekly/annual expenditure—we reckon it is much nearer to 20 per cent. and I'm sure many people living in Hallam constituency must feel the same. I know the Conservatives are at present fighting a losing battle with the local council on the issue of rates". Even the chamber of trade has written to me about the fact that the local authority has blamed the government for the burden on commerce and industry. Those letters are encouraging. However, I have received a letter from a branch chairman of the Conservative Association. He wrote: The most important thing which seems to worry people here is the high rates. As you know in the Broomhill area we still have a mass of elderly people who are distressed at the fact that the Government seems to be doing so little about the rates system. Last night, the Select Committee on Education, Science and Arts had a chance of questioning the Secretary of State for Education and Science. Sheffield was often cited in relation to the cost of the project run by the Manpower Services Commission to give everyone who leaves school a place in the scheme. There was concern about the cost to local authorities. This is a question of the chicken and the egg. High rates will drive away industry. Indeed, industries are driven away daily in Sheffield. In addition, high rates are a contributory factor in the rising level of unemployment and perhaps in the collapse of the steel industry.

I welcome the schemes put forward by the Secretary of State for Employment but like the chicken and the egg, high rates demand high expenditure to deal with their consequences. My constituents are concerned about that. The local authority in Sheffield has never been amenable or kind to industry. Recently I have had to advise several companies on whether they should stay in Sheffield or go somewhere else where they will be treated better and where the rate burden will be less. One or two have had to follow my example when I found it difficult 30 or 40 years ago to develop industry inside the city boundaries when I embarked on industrial development. They have had to look elsewhere and that is having an even worse impact on the city.

Like my constituents I welcome the report. My right hon. Friend the Minister for Local Government and Environmental Services wrote to me on behalf of my right hon. Friend the Minister as follows: Having carefully examined the 1,100 or so responses we had to the Green Paper, 'Alternatives to Domestic Rates' we are urgently studying the complex issues involved. I hope we shall be given some intimation of when that review is likely to be completed. Unless city councils such as Sheffield city council and county councils such as South Yorkshire county council have their profligate expenditure controlled, the Prime Minister and her ministerial colleagues will find that many of their supporters have gone under before the next election.

7.8 pm

Mr. R. B. Cant: (Stoke-on-Trent, Central)

I have been present at some very thinly attended debates during the past 17 years, but it was only as I sat here in solitary splendour at the beginning of the debate that I appreciated what Nye Bevan meant by being sent naked into conference chamber.

Local government is such an exciting subject, I do not know why it is impossible to find more hon. Members from both sides of the House who are willing to discuss an arm of government that makes such a massive contribution to the welfare of the British people. Perhaps there is a financial threshold. Until we reach £20 billion of current local authority expenditure, hon. Members may not take the subject seriously. On Thursday I assume that the Secretary of State will announce that we shall reach the magic figure of £19 billion plus £1 billion. Perhaps that will transform the situation.

It is difficult to follow my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), who made another devastating onslaught on the Government. He has a wonderful literary knowledge and massive intellectual insight, which gives every one in the Chamber, apart from yourself, Mr. Deputy Speaker, an inferiority complex. My contribution will be at the lower level of the humble local government practitioner. I have been involved in local government for 30 years, but I still do not understand local government finance. That is pardonable in the light of some of the formulas read out by my right hon. Friend the Member for Ardwick.

The Secretary of State talked about the fact that local authorities knew what was coming and should have planned their expenditure accordingly. He said that they could see the trend as long ago as 1979. The Secretary of State should look at the evidence—I am not talking about the people in the esoteric tower blocks in Marsham Street—from the grass roots and listen to the councillors, not just Labour councillors but many Tory councillors as well.

I have tried to jot down a history of what happened. I shall be parochial. In Staffordshire we budgeted for 1981–82. The Tories cut expenditure by £10½ million. A letter was received from the Department of the Environment about three weeks later, on 28 January, which gave new expenditure targets. It meant further reductions of £9½million. During the Staffordshire county council debate, the Conservative leader said that it was far too late to do anything about the budget that was being discussed. That was a perfectly reasonable reaction, even from a Tory, but he must have felt extremely disloyal to his Government.

In June 1981 the Government announced their proposed penalties and called for revised budgets. By that time the Labour Party was in office and the county of Staffordshire was about £9½ million below target. We were told that a penalty of £6 million would be imposed unless we could get ourselves off the hook by cutting expenditure in some way. We reviewed the budget and found it impossible to introduce the major policy changes necessary to make further cuts of £9½ million within time. We made a reduction of about £2 million and explained to the Secretary of State why we could not do better.

In September 1981 the Government extended the exemption from the penalty to local authorities whose expenditure was at or below their grant-related expenditure assessment. Alas, we were still £8½ million in excess of our GRE.

Excessive changes of mind are a characteristic of Government policy. One never knows what the Government will do next. Let us leave elected representatives out of the picture altogether. The policy changes are confusing and bewildering for local authority senior executives who have been employed for over 30 years. We have to respect their reaction. Far too many of them are seeking early retirement as a result of the Government policies, which are no doubt dictated by Whitehall civil servants. Such early retirements are unprecedented in local government history.

In December 1981 the county council was notified that the GRE was to be increased by £4 million. The Minister of State wrote to us on 11 December and drew our attention to the revision. He pleaded with us to do something as we were only 1.2 per cent. above our expenditure level. We responded and became exempt from the penalty. That 12-month history of local government finance is a mess. There were changes of mind, principles and regulations. Local authorities did not know what the next step would be

The Minister is a reasonable man. We know that he is just marking time and is destined for greater heights. If this country must have a Tory Cabinet, I believe everyone would agree that he should be a member of it. However, while he has his present job, he should bring some of his excellent common sense and reasonable philosophy to bear on some of the nonsense that masquerades as Government policy.

It is one thing for Ministers and civil servants who sit in offices and speak in the Chamber to talk about overall cuts and global sums. It is quite a different thing if one is at the other end of the spectrum, down in the shire or the borough carrying out the policies. I know that there are some Labour authorities, and no doubt some Tory authorities when the Labour Government are in power, that are so ideologically opposed to central Government that as a matter of principle they would not do anything that the Government wanted. There are some moderate Labour authorities that are willing in certain circumstances to take action. They are prepared to go some way towards co-operating when the Government announce their policies and cash limits. The local authorities get on with it although it is not always easy.

Let us assume that one is, like myself, a chairman of an education committee. The Government say that expenditure must be cut by so many millions and the share of the Staffordshire education committee is x millions. I know civil servants believe that in the towns and shires a magic wand is waved and the cuts are made. They believe that the political will is all that is required. That is absolute poppycock and nonsense. One has only to study the practical problems. With falling rolls it is argued that one can get rid of teachers. I should like to have placed before me an example of an authority that has actually sacked teachers. I have been present when the top echelons of the National Union of Teachers have demanded an undertaking that no teacher shall be sacked. Whatever the institution or department—NALGO is another example—it is extremely difficult.

The Minister of State will say that in the interests of financial probity, to achieve the cuts and to avoid the penalty, the teachers should be sacked and a strike faced. There are, however, severe limits on the power that local authorities can exercise to overcome some of the difficulties. We have made considerable economies through the redeployment of teachers. By the end of this year, we shall have reduced the teaching establishment by 800 teachers.

Another aspect of the matter—I refer again to education—relates to the circulars received from the Secretary of State for Education and Science. There was the famous circular that stated that as school rolls were falling, schools should close. It is all very well to say that schools should be closed. The mechanics are forbidding. One has to serve all sorts of notices and stick bits of paper on walls, posts and buildings. There has to be a long-drawn-out consultative process. This does not take a couple of weeks. It can last anything up to four months. After that, the Secretary of State may say that he intends to give people another two months to consult him. A further two months may elapse before the Secretary of State makes up his mind. It is not, of course, the Secretary of State making up his mind. It is the civil servants. As the Minister of State must appreciate, the civil servants are involved in a new exercise and a new dimension to their activity to which they are not accustomed. They have to learn their trade.

We are not talking about pennies. We are talking about millions of pounds. It is all very well the Minister suggesting cuts. The Government have to appreciate the difficulties implicit in all the procedures that are required to implement cuts. I wonder whether the Minister of State, or the Department of the Environment, ever hold discussions with other Departments about the ramifications of the cutting exercise. I wonder whether they discuss clearly and carefully whether the time scale is practical. I do not suppose that they ever speak to other Departments. I wonder, for instance, if they speak to the Department of Industry.

We are being urged, as a local authoriy, to spend more money on computers and microelectronics. I am probably, Mr. Deputy Speaker, going beyond the terms of the debate. I am, however, trying to explain why Staffordshire county council finds it difficult to achieve the level of economies or, to use the euphemism, the savings, that would enable us to escape the penalty. It is not only a question of making savings. Enormous pressure is put by other Departments on local authorities—I have cited the Department of Industry—to spend more money. What sort of response do we make? Do we say that the schemes of the Department of Industry and its bait of half-price computers are excellent but that we have been told by the Secretary of State for the Environment that we have to cut expenditure?

Where is the synchronising of policy that will bring about reasonable cuts? There are difficulties about doing the job even when one has shown that one is willing to put into operation policies that will lead to the sort of savings that the Government want. The Secretary of State does not appreciate the difficulty of achieving certain savings when the objective has to be realised within a short time. There are a large number of examples that could be given. I make an appeal for greater clarity in defining the objectives. When this does not happen, there is massive confusion.

Conservative Members laugh about the problem, but if they could appreciate, from the other end of the operation, just how ridiculous some of the changes in policy appear not only to officials and elected representatives but to the public, they would be surprised. We read constantly about the need for cuts, savings, and so on. Suddenly the Secretary of State gets up and tells the local authorities that they are grossly underspending and should spend more. People wonder what this is. Then we get some of the jargon.

Local authorities are told that they are underspending not on current account, which is where they are overspending, but on capital account. In particular, they underspend on capital account because they are not spending capital receipts. Local authorities then have to make a tremendous effort somehow or other to find projects on which to spend money before 31 March. People begin to wonder whether the Secretary of State has gone mad or whether there is a reasonable explanation of the exercise, or both.

A week later there is another announcement in the financial press to the effect that the Secretary of State has been overruled by the Treasury. All the projects brought together by the local authorities to spend their money on to appease the Secretary of State have to be cut in half as the Treasury has said that only half the capital receipts can be spent. Somehow, local government survives the Secretary of State.

I shall not put my opinion into the words that my right hon. Friend the Member for Ardwick would use, partly because I am too polite and partly because I cannot think of the appropriate words and phrases. These are points that the Secretary of State should take up. He will say that he can point to some good loyal Tory authorities that have managed to make the cuts. However, is it worth it? Is it worth causing all the trauma that arises when one is determined to sack all the kitchen ladies, get rid of school meals, disrupt the teaching staff and 100 other things?

On Thursday, the Secretary of State will announce that he is cutting the rate support grant from 56 per cent. to 53 per cent.—a cut of 3 per cent. I sometimes think of the story now circulating about Brezhnev, who has gone to Heaven. He meets Peter, Tsar of all the Russias. Peter asks him what it is like now in Russia and Brezhnev say s "We have the largest army in the world; we have the best intelligence service; we have a submarine service that will guarantee that there is always complete security for the Russian people; and vodka is 3 per cent. stronger." Whereupon the Tsar of all the Russias says "Three per cent.? Was it worth a revolution?" The Government should address themselves to that point.

Before I go on to my peroration, I wish to clear up the point that forms my main reason for addressing the House, and which was referred to by the Secretary of State. I thought that he had made a concession. However, where local authorities have made savings, or cuts, to the extent that this will get them off the hook of the penalties, they are still being penalised because they have not, in the case of Staffordshire county council, got the money.

This is a cri de coeur from the county treasurer of Staffordshire. It is most inequitable for the council to have to wait a full year before its position is recognised. Our annual returns showing the final position were sent to the DOE and the district auditor for certification in October 1982. If no concession has been made—and I would rather believe the pessimistic view of my right hon. Friend the Member for Ardwick than the Secretary of State—we have nothing less than legalised robbery. We have fulfilled our part of the bargain, we have got off the £6 million penalty, but we shall not get the money, although that is the wrong way to put it, for another year. This will cost the Staffordshire ratepayers £½ million in interest. That is unjust.

We have been down, as no doubt other local authorities have been, to see Lord Bellwin. I thought that he was making a sympathetic response and was moved by our appeal. Unfortunately, I was sitting close to him and in the wide margins of his brief I could see the words "resist at all costs" in red. I hope that the Minister will think about his policy again. These amounts are peanuts to the Government, but £½ million extra in interest charge for a local authority is a serious item of expenditure. If nothing else comes out of the debate, the Minister should concede this point.

I am becoming a bit sick and tired of the way that local government is blamed every time there is some sort of economic crisis, whether it is a run on sterling, the deindustrialisation of the nation or the excessive rates of interest. Everything that happens is supposed to be a consequence of something that the people in local government are doing wrong. They are always tremendous spenders and excessive employers of labour.

However, as the Secretary of State conceded, the one remarkable thing is that the current expenditure of local authorities has been what The Economist called this week "stubbornly constant" during the Prime Minister's period in office. Nearly everything has been "stubbornly constant". I do not see how that can be interpreted as a runaway financial wagon. As the Secretary of State conceded, manpower employed by local authorities has decreased—he did not use a figure by 4 per cent. That is not a bad record.

The hon. Member for Sheffield, Hallam (Mr. Osborn) brought here the heartrending complaints of the industrialists to the effect that rates are the cause of all their problems. The most significant thing about local government finance is the shift from the taxpayer to the ratepayer. The effective rate of rate support grant has gone down from 65 per cent. to 50 per cent. It is that shift in the burden of taxation on to the back of the ratepayers that is more significant in this context than anything to do with local government spending.

Mr. John H. Osborn

Will the hon. Gentleman bear in mind that ratepayers are the providers of jobs in Sheffield, in the form of shops—one shop in Sheffield, called Schofields, left the city for that very reason—commercial enterprises and business? I agree with the hon. Gentleman that the ratepayer is the provider of jobs, but the ratepayer cannot stand it, and that is why I spoke earlier this evening.

Mr. Cant

The hon. Gentleman would get his reply if he were to read the second leader in the Financial Times of, I think, 12 July this year, although I cannot remember the date exactly. I do not know who wrote the article. The point is clearly made that this attack on the rates by industrialists is a hardy annual. It comes when other forces in the economy depress profits, and rates are then attacked by business men. It has nothing to do with the real problem.

Mr. Greenway

The right hon. Member for Manchester, Ardwick (Mr. Kaufman) delighted the House earlier with quotations from Oscar Wilde, including Lady Bracknell, who also said in the "Importance of being Ernest": Ignorance is like a delicate exotic fruit; touch it and the bloom is gone. Ignorance on this matter is quite inexcusable. In his extravagant assertions, is the hon. Gentleman unaware of what the London chamber of commerce has written about the effect of rates on jobs? Is he also unaware of what has been said of Sheffield and other cities, including Stoke-on-Trent, that every time a firm's rates go up by £5,000, a job is lost. Those are hard facts.

Mr. Cant

I prefer my ignorance to that wild assertion. It is pathetic how all the chambers of commerce now are writing to Members of Parliament trying to indict local authorities, as the main contributors to their welfare. Let us look at the state of British industry and commerce. If the rates are the cause of their present malaise, I shall go back to school and learn some different lessons.

Even if the Minister of State and the Secretary of State get the average rate increase down this year, as is generally expected, to 9½ per cent., the fantastic system that they have developed through grant-related expenditure and so on, produces differences in the outcome, above and below the average for different authorities, which are creating much heartache for councillors, ratepayers and others. I would not say "Come back multi-regression analysis all is forgiven", but if this is the end product of the new system that has been devised, which was intended to have the attractive qualities of simplicity, equity, and so on, the sooner we get another Government and another system the better.

7.44 pm

Mr. Tony Durant (Reading, North)

I am sorry that the right hon. Member for Manchester, Ardwick (Mr. Kaufman) is leaving the Chamber, because I wish to allude to his remarks about the Armed Forces and their budgetary principles. When his party was in government and a few of us visited a regiment that had been amalgamated by his Government, we were given a short display of armaments and so on. The commanding officer told us that the amount of ammunition that he had just expended was his allocation for the year. That was under a Labour Government. I am not against that type of control, but it should be understood that the forces have tight allocations, just like anyone else. We should not give the idea that the forces have a free hand in this respect, because they certainly have not.

I wish to say a few words about local government expenditure in relation to a management concept. One of the difficulties is that we have had a long period during which local government has had generally an increase in expenditure. For a long time both political parties have encouraged local government to spend more on this, that and the other. The officials of whom the hon. Member for Stoke-on-Trent, Central (Mr. Cant) spoke have been used to an atmosphere in which it was permitted to continue to increase spending. The Labour Party began the process of checking that trend. Anthony Crosland, in his famous speech, said that this continual upgrading of expenditure could not go on. However, the Labour Party did not sustain that policy. It sustained it for a short time, but then it weakened and allowed the increase to go on.

The problem is that local government is not used to tight financial control. That is a new phenomenon. The hon. Member for Stoke-on-Trent, Central was rather withering about commerce and industry. He also said that it was difficult to change direction, that it took time, and that things could not be done overnight. In commerce and industry one often has to do things overnight. One often has to meet all night to make a budgetary decision, and take action on it. That is what it is all about. One cannot just drift on day after day saying "We have to consult this person and that person".

I agree that Governments are responsible in part for the trouble. The hon. Gentleman told us of the difficulties in trying to close a school. We should consider that. The Government must grasp the nettles. If we are to have tight financial control, we shall have to streamline procedures. I accept that we have made it more difficult to do that, but we must accept that it has to be done and we must have better management in local government.

The chambers of commerce, which have been mentioned several times in this debate—sometimes witheringly, and sometimes with encouragement—have offered to put in people to look at the budgeting of local authorities and give advice about how to control expenditure. In some places the process has started, with quite fruitful results. In other places the offer has been spurned. Nevertheless, it can be done. In my opinion, the Government must get a grip on all this public expenditure. We have not gone even halfway yet.

Mr. Arthur Lewis (Newham, North-West)

I agree with the hon. Gentleman, but, no matter which party is in power, central Government are the worst offenders of all. Local government was not responsible for the Property Services Agency, which lost millions and millions of pounds. No one was punished. Every day, one can read about millions of pounds being wasted by this "efficient" Administration. Never on your life. The blame is not all on local councils.

Mr. Durant

I support the hon. Gentleman's argument, but I shall not pursue the point because we are debating local government and I must keep to the point. I have my views on the PSA too. I accept his point that the Government are a principal offender in this matter and that local government overall has not had a bad reputation for controlling expenditure.

To roll back local government expenditure is much tougher and more difficult. It requires even tighter management control than in the past. We cannot say complacently that all is well, because it is not. We can all think of instances of wasted expenditure. It is the little sums added together that cause part of the trouble. The £250,000 here and the £250,000 there soon add up. We must look at the whole question of management.

My local authority—Reading—has incurred a £600,000 cutback. The leader of my council says that if he were in control he would not have incurred that penalty, that it is due to the Labour and Liberal groups which have pushed through stupid schemes. In Berkshire, where nobody has overall control, there has been a 27.5 per cent. rate increase. I interrupted my right hon. Friend the Secretary of State's speech today to point that out. That figure was promoted by the Liberals. There is no way that they can get away from it because it was their stated aim. The Conservative Party's figure was 13 per cent.

Mr. Arthur Lewis

I know that the hon. Member for Reading, North (Mr. Durant) is a fair and honest man and that he knows the rules of the House. However, it is not the usual custom to attack hon. Members in their absence. There is not one Liberal Member here. The hon. Gentleman should be fair and withdraw his remarks. He should say that had the Liberals been here he would have attacked them. He should ask them to come on occasions to hear such attacks.

Mr. Durant

I take the hon. Gentleman's point. However, I raised that point when a Liberal Member was present, so I am not saying anything that I have not said already to them.

I want now to talk about the effect of the 27.5 per cent. rate increase in Berkshire. My constituency is a comparatively prosperous area in Britain. We have our problems. We have unemployment, but, in comparative terms, it is not bad in my area. It is in the famous Thames Valley which is supposed to have the silicon chip, computers and so on. However, it is interesting that several fines that have considered moving to Berkshire from central London, for various reasons such as rates, staff costs and so on, are looking further down the valley towards Swindon as a result of that 27.5 per cent. rate increase. Rates have a bearing.

The headquarters of the Metal Box Co. Ltd. is in my constituency. That company's rate payment, for all its factories put together, was £9 million last year. I do not know this year's figure, but it is probably even more. That is not a small sum which can be spurned. It is a lot of money for a firm to find. We should not say that industries can meet such figures themselves. It is a serious matter for them. It is an overhead from which they get no relief. It must be passed directly on to customers, along with inflation costs and so on, when at the same time they are trying to compete in a world market. We cannot dismiss such matters lightly.

Mr. Cant

My point was that industry and commerce have been brought to their knees not by rates but by all the other aspects of Government policy. However, when such companies are on their knees they will feel the burden of rates.

Mr. Durant

I trust that the company to which I referred is not on its knees. I should be appalled to hear that. Therefore, I deplore the hon. Gentleman's approach. That company is not on its knees, but it has been to see me about the enormous sum of money that it has to pay in rates, which cannot be set to one side. It must be borne in mind when the company is considering its future planning.

Another major company, whose name it would not be wise for me to mention, came to see me about the future of rating because it was considering moving to my area. That company considers rates to be an overhead. Take the example of a corner shop which helps widows or families who need only a few goods, and people who have difficulty in travelling into town. Such shops might employ only one man and his wife and rates would be an enormous part of the overheads. Apart from electricity and gas, I imagine that rates would be the biggest item of the overheads of such a shop. One only needs to consider the disappearance of the corner shop to appreciate the importance of rates to the shopkeeper. I accept that rates are not the only factor, but it is a big factor when one is competing against supermarkets and so on.

Although I am a supporter of local government, it cannot be sufficiently emphasised that it cannot escape the disciplines of the world and say that its outlay has nothing to do with it. That is not true. We are all involved in this together. I am looking for financial probity, expertise and management. The difficulty is that a councillor is a part-timer. He does not have the time to search out information. He is in the hands of his officers. That is why it takes time to roll back expenditure. It also takes courage.

When I joined my council, I remember that I moved to delete something from every committee's budget. One item that I remember deleting was chicken wire for the ducks in the park. I got a pal of mine to second the motion and I had every budget sent back. I was the most unpopular man in the council. We were there until 1 am. Nobody wanted to speak to me and I was alone. However, I believed that public expenditure was too important to treat lightly. I do not say that that approach worked that year, but the following year people remembered that I was still there. They feared that I would ask about various things and so they pruned. That is how councillors can do a better job. They can ask penetrating questions again and again. It is a boring job, but it must be done.

I remember when we redeveloped my town centre. It was a £1.5 million project in combination with Norwich Union. Nobody appeared to want to speak in the council chamber, so, believing that somebody should say something, I made a speech about the project. I welcomed it. An hour later in the council chamber we spent an hour discussing the redecoration of the chairman's office which was to cost a mere £10,000. Everybody understood £10,000, but not £1.5 million. That is the problem.

Councillors must come to terms with the problem. There must be better and tougher councillors. The other day I met a very old boy in Reading. He had been chairman of the finance committee for some years and he told me that when he held office the rates in Reading went down every year. That was because he was tough. He was not the most popular man in Reading, but he did his job and reduced expenditure. The rates were kept down and the residents were happy. I stress that we must look much more towards management in local government.

I have said time and again that local government reorganisation was not a success. I am on record as saying that we made the units too big. We lost the county boroughs which had a great deal of merit because they provided tighter control and better management. Such changes are part of the problem, but we must come to grips with it.

The hon. Member for Stoke-on-Trent, Central should rethink his views on industry. He will find that if we can reduce rates industries will be helped considerably. That is what we must do constructively and helpfully as quickly as possible.

I welcome the report. I know that it is complex. We have had jokes about the formula, but let us be fair to the Government. There has been a peculiar formula ever since time immemorial. We could not find out what the formula was in the past. I bet that there was a similar formula in the past. It is a complex matter.

The right hon. Member for Ardwick rightly said at the local authorities conference in Torquay on 24 September 1981—this is the chief Opposition spokesman for the environment speaking: I do not deny the right of Government to impose specific duties for which it has an electoral mandate. We" — that is a future Labour Government — may require local government to perform certain specific duties. The right hon. Gentleman is not frightened for the Government to impose their will on local government. He has said that that will happen. Let us be clear that the Labour Party thinks that it has a role to play in dealing with the costs of local government. There is a two-party agreement on that. The only argument is about the way in which we handle it. Let us be clear that there is cross-party agreement on controlling expenditure. I urge those in local government to be more management conscious in the way in which they perform their duties because that is the key to success in getting rates down, making a prosperous country and making useful and progressive local government.

8.1 pm

Mr. John Cartwright (Woolwich, East)

I agreed with the hon. Member for Reading, North (Mr. Durant) when he said that he wanted to see greater involvement of local authority members in the control of local authority expenditure. That would be a much more efficient and effective way of dealing with the problem than having a system of control imposed from on high. That is one reason why I object so strongly to what the Government are doing.

The points that the hon. Gentleman made about the impact on rates on businesses are right as far as they go. There is agreement on both sides of the House that rates have an impact on businesses. It would be foolish to deny that. A business that is fighting for its very existence in a recession may find that a sudden rate rise pushes it over the edge. There is a difference in view in the House. Conservative Members constantly seem to imply that rates are the only problem that drives firms into difficulty. However, that is manifestly not so. Rates are one of the problems and on occasion they can have a major impact, but many other difficulties cause problems for firms.

It is strange for a member of the Social Democratic Party to be providing about 50 per cent. of Opposition Back Bench contributions to the debate. I am sure that the hon. Member for Newham, North-West (Mr. Lewis) will agree that in the old days of the Labour Party, a Whip would have been dispatched by now around the Tea Room, with the usual knee-tapping gentility used on such occasions, to encourage more hon. Members to speak in the debate. Unfortunately there has not been an Opposition Whip on the Front Bench during the debate, so that prospect is not open to the Labour Party.

One problem is the mind-boggling complexity of the report, to which hon. Members have referred. I am sure that hon. Members take one look at the multipliers going to six decimal places and decide that that is not for them. If they get as far as examining the extraordinary mathematical formulae, to which the right hon. Member for Manchester, Ardwick (Mr. Kaufman) referred so dramatically, I am sure that that is a major deterrent to taking part in this important debate.

We should be grateful to the Select Committee on Statutory Instruments (Joint Committee), which took one look at the report and decided that it should draw the special attention of the House to the instrument on the ground that its purport calls for elucidation. The strikes me as a clear grasp of the problem. We now have a memorandum that is described as being drafted in terms intelligible to the layman". It is marginally more intelligible than the original document, but it is still fairly complicated to grasp.

If one is talking about greater involvement of local councillors in controlling local authority expenditure, it would help if they were able to understand what the measures are about. We would get more co-operation if people could get their minds round some of the formulae that are set out in the report. Hon. Members have said that the rate support grant has always been complex and an issue that treasurers understood, but comparatively few local authority elected members understood. However, the complexity is now on a totally different plane—perhaps an extra-terrestrial plane—compared with the past.

I am strongly opposed to the principle of centrally fixed spending targets for individual local authorities. I am old fashioned enough to believe that decisions about local spending ought to be taken by local people in the light of local circumstances. That is the essence of local government. I do not believe that we should allow mandarins in Marsham Street, however well informed they are, to take over the role of local authority elected members.

I accept that there are overspenders in local government. There have always been overspenders. There have always been local authorities that are wild and reckless in the way in which they go about spending ratepayers' money. If they exist, they should get their come-uppance from the local electors. We should seek to strengthen the way in which local people can have more accountability, supervision and control over local authority elected members so that if they are acting unreasonably or irresponsibly, the local electors will sort that out. That is what local government and local democracy are all about.

Grant related expenditure calculations are explained in paragraph 11 of the explanatory memorandum. I shall quote from it because it is central to much of what is going on in the block grant allocation system. It states: An authority's grant related expenditure is an assessment of the amount that it would cost the authority to provide a standard level of service in its area. It is therefore a measure of the authority's relative need to spend. That is extremely important. The paragraph continues: The figure for each authority is arrived at by applying certain objective factors or indicators to the particular circumstances of each authority. The factors or indicators are built up in consultation with local authority associations by detailed analysis of each local authority service. That sounds an impartial and scientific approach until one looks at what it produces at local level. I shall give my local authority, the London borough of Greenwich, as an example. In 1981–82 its grant related expenditure assessment was £31.9 million. That is apparently the objective assessment of the authority's need to spend. Its actual spending in that year was £46 million. Therefore, there was a major gap. If there was a determined attempt to get down to the grant related expenditure assessment figure, there would have to be cuts of 30 per cent. to 40 per cent. Greenwich has never been included in the black list of profligate overspenders. Under new management at the town hall it may figure in that list in the future.

When I look at some of the individual services and compare the grant related expenditure assessment with the actual spending, the situation becomes more alarming. For social services the GRE was £9.8 million, but the actual spending was £16.8 million. For libraries the GRE was £1 million but actual spending was £2 million. For parks the GRE was £1.4 million but actual spending was £2.6 million. For housing the GRE was £4.9 million but actual spending was £7.8 million.

Therefore, there would have to be cuts of about 50 per cent. in social services, housing, libraries and parks if we were to get the Greenwich figure anywhere near the GRE. Critical though I am about spending in certain areas in the London borough of Greenwich, I recognise that such cuts are impossible. The Government, to be fair, recognise that too. They have not set Greenwich the target of getting down to the GRE. Its expenditure guidance is calculated in the complex formula in the report.

The target for Greenwich at November 1980 prices was £31,838,000. It actually spent £32,949,000. Therefore, the overspend was a little more than £1 million. On my calculations, that means that Greenwich will secure the prize of partial protection for 1981–82 and not all the penalties will be exacted. That is based on the final out-turn spending for 1981–82.

As other hon. Members have pointed out, the penalties in this report are based not on final outturn of expenditure but on the revised estimate that was made in the summer of 1981. On that basis, Greenwich is penalised for spending not £32.9 million but £34,068,000. Greenwich is one of the authorities whose final spending turned out to be a good deal lower than its revised estimate. It will therefore have to wait until further alterations are made in a year or two from now to sort out the fact that the overspending is not at the level suggested in the report. Therefore, Greenwich will be one of the authorities that suffers a direct cash flow disadvantage as a result of the way in which this administrative arrangement is being conducted.

The effect of changes in block grant have been dramatic in Greenwich as in other areas. I agreed with the hon. Member for Stoke-on-Trent, Central (Mr. Cant) when he said that the great switch has been from central taxation to the local ratepayer. In 1978–79, 56 per cent. of Greenwich's spending was met by grant—£27.9 million out of a total of £50.2 million. By 1981–82, that percentage had dropped to 40 per cent. and it is likely that in 1982–83 it will drop still further to 34 per cent. That demonstrates the trend that the hon. Member for Stoke-on-Trent, Central pointed out. The grant loss this year is likely to be £12 million and approximately £20 million in 1982–83.

The impact on the Greenwich ratepayer has been considerable. Including the expenditure of all rating and precepting authorities falling on the ratepayers in the borough, expenditure in 1978–79 was £50.2 million. By 1981–82, that had increased to £79.8 million—an increase in three years of £29.7 million or about 59 per cent. That is roughly in line with the rate of inflation during those three years. But reduced Government grant has meant that the rate for spending has increased, not by 59 per cent. but by 92 per cent. and the burden of rates paid by the domestic ratepayer has increased not by 59 per cent. but by 115 per cent. That demonstrates the way in which the transfer of the burden to the shoulders of the domestic ratepayer has been conducted. The domestic ratepayer may have expected an average payment of £4 a week on the basis of past performance but it has turned out to be almost £6 a week as a direct result of the cuts in central Government grants.

As far as I understand it, the Government's case for this complex operation is set out in paragraph 3 of the report. It says: Since taking office, Ministers have repeatedly stressed that a reduction in the volume of current expenditure by local government is central to the Government's overall economic strategy. However, they have never explained why it should he so essential to their economic strategy. There has not been an explanation of why extra local government expenditure that is financed by rates should threaten our economic recovery, even were such an economic recovery on the horizon, and it manifestly is not. The picture that the Government like to present—of local authorities as wild overspenders—is true in only a minority of cases. Most local authorities are substantially more successful than central Government in controlling expenditure.

As the right hon. Member for Ardwick said, local government spending as a proportion of total public spending has fallen recently. Other research supports that view. For example, the Association of Metropolitan Authorities has drawn attention to research that compares the impact of central Government programmes with local government spending. One source is Cmnd. 8175 which examines the level of central and local government volume expenditure between 1975–76 and 1981–82. The information has been reproduced in index form. If central Government expenditure in 1975–76 is taken as an index of 100, it reached 108 in late 1981–82. Local government spending, if expressed as an index of 100 for 1975–76, dropped to an index of 80 by 1981–82.

The subject is approached from another angle by information that was presented to the Treasury and Civil Service Select Committee that examined local and central Government expenditure in cost terms between 1978–79 and 1982–83. It was also presented in index form. Central Government spending, from an index of 100 in 1978–79 had reached 109.3 by 1982–83. However, local government spending, from an index of 100 in 1978–79 had fallen to 94.1 in 1982–83. There is other information that also shows that local authorities have been more successful in controlling expenditure than it is politically desirable for central Government to admit.

There is a low level of morale in local government, especially among its officers. The hon. Member for Stoke-on-Trent, Central made this point graphically. They feel battered and bruised. They are upset when services that they have spent a lifetime building up are now reduced before their eyes and are being undermined by central Government policy. They strongly resent the fact that they are being made the whipping boys of central Government. One local government officer told me recently that he felt that they had become the British Leyland of the 1980s—local government was to be blamed for everything that was wrong in Britain. That is a dangerous course.

I was struck by the conclusion that was published by the Environment Select Committee. It examined methods of financing local government and published its report in July. It recognised central Government's anxiety to control authority expenditure. The report said that the Committee concludes that Government needs to devote more care and attention to the nature and extent of its controls than has been the case in recent years in order to secure greater consistency in its policies and the understanding and co-operation of the local authorities. That is a fair assessment. My right hon. and hon. Friends and I will vote against the report because the Government are not pursuing that policy.

8.18 pm

Mr. Michael Shersby (Uxbridge)

The right hon. Member for Manchester, Ardwick (Mr. Kaufman) made it quite clear that this was an important debate. I agree. He went to great lengths to castigate my right hon. Friend the Secretary of State for the Environment for producing the report. There are 272 Labour Members of Parliament. I can count only three of them sitting on the Opposition Front Bench.

Mr. Arthur Lewis

How many Tories are present?

Mr. Shersby

It seems that the right hon. Member for Ardwick is in a minority in believing that this is an important debate. I understood that he wished to debate the subject at length. It is clear that his right hon. and hon. Friends do not share that view. My colleagues and I are satisfied with the report. Many of us have other matters to attend to in our constituencies. For example, we have letters to write to constituents about the flagrant overspending by Labour-controlled councils. My hon. Friends are probably getting on with those duties. I do not know where all those other Labour Members are who apparently feel so angry about the report.

I am grateful for the opportunity that the debate on the supplementary report provides to pay tribute to the prudent administration of the local authority that has control in my constituency, Hillingdon borough council, which enjoys the full protection to which it is entitled as a result of the policies adopted and implemented by the controlling Conservative group over the past four and a half years. I know from the close relationship that I have with Hillingdon Conservative councillors that it is only as a result of their determination to control and reduce public expenditure and to meet the targets set by my right hon. Friend that that record has been achieved.

It has not been an easy task. Indeed, it has been a hard slog. It has resulted in many of my friends who serve on the local authority spending many hours during many nights of the week pursuing the need for economies. The leader of the council, his colleagues and the chief officers have had to be, as my hon. Friend the Member for Reading, North (Mr. Durant) described, good managers. They have had to make sure about reducing expenditure in Hillingdon. They have succeeded in reducing it by about £10 million in the past four and a half years, which has been pretty good going.

That achievement has resulted in the local authority fulfilling the promises that it made to the electorate when it won control of the council four and half years ago in 1978. As a result, the Conservative council was re-elected with an increased majority in the elections that took place in May. The reason is clear. Hillingdon ratepayers know that the borough council, as distinct from the Socialist-controlled Greater London Council, is doing a good job in difficult times. They appreciate the way in which the council exercises strict financial control, which is reflected in full protection from selective grant reduction.

I was aware of the appreciation that was felt by local ratepayers when canvassing in May on behalf of my local Conservative candidates. If only Hillingdon ratepayers and other London ratepayers did not have to bear the massive rate burden that is imposed upon them by the Socialist-controlled Greater London Council, they would be relatively content. To add insult to injury, they have had to put up over the past week or so with the antics of Mr. Livingstone and his colleagues, who have been trying to dabble in national politics, in matters that are primarily the concern of Parliament rather than of a local authority that is supposed to be a strategic authority. I do not think that London ratepayers consider that it is the GLC's job to dabble in Northern Ireland affairs or other national political issues. That is Parliament's job, and it is no small wonder that the GLC is such an overspender.

To appreciate the full protection from selective grant reduction that is enjoyed by the Hillingdon borough council and other similar well-run authorities, we have only to consider the terrible situation faced by ratepayers in other London boroughs whose councils appear to have little or no regard for the exhortation to reduce public expenditure. It is a roll-call of profligate, high-spending Socialist authorities. It includes Camden and Lambeth, which is again, unhappily, under Labour control because of the defection of one Social Democratic Party member back to the Labour Party. Lewisham ratepayers have suffered a 40 per cent. rate increase. There has been a 55 per cent. rate increase in Brent. Likewise there has been a 40 per cent. increase in Hounslow. Also included are Newham and Waltham Forest. By comparison, Hillingdon's rate increase last year was 4½ per cent. That has also to be compared with 40 per cent. in the neighbouring borough of Hounslow.

Why is there such an enormous difference between local authorities that operate in similar areas and which do a similar job? We know that 70 per cent. of local government costs are wages, salaries and superannuation of local government staff. It is, therefore, revealing to compare the number of staff employed by some authorities with the average number of staff for that type of authority. If we examine statistics for some inner London boroughs showing the number of full-time staff that they employed per thousand people for 1979–80, we see that the figure for the Labour-controlled Lambeth borough was 29.96 and for Tower Hamlets it was 29.73. Perhaps there are special reasons why the figure for Newham jumps up to 42.35, Haringey has 36.06 and Barking has 33.99. My own local authority of Hillingdon employs fewest, with a figure of 29.52. Why does Hillingdon require 29.52 staff per thousand to do the same job as Hammersmith, Islington, Newham or any other local authorities in London? The answer is clear. Well-run local authorities such as Hillingdon—I mention my own only by way of contrast—have a grip on the number of staff that they employ. They know that the more staff they employ, and the higher the authority's current expenditure, the less money there is available for capital projects.

Mr. Arthur Lewis

Much of what the hon. Gentleman has said is right. There is a similarity between Hillingdon and Newham in relation to immigration. Does he not agree that immigration creates problems? In Newham, we have one of the largest aged populations as well as many blind, sick and disabled people. We have given them a good service for years. They have floated in from all over the country and especially from the London area. We have, therefore, an enormous number of people requiring special attention and that accounts in part for some of the extra staff that Newham employs.

Mr. Shersby

The hon. Gentleman knows better than I that there are differences between boroughs such as Hillingdon and Newham. Nevertheless, he will agree that where similar local authorities are in similar areas and where there is a large difference between the number of full-time staff per thousand of the population employed, questions must be asked.

Rent arrears are another factor related to good management. Many of the local authorities that spend a large amount of ratepayers' money subsidising council tenants are also poor at collecting the rents that are due to them. In the table of rent arrears, we find that Islington is top of the list with 19.2 per cent. Lambeth comes a close second with 18 per cent., Camden has 17.1 per cent. and Brent has 16.5 per cent.

Hackney, which is an inner London local authority seems to do much better, with only 10.5 per cent. of rent arrears. It seems that Hackney, Haringey and Hammersmith, which are bottom of the 1980 table of rent arrears, operate more efficiently than Islington, Lambeth, Camden and Brent.

Another problem familiar to every hon. Member is empty council houses. Some of the authorities that I mentioned have the highest number of empty council houses. On 1 April 1980, several authorities had had more than 500 dwellings empty for more than 12 months. That is very serious, because there is always a grave housing shortage in London. In Manchester, there were 1,869 empty council houses on 1 April 1980. Islington had 1,401 empty houses. Knowsley, about which we heard earlier, had 1,400 empty houses, and the list continues. That shows bad management. The position could be improved. Empty houses do not bring in rent and the arrears that accumulate from other tenants contribute to the burden.

Another problem is subsidies to tenants. Councils have a discretion to subsidise the rent of council tenants and that subsidy comes from the pockets of ratepayers and taxpayers. However, the amount of subsidy varies considerably. In London, Tower Hamlets and Camden are top of the list, with a subsidy of 39.1 per cent., and Hammersmith is bottom of the list with 18 per cent. In outer London, Waltham Forest subsidises its tenants by 24.3 per cent., but Barking, another Labour-controlled authority, has a subsidy of 15.4 per cent. There is an enormous fluctuation in the subsidies given by authorities, some of which are next door to each other. That fluctuation must be examined.

My local authority of Hillingdon operates a sensible rent policy and does not provide such an enormous subsidy to its tenants because it knows that the subsidy must come out of the pockets of people who may not be able to afford it. The local authorities who provide substantial subsidies should consider the problem, because there is an opportunity for improvement. I do not say that they should eliminate subsidies altogether—that is a local decision—but they should see whether they can make sensible savings.

Hillingdon authority is an education authority and my constituents are fortunate because their children's education is not provided by the Inner London Education Authority. I pity those who have the misfortune to live in inner London because of the massive expenditure by ILEA. That authority receives no block grant—that is appalling—and the fact is reflected in the rate demands of every inner London borough. I do not know what can be done about ILEA. I believe in high standards of education, as does every hon. Member, but it would seem that those who run ILEA have completely lost touch with the people of London. They have no concept of what is involved. Do they know what it means to an elderly person, whose income is just above the rate rebate level, to face the rate demands now being given to Londoners? Do they know what it means to the small firm struggling to keep its head above water in difficult circumstances to face the rate increases that have been inflicted in London during the past few years? Those who run ILEA should attend a course in business management so that they can understand the problems with which others must cope.

For my constituents and for just about everyone who lives in outer London, the GLC is the great bugbear. They must cope with a council that is led by a man who seems to be more concerned with national politics than with the proper running of a strategic London county authority. I note from the tables that I obtained this evening that the GLC receives partial protection from selective grant reduction. The reason for that is the effect of the budget introduced by the outgoing Conservative council, led by Sir Horace Cutler. We can say tonight that the GLC has partial protection, but I wonder what the next report will look like. I do not have much hope for the London ratepayers when they see the next selective grant reduction that the Secretary of State must make. The GLC does strange things. It has set up a number of police monitoring groups, one of which is in Hayes and Harlington, a constituency next to my own. That group receives a substantial grant from the Greater London Council to monitor what the police are doing. There is no need for that operation. The borough of Hillingdon has several elected representatives. It has three Greater London councillors and three Members of Parliament who represent the constituents situated within the borough of Hillingdon. We do not need a police monitoring group to tell us what is going on. That is a job which the local authority can do if necessary.

Obviously the Home Secretary feels that it is a very good idea that there should be good liaison between the Home Office and local authorities. That is already available at virtually no additional cost. We also have a legal advice centre which has been reopened since the Labour Party regained control of the Greater London Council and which was shut down during the period that the Conservative Party controlled the Greater London Council. It is not necessary because my local authority, the borough of Hillingdon, provides a substantial grant to the citizens advice bureau to do that very job.

We now see the Greater London Council duplicating the position all over again. I have always been in favour of people being able to have access to good legal advice. I remember Mr. Peter Crowder, the former Member of Parliament for Ruislip-Northwood, whom many hon. Members will remember with affection, participating in a debate on this very matter when the then Labour GLC set up a similar centre. He made the point that everyone was entitled to get good legal advice, and I supported him.

In Hillingdon we are giving the cash to the citizens advice bureau to enable it to do the job. Once more, we have a duplication.

The GLC participates in strange activities. It gives support to rather odd organisations. Cash goes out in one direction or another. It makes one wonder what sort of councillors form the majority that serve on that local authority. They are a strange group of people led by a man who was not the leader of the Labour Party when the election took place, whom most people in London had never heard of, and who took over the leadership within a matter of hours of the Labour Party gaining control, thereby deposing Mr. Andrew McIntosh who led the Labour Party into the election. The problem with that section of the Labour Party is "Now you see them; now you don't".

The way in which local authorities are run, the massive expenditure in which they are involved, and the need for prudent financial control, to my mind raises an issue of overriding importance, and I shall try to persuade my right hon. Friend to listen to me for a few moments while I flog one of my particular hobby horses.

I have served in local government for 12 years, in Paddington and then in the new City of Westminster when the amalgamation took place following the implementa-tion of the Local Government Act. There were a number of leading business men on that local authority whose businesses were situated within the City of Westminster. Some came from Paddington, some from St. Marylebone and some from Westminster. I can remember one or two people who were senior partners in firms of one kind or another.

Local government in the City of Westminster is a complex business. It has an enormous budget, larger than the budget of many countries with which we have diplomatic relations and which we regard as sovereign States. The job of running those committees and of securing the respect of council officers and the electorate demands councillors of high calibre. We had them in those days. Westminster, perhaps peculiarly among the London boroughs—although the City of London can be counted within the same category—is fortunate in that it does have elected to its membership quite a large number of people who have experience in various professions and various branches of industry and commerce. They can blend their experiences with those of many other people who come from other walks of life, thereby constituting a local authority capable of running its affairs properly. The borough of Hillingdon is in a fortunate position, because people with considerable business experience contribute massively to the running of that local authority.

I hope that I am not thought unduly critical if I say that there is a need to draw into local government many of the business men who, since the Labour Party abolished the business vote, have disappeared from local government. Many hon. Members support that view. Those business men no longer sit in the council chamber, and, with the help of the motor car and motorway, they live far away from the place where their business is conducted and play little or no part in local government.

I shall not enter into a controversy about why the business vote was abolished by the Labour Party. I agree that the original qualification for the business vote was not satisfactory. A person had to pay more than £10 a year in rates, which effectively meant that the people who came from the business community to serve in local government were, generally speaking, partners in firms of solicitors, estate agents and small business men. It was not easy for people who worked in large limited liability companies to serve in local government because they were not individual ratepayers.

Because of my interest and activity in this matter at the time, I managed to persuade the late Henry Brooke to change the law. One of the first measures that the Conservative Government enacted in 1970 was a change in the law so that any person could stand for the local authority in which his principal place of employment was situated.

That means that virtually anyone who works within a local authority area, even if they do not live there, can stand for election. It means that every business man in the London borough of Hillingdon can, if he wishes, stand for election to that local authority. That is better than nothing. These people pay enormous taxation in the form of rates, yet have no representation on local authorities.

I firmly believe that the time has come for Parliament to have another look at this matter. I should like to see about 10 per cent. of every local authority elected by a B roll of electors who represent the business community so that in every town hall at least 10 per cent. of the local authority would be business ratepayers who feel the burden of the rates charged by the local authority and who can make their contribution to the deliberations of the council.

After all, in the vast majority of cases, such people are as much part of the community as the residentially qualified councillors, even if they happen to live a few miles over the boundary. They spend most of their working life in a local authority area, and they ought to have a say in the way that local government is run. Perhaps even more important, they ought to be encouraged to contribute their business expertise to the affairs of our local authorities.

If we are to get away from the problems that bedevil local government today, if we are to manage it more efficiently in the way that hon. Members have described, if we are to collect the rent arrears and if we are to re-examine the number of staff we employ per 1,000 of the population, we need the best possible councillors that we can get. I therefore urge my right hon. Friend to take account of this point and to deliberate on it. Reform is urgently necessary. If we do nothing else in local government, we must get the business men back into our town halls.

I have discussed this matter with the CBI, which I see from time to time. It complains about the rates and the effect they are having on its members' businesses. I have asked "Will you help by encouraging CBI members to encourage their employees to go into local government?" The CBI said "Yes, we shall", and it certainly does. From time to time, the CBI writes up the importance of doing so in its bulletin. That is not enough. Business men should either have to fill 10 per cent. of seats on the B roll of electors or they would remain vacant. If they remained vacant the local business men would not be able to complain that they were not being consulted and that they did not have the opportunity to play their part in the local authority.

I welcome the report. It is a realistic attempt to get public expenditure under control. I congratulate my right hon. and hon. Friends on their courage in dealing with it in the way that they have. I only hope that it will encourage those overspending authorities to put their houses in order. It can be done. Many of the local authorities mentioned in the report have done it. It is high time that the rest got on with the job.

8.45 pm

Mr. William Wilson (Coventry, South-East)

My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) described himself as a humble member of a local authority. If he is a humble member, I hardly know where I come in the council hierarchy. He has managed to rise to the height of chairman of the education committee. After 24 years on the Warwickshire county council, I have never even reached the stage of being a vice-chairman. We have always been in a minority on the council. Once we had 16 out of 96 seats and on another occasion 10 out of 50.

The Minister for Local Government and Environmental Services (Mr. Tom King)

There is plenty of time.

Mr. Wilson

There is plenty of time.

My hon. Friend the Member for Stoke-on-Trent, Central made another point that applies equally to the Warwickshire county council. It does not know what is going on. We spent the July meeting of the council in earnest discussion about how several million pounds were to be saved. We spent the next meeting of the council trying to work out how the two committees on which I serve would be able to make up their contribution to the savings. In November we were told that we did not have to make savings now because there was no need for them. It is difficult to understand how in a few months we could move from substantial anticipated cuts to being in balance.

Warwickshire county council has always been law abiding. When we were in office and the Government of the day were imposing cuts I criticised the then Minister at the Department of the Environment because, even after Warwickshire had made savings of several million pounds, he still asked for more from us. The House should understand the price that has had to be paid by Warwickshire, a county without penalties under any order from any Government. Our departments are under-staffed. In the south of Warwickshire we have a purpose-built old people's home that is closed for lack of funds. In the north of Warwickshire we have a nursery unit that has never opened for exactly the same reason.

The House will gather from what I have said that Warwickshire has a Conservative-controlled council. The Conservatives are only just in control; they do not have an absolute majority. Having heard about how some councils are manipulated by their minorities, we, as a minority in Warwickshire, have something to learn.

Our councillors in Warwickshire are Conservatives. I often feel sorry for them, because I am sure that they want to provide for Warwickshire's elderly just as much as I do. They do not want the number of teachers in our schools to be cut any more than I do. However, they form the controlling party and are having to do such things. That is the result of the Government's policy. A council that is law abiding and careful with the economy is closing an old people's home and is unable to open a place for children that has been built but not even been furnished because of the lack of money.

There is no one else here to speak for the Tory councillors of Warwickshire, so I say that, given the way in which they have run Warwickshire's affairs, they deserve better from the Government.

8.50 pm

Mr. Richard Alexander (Newark)

I am glad to speak after the hon. Member for Coventry, South-East (Mr. Wilson), because it is appropriate to remind him that in August 1976 the Department of the Environment—then under a Labour Government—issued a circular to all local authorities saying: The Government therefore ask local authorities to seek further savings in current expenditure during the remainder of 1976–77. For their part the Government intend to restrict the additional grant to be made available to local authorities … It is now proposed to set the forthcoming increase Order for 1976–77 at a level of £50 million below what it would otherwise have been. It is reasonable to remind Opposition Members what happened under their stewardship when they castigate the Government for what they are doing.

I support the proposed selective holdback of grant from the gross overspenders among local authorities; the authorities that have consistently disregarded the Secretary of State's request for moderation in their current expenditure.

But under the proposed scheme Nottinghamshire is likely to experience a difficulty that has already been referred to by the hon. Member for Stoke-on-Trent, Central (Mr. Cant), although it may still have some validity. Nottinghamshire submitted a return to the Government in July, 1981 which showed that it proposed to spend £317 million, which was £8 million more than the revised grant-related expenditure assessment for 1931–82. The final accounts or 1981–82 show that the county council's expenditure was contained within the grant-related expenditure assessment level and the information about that was passed to my right hon. Friend the Secretary of State in September 1982. Although the council has managed to reduce its net expenditure to below the GREA requirement, the present proposals would impose a temporary abatement of block grant on Nottinghamshire county council.

Under the proposal, the payment of block grant will fall to £165 million, which will in due course be revised upwards to £171 million because ultimately the council will be protected from grant abatement. However, because it may be up to a year before the figures are known for all councils, Nottinghamshire will suffer a loss of £6.4 million for the time being. I ask my right hon. Friend the Minister to look at that because the result will be a loss of revenue and interest charges, and we are properly urging local authorities to look at their expenditure. I shall be glad to hear what reassurance the Minister can give Nottinghamshire county council on that point.

The items most consistently in the postbags of Conservative Members in Nottinghamshire, and also apparently in the postbag of that rare Conservative Member for South Yorkshire, my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn), are letters urging us to do something about the heavy expenditure by local authorities and the swingeing rate increases suffered year after year.

It was not surprising that the Opposition Benches were largely empty when my right hon. Friend the Secretary of State was making his strictures and saying that high-rating local authorities are crippling businesses. Such local authorities are putting small businesses out of business day after day and making them ask whether it is worth while carrying on. They are presiding over a huge loss of employment in the private sector.

Mr. Allen McKay (Penistone)

That point has been raised many times. How does the hon. Gentleman account for the fact that a firm in my locality is moving to Sheffield, which is a high-rated area, to obtain the best facilities, the room for expansion and the work force that it wants?

Mr. Alexander

I am delighted to hear what the hon. Gentleman has said. I should like to see Sheffield, which I know probably as well as he does, expand and take in new businesses. However, for every example that he can produce, there are examples, such as those my hon. Friend the Member for Hallam produced, of large and small businesses fleeing from Sheffield.

Hon. Members who represent high-rating local authorities will be the first to say that democracy is under attack as a result of what we are doing today. Much of the local authorities' income comes from people who have no vote. The local authorities can spend without responsibility. They can cripple businesses and Opposition Members will whine to the Prime Minister at Question Time asking what she will do to restore jobs in their constituencies.

My right hon. Friend the Secretary of State has done more to restore and preserve jobs in the private sector than anything the Labour Party would do if it came to power. The majority of Labour local authorities care little about private businesses and private employment. They tax and squeeze to pay their own swollen staff bills. [Interruption.] I assure Opposition Members, who scoff in disbelief at what I have just said, that there are many small businesses and shops which are at the margins of profitability. They are sometimes even trading at a loss. They will be watching the proposed rate demands of next spring with one object—to decide whether to stay in business or pack it all in, putting their staff out of work and swelling the unemployment figures. If they do, the Conservative Government will be blamed. But the blame will lie squarely on the local authorities that squeeze small businesses and impose swingeing rate increases next time.

Mr. Cant

rose—

M. Alexander

I am anxious to sit down to allow the right hon. Member for Widnes (Mr. Oakes) to reply for the Opposition.

I conclude by paying tribute to my right hon. Friend the Secretary of State for trying, throughout his period of office, to reverse the tide of profligacy and to keep businesses going in the Socialist republics that we have been discussing. It has been hard going for my right hon. Friend. However, measures such as the one before the House today are another example of my right hon. Friend's attempt to restore common sense at county and district level, to preserve private enterprise and to preserve the jobs that many Socialist councils seem anxious to destroy.

9.1 pm

Mr. Gordon Oakes (Widnes)

Like my hon. Friend the Member for Coventry, South-East (Mr. Wilson), before coming to the House, I was a practising solicitor. Much of that practice I conducted in criminal courts. It is therefore apposite that I should be winding up the debate because the whole flavour of the report and the speech of the Secretary of State is that of a criminal court. The document before the House imposes probably the biggest fine—it amounts collectively on local government to £201 million—ever imposed in this country. Even the Secretary of State admits that this is not simply a withdrawal of grant. It is a penalty—and the penalty is a fine. The right hon. Gentleman has fined authorities collectively £201 million and individual authorities specific fines within that total.

My right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) has dealt more than adequately with the legality of what the Secretary of State has done. Paragraph 10 of the document states the issue clearly. Local authorities are being fined, for doing something that was perfectly legal at the time, by a Secretary of State sitting as a judge, who, when he did this, was himself acting illegally. There was need for an Act of Parliament, upon which my right hon. Friend the Member for Ardwick and myself served during its passage through the House, and which did not reach the statute book until the summer, to endorse the legal actions of the Secretary of State. It is tyranny, not justice, when that sort of thing happens.

I wish to talk about the wording of the judgment, if we are to use legal expressions. The hon. Member for Woolwich, East (Mr. Cartwright) has, like my right hon. Friend the Member for Ardwick, referred to the serious strictures of the Select Committee on Statutory Instruments. It is a most serious stricture when a Select Committee has to send for further documents to clarify a document before it and then castigates the Government for the wording of the document. Is not the wording of the document deliberate? It is said that clarity is the hand maiden of justice. Is not therefore obscurity the slave of injustice?

It suits the Government to present the House with a paper that is so obscure and confused it reads more like a computer print-out than the sort of document that the House should be considering. Is it not inevitable—although I deplore the fact—that the Benches on both sides of the House have been fairly empty? Hon. Members looked at the document and could not understand it—hon. Members who understand local government could not understand it. I doubt whether Ministers could understand it without the guidance of their civil servants.

It is right for the Select Committee to say that not only should we, the treasurers and the councillors understand it, but the laymen, the ordinary public, should be able to understand clearly a document put before the House. This document is ludicrous, as my right hon. Friend for Ardwick pointed out when he quoted the various formulae in the document, in the degree to which it reveals in its own obscurity.

Let us take some of the double-speak words that are in the document and in the legislation, and which express the usual double-speak of the Department of the Environment. The word that dominates the document is "multipliers". Mathematically, anything that multiplies increases. The mathematical term in this document should be subtraction. It takes away, it does not multiply anything.

I wonder whether the Secretary of State will say to someone, "You have been a naughty boy, I shall bring the pliers out and use my multipliers on you." The Secretary of State has been using his multipliers on local authorities to bend them to his will, but not through any force of law. He imposes his will not only on authorities that have collectively overspent but on individual authorities that have spent more than he intended them to spend.

The other part of the document that I find quite amusing, in view of what went on in the Standing Committee on the Local Government Finance Bill, is where the Secretary of State is so kind as to take out of the figures damages that had to or will have to be paid by local authorities under the Riot (Damages) Act. In Committee we pointed out that nobody could forecast this kind of damage, and that the Secretary of State should therefore not lay down in an Act of Parliament incidents that may happen, but about which no one could know. This provision has come home to roost, as the Secretary of State has had to take those figures out.

Even more bizarre is the Secretary of State's removing from the figures the amount of money that has had to be spent by local authorities, particularly county councils, because of the severe and inclement weather during the early months of the year. It is ludicrous that the Secretary of State has to judge the clemency of the weather before deciding whether to impose penalties on a local authority, which is what he will have to do.

This year, as luck would have it, the weather was inclement throughout the whole country. Everybody suffered in the freeze. What will happen this winter when possibly Northumberland, Cumbria and Durham have bad weather, but the rest of the country does not? What will happen to the targets and the GREs of those counties? Are we dependent on the Secretary of State's judgment as to whether it was cold for the amount of money that a particular local authority has?

I hope that the Minister will take the opportunity to tell the House that the archaic Riot (Damages) Act, which is now 100 years old and was passed at a time of mental aberration by the House in responding to a local problem, shall be repealed. Proper steps must be taken for county councils—particularly for Liverpool, as the Secretary of State knows—so that the ratepayers and the county councils are not penalised because of the riots that take place in their areas.

No one could suggest that those riots in Toxteth or Brixton were the result of police incompetence or that the place was not being properly policed. The riots were the result of other factors. It was not that the county council did not provide enough policemen—policemen were there in large numbers. However, under this archaic Act, the county council will have to reimburse for damage even in this age of insurance. So I hope that the Minister will say that the Government plan to do something about that Act, as the Association of County Councils has pressed him to do for some time.

One should consider this rate support grant report, its penalties and its fines, in the context of other things that the Secretary of State has said. Mr. Justice Heseltine, when he is not sitting in this court fining local authorities, also sits in another court next door, which for convenience I shall call the court of capital expenditure. He has said to local authorities in this court, "You have spent too much," but when he has the same defendants in the court next door he castigates them for not spending enough. He says, "You have not spent the grants and capital that are available to you. If you are good boys, and spend the money before the end of March next year, grants will be given to you." Of course, the local authorities, the defendants, say, "But, my Lord, there will be revenue consequences, and I shall have to appear before you in the other court and get into trouble for overspending."

The Secretary of State or one of his Ministers—I do not think that it was said in either this House or the other place—suggested that one of the ways in which local authorities could spend their capital moneys best, without revenue consequences, was on improvement grants for individual owner occupiers. That is one of the most heavily staff concentrated areas, one of the most revenue-intensive areas, because public money is being given to an individual. While the majority of people applying for such grants are honest, it is still public money. If public money is given to people for their own advantage—not lent, given—clearly, there must be scrupulous checks on the individual, the building and the purpose for which the money is spent. I cannot imagine a way that would have more revenue consequences for local authorities than trying to spend all the money, even if they could do so, before March.

To confuse the defendants even more, in the same court of capital expenditure, the Secretary of State made a statement and sent out a circular a few weeks ago, saying that local authorities can spend only 50 per cent. of their capital receipts. Thus, a prudent authority—the authority that Conservative Members praise to the skies for its wisdom and prudence—which saves money from capital receipts, instead of borrowing money for a project, now finds that it is not allowed to do that. I asked the right hon. Gentleman at Question Time last week what happens to the receipts that local authorities have accumulated so far. I am not talking about next year's receipts, the 1983 receipts. I am talking about money that they have in their possession on 1 April this year, money that they have saved this year and last year. Will it be subject to the 50 per cent. reduction? Local authorities do not know, and they want to know. The poor local authorities, between two courts, find the Secretary of State, sitting as their judge, telling them to do different things at different times, sometimes even in the same court.

We have heard about individual applications of the fine to individual authorities. May I, as a Cheshire Member, point out to the Secretary of State that my authority has been fined more than any other authority, whether metropolitan, county, metropolitan district or shire county. We have been fined £11 million. I do not know whether the Secretary of State or his officials know Cheshire. It is an ordinary, workaday county. It does not have any exotic schemes in hand. It does not publish any of the odd magazines about which the hon. Member for Newark (Mr. Alexander) spoke. It tries to run proper and decent services, and to run them with the maximum economy. Nevertheless, Cheshire finds itself penalised to the tune of £11 million.

I spoke to the chief finance officer of Cheshire this morning and I echo the words of my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) and the hon. Member for Newark. If this penalty were imposed, although it is doubtful whether it will be because it may be that when the audit comes next year Cheshire will be entitled to the money that is now being withheld from them—the Secretary of State smiles at that but we in the House are at the moment fining Cheshire £l1 million and whether that is returned to or not is subject to the Secretary of State's good will—the effect on Cheshire of an 8p increase in the precept, if the whole of it were to be borne by staff reduction as has been suggested, would be that a further 2,000 people would have to leave Cheshire county council's payroll.

Cheshire has been a model authority. It brought in private consultants to consider its staffing and as a result its manpower has decreased by more than 2,000 in the past two years. One would have thought that an authority doing all that would escape such penalties. However, if the whole of the burden were to fall on its manpower budget it would face a further reduction of 2,000 people.

When we talk about the reduction of manpower in local authorities, let us not forget that the people who work for local authorities are human beings like anybody else. When an authority reduces its manpower it is not the white collar workers who suffer most, but the cleaners, widows and single people living alone, and so on, who are wholly dependent on the authority for their living. They are the people who feel the axe rather than those in the higher reaches of the authority.

The other authority, which the Secretary of State might have mentioned in detail, although, to my astonishment, he did not, is that area for which he has special responsibility—Merseyside. The county of Merseyside has been fined £5.14 million. Liverpool, where, to his credit, the Secretary of State spends one day a week, has been fined £5.38 million. The Secretary of State should know better. The same Minister—the Minister for Merseyside, as he likes to be called—no matter how much money he says he will put into the area via the development corporation or other schemes that he has at his disposal, will fine Liverpool city council—not a Labour-controlled authority, I hasten to add—over £5 million for doing what it was elected to do. This is the economics of madness. The Secretary of State is saying not only that he has no faith in Liverpool city council but no faith in those who elect Liverpool city council. He is saying that he will decide where the money goes and how it will be spent, not the elected representatives of the people.

The Secretary of State has probably heard a story that is circulating in the pubs and clubs of Liverpool, although I do not know whether the House has. It is said that one thing that the Secretary of State has achieved in Liverpool is the planting of 10,000 trees in the little more than a year that he has been there. That has been done to beautify the city. Can he spare the money for another thousand trees? Just another thousand trees—that is all we ask for. There would then be one living tree for every dead job created in Liverpool, not since the Government came to office but since the Secretary of State took on responsibility for Liverpool. That is the sum total of what is happening in Liverpool at present, yet as a penalty for their so-called overspending the Secretary of State has the audacity to take away from that hard-pressed city council and that hard-pressed county council over £10 million to which they were entitled. The right hon. Gentleman knows the problems of Merseyside and Liverpool. How can he say that that local authority was overspending?

The local authority of the hon. Member for Sheffield, Hallam (Mr. Osborn) has been fined £6.62 million. He seems to agree that his authority should be fined that sum. It was not clear from his speech what effect that would have on his beloved ratepayers, including the industrial ratepayers. Not only do Sheffield and other authorities suffer from the general reduction of the rate support grant, as my hon. Friend the Member for Stoke-on-Trent, Central said, but a further penalty is put on the hard-pressed ratepayers of Sheffield by the actions of the Secretary of State. That point did not seem to come across to the hon. Gentleman.

The hon. Gentleman should know, even if the Secretary of State does not, that that is the effect of democracy. The councillors in Sheffield were elected on a specific programme. They put that programme before the electors and were elected on it, so they have the same mandate to carry out their programme in Sheffield as has the Secretary of State to carry out what he said he would do in 1979. That is the fatal flaw in the argument about the penalties in the rate support grant. There is a complete denial of democracy for local authorities that are elected, just as we are, to do a job for our electors.

My hon. Friend the Member for Stoke-on-Trent, Central made an important point, as did the hon. Member for Newark, who spoke in mitigation of the £9,210,000 fine imposed on his county. Both my hon. Friend and the hon. Gentleman said that, in the interests of justice, if that money is returned to the counties concerned, it should be returned with interest. The Minister can play about with the weather and the Riot (Damages) Act, but I ask him to promise local authorities that if the money is paid back to them next year all the accumulated interest will be paid to them as well. They are lying out of that money. To use the criminal terms that I have been using, the fines were improperly imposed, so the interest on the fines should be paid to the authorities as well as the amount of the fines.

The hon. Member for Reading, North (Mr. Durant), whose authority has been fined £500,000, did a great disservice to the average councillor. Perhaps when he was a councillor he was the only one to raise such issues. However, hon. Members on both sides of the House know that that is not so in most local authorities, whether Labour or Conservative controlled. Estimates are scrupulously examined by councillors. [Interruption.] The Secretary of State may laugh. Chairmen of finance committees of all political parties, not just Tory, go back time and again to ask the committees to prune their estimates. Of course they do. I have served in local government. I have been the chairman of a finance committee. I know what goes on, what has gone on and what continues to go on in local government. It is wrong to suggest that councillors of all political persuasions on the 100 councils that have been fined for profligacy and incompetence do not go into the accounts, try to save money and find cheaper schemes. Often they are at their wits' end to find cheaper schemes.

Mr. Durant

As the right hon. Gentleman has mentioned my contribution to the debate, I shall respond. Does he agree that one of the problems for local councillors is that they are not always aware of the full facts, particularly on the financial front—the borrowings, the use of the market and all the aspects that finance committees do not always consider? I was a councillor for some years. I am not saying that I was better than the right hon. Gentleman. I may have been a weaker councillor. I am not denying that. I was a councillor. My experience is that the information of councils is not as good as it should be. I was trying to make that point. I was not attacking councillors, but I was saying that if they had the facts they would be better at their jobs.

Mr. Oakes

The hon. Gentleman may be right about that. However, I say with some assurance that the information before councils and finance committees is very much better than the information that is before Marsham Street and the Secretary of State. As the hon. Member for Woolwich, East said, the effect of the report is to say that Marsham Street knows best and the local authority does not have sufficient information, or does not exercise proper control over expenditure. In fact, the authority knows much more about the problems that face it than any official in Marsham Street.

The hon. Member for Uxbridge (Mr. Shersby) talked about staff numbers and staffing variations between authorities. Of course there are variations. It would be absurd to suggest that there could be uniformity, or it would be simple for the Secretary of State to allocate a certain number of officers to every authority regardless of its size and problems. The hon. Gentleman presented an example that was the most absurd that one could imagine. He talked about the levels of rent arrears in different authorities. There is an enormous difference in the level of arrears. That is no reflection on the competence of individual authorities. Rent arrears depend on a number of factors. Strangely enough, the level of rent arrears is likely to be rather low in rich and well-heeled areas and in very poor areas. If an authority's population is very poor, most of the tenants will be making direct payment from the Department of Health and Social Security. Therefore, it will not have a high level of rent arrears.

Another factor is the stability of the population. Those who live in the same house for many years pay their rent. An authority that has many fly-by-night tenants who are here today and gone tomorrow, and who flit between authorities, will have a high level of rent arrears. Arrears have nothing to do with the competence of the officers or the standard of a committee. There are bound to be variations between different authorities for reasons such as those I have described. Any housing officer or finance officer would tell the House precisely what I am saying.

The hon. Member for Uxbridge talked also about the GLC. I do not agree with everything that the GLC does. He said that in his area the GLC had reintroduced legal advice centres. He asked why it had done so and observed that the area had citizens advice bureaux. There is all the difference in the world between qualified lawyers in a legal advice centre giving advice to those who need it and the excellent work that is done by those in citizens advice bureaux, who often want desperately to send some of their clients to a legal advice centre because they are not competent lawyers and cannot give the advice that is needed. The hon. Gentleman gave a ludicrous example of how the GLC could save money. If the legal advice centres were closed, money would be saved, but that would be achieved at considerable expense to many individuals who cannot afford private legal advice and who desperately need advice, and need a centre to provide it.

My hon. Friend the Member for Coventry, South-East is a lawyer like myself, but he spoke, as did my hon. Friend the Member for Stoke-on-Trent, Central, as a defendant speaking in his own defence. My hon. Friend the Member for Coventry, South-East has a distinguished record on the Warwickshire country council as my hon Friend the Member for Stoke-on-Trent, Central has a distinguished record on the Staffordshire county council. I venture to say that there was more wit, sense, knowledge, experience and wisdom in every word that my hon. Friends uttered from their vast knowledge of local government affairs than anything that has emerged from Marsham Street or from the Secretary of State.

We are being asked to approve a report that manifestly is imposing penalties on local authorities which do not deserve them. The Secretary of State admitted in his opening speech that some of his figures are wrong. Instead of introducing yet another report, which he told the House he will have to do, he should put right the current report, which in itself is a No. 2 report. I suggest to the Secretary of State that he should withdraw the report and that we should wait until the day when he has his facts and figures right. He should remove all these penalties on local authorities. I ask my hon. Friends and Conservative Members who believe in justice and who despise tyranny to vote against the report.

9.29 pm

The Minister for Local Government and Environmental Services (Mr. Tom King)

We are debating the rate support grant supplementary report. The subject would, under the normal conventions of the House, be considered in one and a half hours, usually after 10 o'clock. The right hon. Member for Manchester, Ardwick (Mr. Kaufman) felt that the House needed longer to debate it. It is not for me to comment, but I have noticed that that view was not shared by all other hon. Members. Nevertheless, we always try to accommodate the Opposition in this matter. I am sure that the right hon. Gentleman will respect that. As the subject was fully debated during the proceedings on the Local Government Finance Act 1982 and on previous announcements, I do not believe that the House should have needed to debate it so exhaustively again.

I listened to the speech of the right hon. Member for Widnes (Mr. Oakes), especially his closing words. Other hon. Members who were here will have heard phrases such as "fining Cheshire" and "tyranny". Apparently that is because its grant has been reduced arbitrarily by the Secretary of State. I am surprised that the right hon. Gentleman should have used those words. He received fair enough warning from my hon. Friend the Member for Newark (Mr. Alexander) who took the trouble to read from circular 84/76—"76" representing the year in which it was issued—that was issued by the Labour Government of which the right hon. Gentleman was a member. I do not wish to misinform the House, but I think that the right hon. Gentleman was a Minister in the Department of the Environment at that time. Nevertheless, he was a Minister.

I shall read one of the quotations to which my hon. Friend the Member for Newark referred: For their part, the Government intend to restrict the additional grant to be made available to local authorities in the Rate Support Grant Increase Order". This is an equivalent version.

It is now proposed to set the forthcoming Increase Order for 1976–77 at a level of £50 million below what it would otherwise have been". That was because of a prospective overspend and the Labour Government's need to take action.

Tyranny? Fine? The right hon. Gentleman knows that the principle whether a Government are entitled to withdraw grant from local authorities is not at issue. The method may be at issue, but the principle has already been established by the Labour Government. Moreover, when that principle was established the right hon. Members for Ardwick and Widnes remained silent. They did not care to use such words as fine and tyranny. Presumably they then considered that this was a perfectly proper approach.

Some of my right hon. and hon. Friends may say that in principle it is proper to withhold grant if there has been excess expenditure but they would ask whether it is acceptable that that should be done in a crude and across-the-board way that hits both high-spending and low-spending authorities as was done by the Labour Government's circular 84/76.

We believe that it is unacceptable that authorities that have tried to observe economic patterns of expenditure and have tried to play their part in matching overall national targets of expenditure should be punished along with those which pay no regard to the needs for econony.

While the right hon. Members for Ardwick and Widnes are happy to say "punishment", they are happy to punish all alike. We believe that punishment should fall only where it is appropriate.

I shall briefly rehearse the background that has led to the supplementary report. When my right hon. Friend the Secretary of State and I came to the Department of the Environment and were first faced with the need to make economies in public expenditure and to urge economies in local government expenditure, we sought to pursue a voluntary approach. Each responsible local authority leader to whom we spoke emphasised and reaffirmed his belief—as he did to previous Governments—that local government had a proud record.

They said—the hon. Member for Coventry, South-East (Mr. Wilson) will remember the words—that local government has a proud record of accepting a responsibility to match the overall levels of national expenditure suggested by central Government, and not only accepted that responsibility but had a proud record of achieving it.

As my right hon. Friend the Secretary of State said earlier, such a record is easier to achieve—I do not say this sarcastically—at a time of increasing expenditure than when one is trying to achieve reductions. When we had to ask for economies, that voluntary spirit of co-operation could no longer achieve the results that we required.

Many right hon. and hon. Members will remember that the order that we are discussing now—whether to impose a holdback of grant—was our second choice. When my right hon. Friend the Secretary of State introduced the rate support grant at the meeting of the consultative council in December 1980, and when he put the problem of a prospective overspend and the need to achieve economies before the local authorities, he made it clear that the Government could not shirk their responsibilities to achieve those public expenditure levels. It was made clear that if local authority associations—local authorities acting collectively—could suggest a way in which those economies could be made without the need to move to a system of targets or alternative methods to make expenditure reductions we would welcome it.

We met again after Christmas on 23 January, after the rate support grants had been announced. The local authorities could not reply to that proposal. I do not criticise them for that, because they are not a holding company with many subsidiaries. They are separately elected members of an association of individual authorities. It was understandable that the association could not deliver an arrangement that would bind individual member authorities. They genuinely could not offer any proposals.

It was against that background that, having asked for the reduction, we converted them into targets for individual authorities, backed up with the proposals about grant reduction for those that could not match our targets.

This is almost a reunion meeting for the long-lost souls on the Local Government Finance Bill Committee. I feel sorry for the hon. Member for Stoke-on-Trent, Central (Mr. Cant) because we do not have a Bill for him this year. He may feel that this parliamentary Session is incomplete without such a Bill. He knows that the arguments about whether this legislation is retrospective were rehearsed endlessly. The House debated the matter on Second Reading, Report and Third Reading. Lords amendments were debated and we discussed the matter in Committee. The House gave its judgment that the specific proposals should go through, and it is under those powers that the report is laid before the House tonight.

I do not wish to weary the House with the endless arguments that took place, but we gave specific notice in December 1980, in a circular letter issued to the local authorities on 23 January, of the individual targets. That was the course of action that we proposed to take for the financial year 1981–82, which did not start until April. We passed further legislation in the Local Government Finance Act 1982. The proposals that are before the House today deal with the improvement in the method of deduction of grant where there is an overspend by local authorities.

The Labour Government introduced the procedure in 1976, but the old system was unfair because it imposed penalties across the board. During our first year in Government we had to use the same procedure, but we regretted the fact that we had no discretion to impose the penalties in a way that was fairer to the authorities that tried to economise.

When we were faced with a potential overspend of £800 million, we invited local authorities to revise their budgets and we then put before them our proposals for targets and holdback. The holdback proposals will mean a cut of about £201 million in 104 authorities. Some authorities will suffer the full effect of the holdback while others will obtain partial protection. We have exempted from holdback authorities whose expenditure is below what is deemed to be reasonable in the GREA. We have also exempted urban programme expenditure in partnership authorities, which I hope has the support of Labour Members.

We have exempted expenditure on civil disturbances. The right hon. Member for Ardwick asked about the Riot (Damages) Act 1886. The matter has been raised with my right hon. Friend the Home Secretary and a review is being conducted to see whether changes can be made. We have also exempted the exceptional emergency winter expenditure of 1981–82.

I am grateful for the understanding of the right hon. Member for Ardwick about my earlier problem. Both he and my hon. Friend the Member for Newark mentioned the fact that the holdback proposals are included in the revised budget. Some authorities that suffer holdback may be able to demonstrate on their outturn figures that the holdback should not apply to them. We have received only a handful of audited accounts for outturn expenditure for 1981–82, but we shall introduce another supplementary report as soon as possible if further changes are needed.

Mr. Kaufman

If the Minister understands my point, perhaps he will reply to the point made by the hon. Member for Newark (Mr. Alexander) and my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant). As some local authorities will not have been liable to holdback but will have been deprived of grant for some time, will they be recompensed for the interest that their money would otherwise have attracted?

Mr. King

Those moneys accrue from monthly or periodic payments during the year and would attract only limited interest. We do not propose to change the arrangements that were respected by both this Government and the Labour Government, when several payments and adjustments were made at different times. I have copies of the right hon. Gentleman's interim orders and supplementary orders in which adjustments were made between authorities. Interest was never paid and we shall not pay it now.

Mr. Oakes

The right hon. Gentleman and I are at cross purposes. He is talking about mistakes, but I am talking about penalties that have been imposed by the Government. Therefore, in those circumstances, interest ought to be paid.

Mr. King

The issue is that of adjustments to payments which are made in a number of cases. We do not propose to allow interest costs in this respect. We shall lay the supplementary reports when the outturn and the audited accounts are available. This follows the current practice. If errors made by the previous Government come to light, and if errors are made in Government calculations, they are put right at the earliest opportunity, although interest is never paid. Although the right hon. Gentleman may be seeking to make a major issue of this point, I assure him that this is standard practice.

The background to this debate and the issue of the holdback of grant beg the question whether there is any justification for the Government to be concerned about economy in local government expenditure. The very basis upon which we started on this matter is the need to achieve reductions in local government expenditure.

I hope that I do not need to remind any of my hon. Friends why the Government thought it necessary when they came into office to seek to make economies in public expenditure, and economies in local government expenditure in particular. The Government were faced with an all-time record level of local government current expenditure, at a time when there was a rapid decline in capital expenditure. We asked local government—it could be said that the targets we set were unreasonable—for a reduction of 5.6 per cent. in real terms over three years.

I take on board what the hon. Member for Stoke-on-Trent, Central said about the difficulties of making economies. I have checked the fall in school rolls over the period for which we were asking for a reduction of 5.6 per cent. The fall in pupil numbers during that time was 6.5 per cent. over the country as a whole.

It is recognised that expenditure on education is by far the largest local government expenditure. It is not fair to expect an immediate pound-for-pound, pound-for-pupil reduction. The Government have never asked for absolute equivalence in that respect. When one looks at the background of what we were seeking to achieve in economies in local government expenditure—I think it is fair to expect some economies on the education side in recognition of the fall in pupil numbers—it is not reasonable to suggest that savage cuts were involved in every possible direction.

My hon. Friend the Member for Uxbridge (Mr. Shersby), in a well-delivered speech, drew attention to the problem of ILEA. My hon. Friend the Member for Reading, North (Mr. Durant) drew attention to the need for councillors to be better informed and the need for proper information.

Recently, my right hon. Friend and I met the leaders of the London Labour boroughs, who were accompanied by the Labour leader of the GLC and the deputy leader of ILEA. When I asked the deputy leader of ILEA what had happened to pupil numbers over the period which he was criticising so deeply, I was shocked to discover that he did not know the figure. I gave it to him. The figure was 20 per cent. There will be an estimated fall of 20 per cent. in the pupil numbers in ILEA. We were talking against the background of the five-year period.

Against that background, it is difficult to tolerate the year-on-year expenditure increases and the burdens that have been borne by people in the inner London boroughs, given the problems that they face. I am prepared to listen to those who are prepared to justify the reasons for increased expenditure and the reasons why such increases are necessary. However, it is intolerable if such people are not even aware of the facts about the authorities for which they are responsible.

My hon. Friend the Member for Reading, North spoke far too modestly of his own experiences in local government. I am aware of the close interest that my hon. Friend the Member for Uxbridge takes in the London borough of Hillingdon, and I am aware of the determined effort made by councillors there to achieve results. However, those results are sometimes frustrated by certain Labour and Liberal councillors who seem to be working in the opposite direction.

The Opposition claim that any reduction in expenditure means cuts. The answer to that charge has been given by the newly elected Conservative council in Birmingham. Its council employees have said that, given the crunch, that local authority can provide the same service as previously with a one-third reduction in costs—£3.5 million a year—and about 250 fewer people.

My hon. Friend the Member for Uxbridge took us into slightly different country. Although I warmly support the need for better informed councillors and the need to attract into local government councillors of the highest quality, I do not think that my hon. Friend's methods, such as the business vote, are Government policy. In saying that, I in no way mock the seriousness of the issue that he raised.

Anyone who cares about local government and who has any understanding of the problems of the industry in the city represented by my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) can only weep at the problems. Those problems are caused not by rates, but by the current industrial situation and a world steel crisis. At such a time, any company would be looking for some understanding and recognition from a local authority of the problems that it faces, and local authorities should be determined to do what they can to help.

I remember speaking to the Sheffield chamber of commerce, which has been fighting to save the industries that have played such a vital part in the growth of that city. I did so on a day when it heard that the rate increase for the following year would be 40 per cent. It is a disgrace for some hon. Members to suggest that rates do not matter to industry. That does the grossest disservice to jobs and employment. Rates are not allowable for exports. They are not rebateable. They fall directly on the export costs of industry. No hon. Member should fail to understand that fact.

Mr. John H. Osborn

The figure over the past few years is 142 per cent. Does my hon. Friend recall that he has had many letters from people who wrote to me in desperation and expected me, as the only Conservative Member in Sheffield and South Yorkshire, to do something about it? Any hope that my right hon. Friend can give them will be welcome.

Mr. King

No one could have done more than my hon. Friend to bring to my attention and that of my colleagues the appalling problems faced by many ratepayers in Sheffield. I well understand the problems that are being caused. The tragedy and the disgrace is that this is not a matter of cuts. It is not that authorities have been put in an intolerable position by economies that we are asking them to make, but authorities are specifically increasing expenditure in a deliberate, provocative and intolerable way. It imposes real problems on my hon. Friend and his constituents.

Many right hon. and hon. Members have joined us now. I am grateful for the best audience by about a factor of 20 attracted to the debate today. The right hon. Member for Ardwick insisted on having the debate. It has not grabbed the attention of the House in a way that we might all have sought. The issues have already been fully debated. They were dealt with in one Act and passed through an exhaustive procedure. The right hon. Gentleman lost then. He said nothing new tonight. He merely rehearsed all the old arguments.

Three main points could have been raised. First, the argument about the principle of holdback crumbles away when it is discovered, unfortunately, that we keep records of Labour Government circulars in the Department. It is a surprising fact that someone still keeps them somewhere. The Labour Government followed exactly the same principle as we have followed in this case. It will be alleged that the procedure we have followed is unfair. The unfairness is to hold back grant across the board and to make no attempt to protect those who have sought to follow the targets and to deal unfairly with those who have sought to be prudent. It has been suggested that the measures are retrospective. We have dealt with that suggestion exhaustively. With the clearest warning being given well before any suggestion of grant holdback was imposed, no authority was in any doubt well before the event of the action that it needed to take to avoid penalty.

Mr. Kaufman

The Minister says that the measure is not retrospective. Will he therefore explain why he was unable to present this report until section 8 of the Local Government Finance Act 1982 made this report a lawful report and made it so retrospectively, which it was not before the Act was passed?

Mr. King

The right hon. Member for Ardwick seems to be under the impression—his right hon. Friend the Member for Widnes made the same mistake—that the penalties and the power to impose penalties are retrospective and that multipliers are malign. The opposite is the case. The power to remove grant existed previously. We sought to improve the basis for the power to give protection to those authorities which sought to observe the guidelines. The multipliers are entirely benign and are used to help authorities. The right hon. Gentleman will find, if he examines the report, that all there which lose grants have a multiplier of one—meaning that there is no change whatsoever. Those which are helped have a multiplier of less than one.

The right hon. Gentleman has tried to attack us by saying that we are a threat to local government. The threat to local government comes from those who are trampling over democracy in this country. It comes from those who try to gain control of a council by smashing a councillor's windows and burning his car to make him stay away from a council meeting. If Labour right hon. and hon. Members did more to comdemn that sort of behaviour in local government, we would have more respect for their other views. I commend the report to the House as a sensible measure to protect those who seek to observe the traditions of local government and not one to protect those who are determined to trample on their ratepayers and electors.

Question put:—

The House divided: Ayes 289, Noes, 239.

Division No. 31]	[10 p.m.
AYES

Adley, Robert
Aitken, Jonathan	Farr, John
Alexander, Richard	Fell, Sir Anthony
Alison, Rt Hon Michael	Fenner, Mrs Peggy
Amery, Rt Hon Julian	Finsberg, Geoffrey
Ancram, Michael	Fisher, Sir Nigel
Arnold, Tom	Fletcher, A. (Ed'nb'gh N)
Aspinwall, Jack	Fletcher-Cooke, Sir Charles
Atkins, Rt Hon H. (S'thorne)	Fookes, Miss Janet
Atkins, Robert (Preston N)	Forman, Nigel
Atkinson, David (B'm'th,E)	Fox, Marcus
Baker, Kenneth (St.M'bone)	Fraser, Rt Hon Sir Hugh
Baker, Nicholas (N Dorset)	Fraser, Peter (South Angus)
Banks, Robert	Fry, Peter
Beaumont-Dark, Anthony	Gardiner, George (Reigate)
Bendall, Vivian	Gardner, Edward (S Fylde)
Benyon, Thomas (A'don)	Garel-Jones, Tristan
Benyon, W. (Buckingham)	Gilmour, Rt Hon Sir Ian
Berry, Hon Anthony	Glyn, Dr Alan
Best, Keith	Goodhart, Sir Philip
Bevan, David Gilroy	Goodhew, Sir Victor
Biffen, Rt Hon John	Goodlad, Alastair
Biggs-Davison, Sir John	Gorst, John
Blackburn, John	Gow, Ian
Blaker, Peter	Gower, Sir Raymond
Body, Richard	Grant, Anthony (Harrow C)
Bonsor, Sir Nicholas	Gray, Rt Hon Hamish
Bottomley, Peter (W'wich W)	Greenway, Harry
Bowden, Andrew	Grieve, Percy
Boyson, Dr Rhodes	Griffiths, E. (B'y St. Edm'ds)
Braine, Sir Bernard	Griffiths, Peter Portsm'th N)
Bright, Graham	Grist, Ian
Brinton, Tim	Grylls, Michael
Brittan, Rt. Hon. Leon	Gummer, John Selwyn
Brooke, Hon Peter	Hamilton, Hon A.
Brotherton, Michael	Hamilton, Michael (Salisbury)
Brown, Michael (Brigg & Sc'n)	Hampson, Dr Keith
Browne, John (Winchester)	Hannam, John
Bruce-Gardyne, John	Haselhurst, Alan
Buchanan-Smith, Rt. Hon. A.	Havers, Rt Hon Sir Michael
Buck, Antony	Hawkins, Sir Paul
Budgen, Nick	Hayhoe, Barney
Bulmer, Esmond	Heddle, John
Burden, Sir Frederick	Henderson, Barry
Butcher, John	Heseltine, Rt Hon Michael
Carlisle, John (Luton West)	Hicks, Robert
Carlisle, Kenneth (Lincoln)	Higgins, Rt Hon Terence L.
Carlisle, Rt Hon M. (R'c'n)	Hogg, Hon Douglas (Gr'th'm)
Chalker, Mrs. Lynda	Holland, Philip (Carlton)
Channon, Rt. Hon. Paul	Hooson, Tom
Chapman, Sydney	Hordern, Peter
Churchill, W. S.	Howe, Rt Hon Sir Geoffrey
Clark, Hon A. (Plym'th, S'n)	Howell, Rt Hon D. (G'ldf'd)
Clark, Sir W. (Croydon S)	Howell, Ralph (N Norfolk)
Clarke, Kenneth (Rushcliffe)	Hunt, John (Ravensbourne)
Clegg, Sir Walter	Hurd, Rt Hon Douglas
Cockeram, Eric	Irvine, Rt Hon Bryant Godman
Colvin, Michael	Irving, Charles (Cheltenham)
Cope, John	Jenkin, Rt Hon Patrick
Cormack, Patrick	Jessel, Toby
Corrie, John	Johnson Smith, Sir Geoffrey
Costain, Sir Albert	Jopling, Rt Hon Michael
Cranborne, Viscount	Kaberry, Sir Donald
Critchley, Julian	Kershaw, Sir Anthony
Crouch, David	Kilfedder, James A.
Dickens, Geoffrey	King, Rt Hon Tom
Dorrell, Stephen	Knight, Mrs Jill
Douglas-Hamilton, Lord J.	Knox, David
Dover, Denshore	Lamont, Norman
Dunn, Robert (Dartford)	Lang, Ian
Durant, Tony	Latham, Michael
Eden, Rt Hon Sir John	Lawrence, Ivan
Edwards, Rt Hon N. (P'broke)	Lawson, Rt Hon Nigel
Eggar, Tim	Lee, John
Elliott, Sir William	Le Marchant, Spencer
Emery, Sir Peter	Lennox-Boyd, Hon Mark
Eyre, Reginald	Lester, Jim (Beeston)
Fairbairn, Nicholas	Lewis, Kenneth (Rutland)
Fairgrieve, Sir Russell	Lloyd, Ian (Havant & W'loo)
Faith, Mrs Sheila	Lloyd, Peter (Fareham)

Loveridge, John	Rost, Peter
Luce, Richard	Royle, Sir Anthony
McCrindle, Robert	Rumbold, Mrs A. C R.
MacGregor, John	Sainsbury, Hon Timothy
MacKay, John (Argyll)	Shaw, Giles (Pudsey)
Macmillan, Rt Hon M.	Shaw, Sir Michael (Scarb')
McNair-Wilson, M. (N'bury)	Shelton, William (Streatham)
McNair-Wilson, P. (New F'st)	Shepherd, Colin (Hereford)
Madel, David	Shepherd, Richard
Major, John	Shersby, Michael
Marland, Paul	Silvester, Fred
Marlow, Antony	Sims, Roger
Marten, Rt Hon Neil	Skeet, T. H. H.
Mates, Michael	Smith, Dudley
Mather, Carol	Smith, Tim (Beaconsfield)
Maude, Rt Hon Sir Angus	Speed, Keith
Mawby, Ray	Speller, Tony
Mawhinney, Dr Brian	Spence, John
Maxwell-Hyslop, Robin	Spicer, Michael (S Worcs)
Mayhew, Patrick	Sproat, Iain
Mellor, David	Squire, Robin
Meyer, Sir Anthony	Stainton, Keith
Mills, Iain (Meriden)	Stanbrook, Ivor
Mills, Sir Peter (West Devon)	Stanley, John
Moate, Roger	Steen, Anthony
Monro, Sir Hector	Stevens, Martin
Montgomery, Fergus	Stewart, A. (E Renfrewshire)
Moore, John	Stewart, Ian (Hitchin)
Morgan, Geraint	Stokes, John
Morris, M. (N'hampton S)	Stradling Thomas, J.
Morrison, Hon C. (Devizes)	Tapsell, Peter
Morrison, Hon P. (Chester)	Taylor, Teddy (S'end E)
Mudd, David	Temple-Morris, Peter
Murphy, Christopher	Thomas, Rt Hon Peter
Myles, David	Thompson, Donald
Neale, Gerrard	Thorne, Neil (Ilford South)
Needham, Richard	Thornton, Malcolm
Nelson, Anthony	Townend, John (Bridlington)
Neubert, Michael	Townsend, Cyril D, (B'heath)
Onslow, Cranley	Trippier, David
Osborn, John	Trotter, Neville
Page, John (Harrow, West)	van Straubenzee, Sir W.
Page, Richard (SW Herts)	Vaughan, Dr Gerard
Parris, Matthew	Viggers, Peter
Patten, Christopher (Bath)	Waddington, David
Patten, John (Oxford)	Wakeham, John
Pattie, Geoffrey	Waldegrave, Hon William
Pawsey, James	Walker-Smith, Rt Hon Sir D.
Percival, Sir Ian	Wall, Sir Patrick
Peyton, Rt Hon John	Waller, Gary
Pink, R. Bonner	Walters, Dennis
Pollock, Alexander	Ward, John
Porter, Barry	Warren, Kenneth
Prentice, Rt Hon Reg	Watson, John
Price, Sir David (Eastleigh)	Wells, Bowen
Proctor, K. Harvey	Wells, John (Maidstone)
Pym, Rt Hon Francis	Whitney, Raymond
Raison, Rt Hon Timothy	Wickenden, Keith
Rathbone, Tim	Wilkinson, John
Rees, Peter (Dover and Deal)	Williams, D. (Montgomery)
Rees-Davies, W. R.	Winterton, Nicholas
Renton, Tim	Young, Sir George (Acton)
Rhodes James, Robert	Younger, Rt Hon George
Ridsdale, Sir Julian
Rippon, Rt Hon Geoffrey	Tellers for the Ayes:
Roberts, M. (Cardiff NW)	Mr. Robert Boscawen and
Roberts, Wyn (Conway)	Mr. David Hunt.
Rossi, Hugh
NOES
Abse, Leo	Barnett, Guy (Greenwich)
Adams, Allen	Barnett, Rt Hon Joel (H'wd)
Allaun, Frank	Beith, A. J.
Alton, David	Benn, Rt Hon Tony
Anderson, Donald	Bennett, Andrew (St'kp't N)
Archer, Rt Hon Peter	Bidwell, Sydney
Ashley, Rt Hon Jack	Booth, Rt Hon Albert
Ashton, Joe	Boothroyd, Miss Betty
Atkinson, N. (H'gey,)	Bottomley, Rt Hon A. (M'b'ro)
Bagier, Gordon A.T.	Bray, Dr Jeremy

Brocklebank-Fowler, C.	Holland, S. (L'b'th, Vauxh'll)
Brown, Hugh D. (Provan)	Home Robertson, John
Brown, R. C. (N'castle W)	Homewood, William
Brown, Ronald W. (H'ckn'y S)	Hooley, Frank
Brown, Ron (E'burgh, Leith)	Howell, Rt Hon D.
Buchan, Norman	Howells, Geraint
Callaghan, Rt Hon J.	Hoyle, Douglas
Callaghan, Jim (Midd't'n & P)	Hughes, Mark (Durham)
Campbell, Ian	Hughes, Robert (Aberdeen N)
Campbell-Savours, Dale	Hughes, Roy (Newport)
Canavan, Dennis	Janner, Hon Greville
Cant, R. B.	Jay, Rt Hon Douglas
Carmichael, Neil	John, Brynmor
Carter-Jones, Lewis	Johnson, James (Hull West)
Cartwright, John	Johnson, Walter (Derby S)
Clark, Dr David (S Shields)	Johnston, Russell (Inverness)
Clarke, Thomas (C'b'dge, A'rie)	Jones, Rt Hon Alec (Rh'dda)
Cocks, Rt Hon M. (B'stol S)	Jones, Barry (East Flint)
Cohen, Stanley	Kaufman, Rt Hon Gerald
Coleman, Donald	Kilroy-Silk, Robert
Concannon, Rt Hon J. D.	Lambie, David
Conlan, Bernard	Leadbitter, Ted
Cook, Robin F.	Leighton, Ronald
Cowans, Harry	Lestor, Miss Joan
Cox, T. (W'dsw'th, Toot'g)	Lewis, Arthur (N'ham NW)
Craigen, J. M. (G'gow, M'hill)	Lewis, Ron (Carlisle)
Crawshaw, Richard	Lofthouse, Geoffrey
Crowther, Stan	Mabon, Rt Hon Dr J. Dickson
Cryer, Bob	McCartney, Hugh
Cunliffe, Lawrence	McDonald, Dr Oonagh
Cunningham, G. (Islington S)	McElhone, Mrs Helen
Cunningham, Dr J. (W'h'n)	McGuire, Michael (Ince)
Dalyell, Tam	McKay, Allen (Penistone)
Davidson, Arthur	McKelvey, William
Davies, Rt Hon Denzil (L'lli)	MacKenzie, Rt Hon Gregor
Davis, Terry (B'ham, Stechf'd)	McNamara, Kevin
Deakins, Eric	McTaggart, Robert
Dean, Joseph (Leeds West)	McWilliam, John
Dewar, Donald	Magee, Bryan
Dixon, Donald	Marks, Kenneth
Dobson, Frank	Marshall, D (G'gow S'ton)
Dormand, Jack	Marshall, Jim (Leicester S)
Douglas, Dick	Martin, M (G'gow S'burn)
Dubs, Alfred	Mason, Rt Hon Roy
Duffy, A. E. P.	Maxton, John
Dunwoody, Hon Mrs G.	Maynard, Miss Joan
Eastham, Ken	Meacher, Michael
Edwards, R. (W'hampt'n S E)	Mikardo, Ian
Ellis, R. (NE D'bysh're)	Millan, Rt Hon Bruce
Ellis, Tom (Wrexham)	Miller, Dr M. S. (E Kilbride)
English, Michael	Mitchell, Austin (Grimsby)
Ennals, Rt Hon David	Mitchell, R. C. (Soton Itchen)
Evans, Ioan (Aberdare)	Morris, Rt Hon A. (W'shawe)
Evans, John (Newton)	Morris, Rt Hon C. (O'shaw)
Ewing, Harry	Morris, Rt Hon J. (Aberavon)
Faulds, Andrew	Moyle, Rt Hon Roland
Field, Frank	Mulley, Rt Hon Frederick
Flannery, Martin	Newens, Stanley
Foot, Rt Hon Michael	Oakes, Rt Hon Gordon
Ford, Ben	O'Halloran, Michael
Forrester, John	O'Neill, Martin
Foster, Derek	Orme, Rt Hon Stanley
Foulkes, George	Owen, Rt Hon Dr David
Fraser, J. (Lamb'th, N'w'd)	Palmer, Arthur
Freeson, Rt Hon Reginald	Park, George
Garrett, John (Norwich S)	Parker, John
George, Bruce	Parry, Robert
Gilbert, Rt Hon Dr John	Pendry, Tom
Golding, John	Penhaligon, David
Graham, Ted	Powell, Raymond (Ogmore)
Grant, John (Islington C)	Prescott, John
Hamilton, James (Bothwell)	Price, C. (Lewisham W)
Hamilton, W. W. (C'tral Fife)	Race, Reg
Hardy, Peter	Radice, Giles
Harman, Harriet (Peckham)	Rees, Rt Hon M (Leeds S)
Harrison, Rt Hon Walter	Richardson, Jo
Hart, Rt Hon Dame Judith	Roberts, Albert (Normanton)
Healey, Rt Hon Denis	Roberts, Allan (Bootle)
Heffer, Eric S.	Roberts, Ernest (Hackney N)
Hogg, N. (E Dunb't'nshire)	Roberts, Gwilym (Cannock)

Robertson, George	Thomas, Dr R.(Carmarthen)
Robinson, G. (Coventry NW)	Thorne, Stan (Preston South)
Rooker, J. W.	Tilley, John
Roper, John	Tinn, James
Ross, Ernest (Dundee West)	Torney, Tom
Ross, Stephen (Isle of Wight)	Urwin, Rt Hon Tom
Rowlands, Ted	Varley, Rt Hon Eric G.
Ryman, John	Walker, Rt Hon H. (D'caster)
Sandelson, Neville	Warden, Gareth
Sever, John	Watkins, David
Sheerman, Barry	Weetch, Ken
Sheldon, Rt Hon R.	Wellbeloved, James
Short, Mrs Renée	Welsh, Michael
Silkin, Rt Hon J. (Deptford)	White, Frank R.
Silkin, Rt Hon S. C. (Dulwich)	White, J. (G'gow Pollok)
Silverman Julius	Whitehead, Phillip
Skinner, Dennis	Whitlock, William
Smith, Rt Hon J. (N Lanark)	Willey, Rt Hon Frederick
Snape, Peter	Williams, Rt Hon A. (S'sea W)
Soley, Clive	Williams, Rt Hon Mrs (Crosby)
Spearing, Nigel	Wilson, Rt Hon Sir H. (H'ton)
Spellar, John Francis (B'ham)	Wilson, William (C'try SE)
Spriggs, Leslie	Winnick, David
Stallard, A. W.	Woodall, Alec
Steel, Rt Hon David	Woolmer, Kenneth
Stoddart, David	Wright, Sheila
Stott, Roger	Young, David (Bolton E)
Strang, Gavin
Straw, Jack	Tellers for the Noes:
Summerskill, Hon Dr Shirley	Mr. George Morton and
Taylor, Mrs Ann (Bolton W)	Mr. Frank Haynes.
Thomas, Dafydd (Merioneth)

Question accordingly agreed to.

Resolved, That the Rate Support Grant Supplementary Report (England) (No. 2) 1982, a copy of which was laid before this House on 28th July, in the last Session of Parliament, be approved.