Rate Support Grant (England)

HC Deb 26 July 1983 vol 46 cc1078-101 5.11 pm

The Secretary of State for the Environment (Mr. Patrick Jenkin)

I beg to move, That the Rate Support Grant Supplementary Report (England) 1983/84 (House of Commons Paper No. 26), which was laid before this House on 4th July, be approved.

Mr. Speaker

It will be for the convenience of the House to discuss at the same time the next motion: That the Rate Support Grant Supplementary Report (England) (No. 3) 1981/82 (House of Commons Paper No. 25), which was laid before this House on 4th July, be approved.

Mr. Jenkin

The two reports and our debate are part of the long saga of successive Governments' efforts to persuade local authorities to keep their spending within what the nation can afford. The saga stretches well back into the previous decade. The first crunch came in 1975. That was the year in which local authorities overspent at today's prices by about £300 million. The House will recollect that it was one of my predecessors, the late Anthony Crosland who, speaking in Manchester town hall in May 1975, told local authorities bluntly "the party is over." The simple truth is that some of the guests are still carrying on their merry-making unrestrained by any thought of what either the nation or their ratepayers can afford.

My two immediate predecessors, my right hon. Friends the Secretaries of State for Defence and for Transport found themselves obliged to apply ever more stringent disciplines on local authorities to try to persuade them to budget responsibly. Many local authorities have done so but a good many—;too many—;have not. So we have had, in succession, block grants with taper, and targets with holdback. It is with the latter, for the two years 1981–82 and in the current year 1983–84, that these two reports are principally concerned.

In 1981–82 local authorities were budgeting above the expenditure targets laid down by Government. It was therefore decided to hold back Government grants worth £201 million. In the event, some of the local authorities concerned spent below their budgets. It is, therefore, right that the grant holdback should be reduced. The figure in the report is now £124 million. The main purpose of this third rate support grant supplementary report for 1981–82 is to implement that reduction.

The purpose of the other report—;the first 1983–84 supplementary report— is to implement the Government's proposals for block grant holdback for authorities that have budgeted in excess of their 1983–84 expenditure targets. On the basis of those authorities' budgets—;I stress that at this stage we can go only on their budgets—;the 1983–84 holdback amounts to £280 million. Both reports also make various technical adjustments, including a correction, in the 1983–84 report, of a mistake to authorities grant-related expenditure assessments and to block grant entitlements.

The two reports do not reflect any new policy or any new decisions by the Government. All they do is bring before the House the consequences for the relevant local authorities of their own spending decisions in the light of announced Government policy. When these reports were published at the beginning of the month, the right hon. Member for Manchester, Gorton (Mr. Kaufman) treated the announcement as though it were some terrible. new, shock-horror story that I had somehow sprung on an innocent and unsuspecting local authority world. Of course, the right hon. Gentleman knew that it was nothing of the kind. Every authority named in the report knew how to calculate and almost certainly had calculated how much the grant holdback would be in respect of the two years in question. For the current year, 1983–84, the targets were announced a year ago. The details of rate support grant and of the holdback scheme were announced last December. As the right hon. Gentleman will know because he took part in it, they were approved after a debate in the House last January. So, when the authorities drew up their budgets for this year, they have what the consequences for their rate support grant would be.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Is that absolutely accurate? If one takes as an example the city of Birmingham which has a resource element based on 1972 values—;my right hon. Frend knows in another incarnation the problems of the west midlands—;how can it be only a technical problem when the west midlands district councils are being deprived of grant they need? My right hon. Friend says that these are technical adjustments. How can it be only technical when it is based on a valuation that is 12 years out of date? Does not my right hon. Friend agree that there should be a corrective multiplier, as has been suggested? That would give justice. It is not just a technical matter.

Mr. Jenkin

If I gave the impression that I thought that the consequences of the budget decisions that are dealt with in the reports are technical—;in the 1983–84 report they are purely technical—;that is not what I meant. I said that there are technical statements in the report as well but the reports before the House are the results of decisions on rate support grant and on the holdback arrangements described by my predecessor, now my right hon. Friend the Secretary of State for Transport, very fully in the debate in January. When those authorities fixed their budgets and their rates they knew, or could have known, what the effect could be. That is not simply a technical question.

Mr. Mark Fisher (Stoke-on-Trent, Central)

Surely the Secretary of State understands that local authorities do not decide their rate after January. If he knows anything about local authorities he will know that decisions are starting to be made now for next year. It is far too late to announce a decision in January—;decisons are made in September or October. If the right hon. Gentleman does not understand that he should start to learn about the realities of local government.

Mr. Jenkin

I understand the hon. Gentleman's point. Last year my right hon. Friend the then Secretary of State was warmly applauded by local authorities when he was able to announce the targets in July. I hope that I shall be able to do the same if not in July—;we did, after all, miss a month for the election—;then early next month. I know that that too will be welcome. The most important thing for local authorities to know is what their spending targets are. That is important and was done.

The debate gives me an opportunity once again to spell out the Government's policy. It is important for all those who make decisions in this area to know what that policy is. The Government have a clear commitment to control local authority expenditure. That commitment was endorsed at the general election last month when our manifesto stated clearly: We shall maintain firm control of public spending and borrowing. There should be no doubt in the minds of local authorities as to the strength of that commitment.

I should perhaps draw the attention of the House to one of the most astonishing statements that I have read from the pen of an Opposition Front Bench spokesman for a long time. The right hon. Member for Gorton had an article published in The Times of Monday under the title "Passing the Town Hall Buck". What he wrote demonstrated that despite his years as a Minister at the Department of the Environment his understanding of public expenditure is precisely nil. I shall read the key sentence in what the right hon. Gentleman wrote.

Mr. Gerald Kaufman (Manchester, Gorton)

Why not read it all?

Mr. Jenkin

I am tempted to read it all because it is full of the most astonishing rubbish. I draw attention, however, to this one sentence: As for rate-borne expenditure, it is of course balanced exactly by the rates levied on local taxpayers and so adds precisely nothing in net terms to public expenditure. That is absolute nonsense. If that is what the right hon. Gentleman thinks, I suggest that he takes some elementary lessons in public accounting from some of his colleagues. For example, the right hon. Member for Leeds, East (Mr. Healey), who was in his place a short while ago, would be able to tell him, because he was Chancellor for six years. He knows that all local government spending counts as public expenditure. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who was also in the Chamber until a few moments ago and who is the new chairman of the Public Accounts Committee, could advise the right hon. Member for Gorton that he was talking absolute rubbish, that expenditure by local authorities is public expenditure and has been so defined by successive Governments for many decades.

The right hon. Gentleman will find that in public expenditure White Papers issued by the Government of whom he was a member local authority spending was treated as public expenditure. Whether it is financed by borrowing, by rate support grant or by rates, it is still public expenditure. By that one sentence in that article the right hon. Gentleman displayed a woeful ignorance, and he does not deserve to be treated as a serious commentator on these matters.

Mr. Kaufman

Does the right hon. Gentleman not understand that what is and what is not counted as public expenditure is simply a convention decided by the Government of the day? If one takes, for example, the borrowings of British Aerospace, by a miracle, when British Aerospace is a public corporation its borrowings are in the PSBR but when it has part of its shares sold off into the private sector its borrowings are taken away from the PSBR. It is simply a convention and I was saying in that article— I should be grateful if the right hon. Gentleman would read it all into the Official Report—;that I no longer accept that convention.

Mr. Jenkin

That is interesting. I am not surprised that the right hon. Gentleman changed the subject to British Aerospace from local government. He has now made his position clear; he is no longer adhering to the canons of public expenditure to which every Labour Chancellor, certainly since I have been in the House, has sought to pay regard.

We regard local authority spending as public expenditure, as do the public and ratepayers, and intense pressure is being brought on my hon. Friends and the Government to do something about it. We have had some limited success in checking the growth of current spending by local authorities, and I gave some of the figures when I spoke last month in the debate on the Loyal Address.

It is salutary to remember that current expenditure by local authorities in England rose by 74 per cent. between 1978–79 and 1982–83, that it was somewhat higher than the rise in prices over the same period and that it occurred at a time when the Government were seeking reductions in real expenditure. That is why we have had to do certain unpalatable things, to which I have referred.

As I have said, there is no reason for any local authority to have been taken by surprise. Nevertheless, some of them disregarded the warnings and are now budgeting for expenditure over and above the guidelines. They now know the exact amount of grant that will be withheld from them unless in the coming months, as happened in the earlier year, they manage to reduce expenditure below what they have budgeted for, and I hope that many of them will take the opportunity to do that.

Perhaps one should look at the figures in more detail, and I will give a few of the more striking ones. Local authority budgets for the current year indicate that, in aggregate, targets will be overshot by lo less than £770 million, almost £¾ billion. How much of that is attributable to the GLC, ILEA and the metropolitan counties? The answer is £470 million of the overspend; 61 per cent. of the total is attributable to those eight authorities, all of them Labour-controlled. It is not as if this performance by those authorities is an exception—;a flash in the pan—;because if we look at the pattern of spending between 1978–79 and 1982–83 we find that those authorities alone almost doubled their expenditure, and they have become a grievous burden on the British people that can no longer be tolerated.

Lest Labour Members should think that we alone take this view, I point out that at the Labour party's local government conference in February, at which it discussed the restructuring of local authorities, there was no commitment to retain the metropolitan authorities. The right hon. Member for Gorton was extraordinarily silent about that, and many members of the press drew the clear implication that if Labour had won the election the metropolitan counties would have been abolished along with the shire counties, which he proposed.

To come back to spending, 23 of the top 25 overspending authorities, all of which are effectively controlled by Labour, account for 82 per cent. of the total budgeted overspend this year. These authorities have been egged on year after year by the Labour Front Bench in blithe disregard of the businesses that have been wiped out and the jobs that have been lost because of the high rates which have been imposed on commerce and industry.

The ordinary ratepayer and business man have declared, "Enough is enough". Successive Governments of all parties have asserted the right to set overall levels of spending compatible with their social and economic objectives. They have expected local authorities to accept these broad objectives. Most local authorities have done so, and I recognise the valiant efforts that many are making to keep within the Government's guidelines.

Those authorities are doing a great many things to achieve that, and I will give a few examples. My hon. Friend the Member for 13irmingham, Selly Oak (Mr. Beaumont-Dark) mentioned the west midlands. He will know that in the metropolitan borough of Dudley outside consultants were brought in and identified savings of over £16 million to be achieved over five years. The savings derive mainly from the removal of unnecessary tiers of management, the simplification of procedures and working practices, the obtaining of better purchasing terms and reducing manning levels to reflect activity levels more accurately.

The second LAMSAC report on value for money, published in February this year, contained 56 examples, and the saving of £4½ million, and a further potential saving of £6½ million. The Government continue to encourage privatisation as a means of reducing costs. Many excellent examples showing modest but worthwhile savings were given in an interesting survey by Sandra Hardingham in the Local Government Chronicle last month. For example, in Calderdale the privatisation of daily office cleaning is expected to save over £23,000 a year. In Gloucester, there will be an annual saving of £24,000 from the privatisation of horticulture. I am glad to say that even Labour-controlled Middlesbrough is making use of private services in architecture and engineering.

Equally important has been the challenge of privatisation to in-house services. When faced with the possibility of privatisation, it was found, remarkably and suddenly, that costs could be cut quite sharply. The survey found that 18 local authorities got better deals in their refuse collection. Aylesbury district council found that it could save £100,000 a year.

Consider the question of manpower. The Department of the Environment is setting an important example in cutting manpower. Between April 1979 and April 1983, staff was reduced massively from 50,400 to 36,400. I pay tribute to my predecessors and to the staffs which have worked with them in achieving that reduction. If we allow for those who left because of a change in status, the net reduction is 13,000, or over a quarter of the Department's 1979 staff. We are not asking local government to make manpower cuts on anything like that scale, but surely it could do better than it is. After some limited reductions in manpower over the past three years, local authority manpower is beginning to creep up again. That is a tendency that must be checked. Cost-saving initiatives are especially important.

Mr. John Fraser (Norwood)

Does the right hon. Gentleman appreciate the distress that is being caused? Within the housing benefit system, which is in chaos, there are old age pensioners who are starving and distressed because they have been waiting for months for their benefit. On the other hand, the right hon. Gentleman penalises a local authority that takes on the necessary staff for a demand-led service to carry out a function that central Government have handed to local government.

Mr. Jenkin

Yesterday I chaired a meeting of the Consultative Council for Local Government Finance. It was said during the meeting that some of the staff increases have been due to policies that have been imposed on local authorities by Government. Bearing in mind that many authorities have been able to continue to reduce staff numbers, I think that that argument needs to be considered with a pretty cold and calculating eye. However, I invited the associations to submit any hard evidence that they had to justify the proposition and gave an undertaking to study it.

Early next week I hope to announce expenditure targets for 1984–85. Once again, local authorities will have over six months before they have to set their rates. At the same time, the Government will publish their proposals on rate limitation.

Throughout our first period of office, the Government sought with great patience, if I may say so, to follow the path of co-operation, persuasion and encouragement. It is not the Government who have sought confrontation. Each year the Government have successively revised upwards their expenditure plans so that expenditure targets can take account of local government's real level of spending. That has happened as we have tried realistically to set targets for local authorities. Despite this constructive attitude, there remains a minority of irresponsible authorities—;the authorities are virtually all Labour-controlled—which is determined to undermine traditional constitutional relationships. It is these authorities which have forced our hand. They insist that their freedom to tax the ratepayers comes before the Government's duty to manage the economy, and that is unacceptable.

The duty to manage the economy is one that Ministers have to the House and for which they are accountable to the House. We do not have a federal constitution, and in a unitary authority it is the Government's duty that must prevail in the end. Therefore, we are left with no alternative but to seek new statutory powers.

Mr. William O'Brien (Normanton)

The right hon. Gentleman is talking about the decision of local authorities, especially those that are Labour-controlled, to raise rates. Surely the issue of rates should be for local communities to decide. They can make their decision on the basis of whether they are satisfied with the services that are provided at the price that they have to pay for them. The attitude of local authorities will be reflected in the ballot box. Why do we need to introduce legislation to do something that is already done by the democratic procedure? Does the right hon. Gentleman agree that that is the way in which democracy should function?

Mr. Jenkin

If the hon. Gentleman studies the election results on 9 June, he will find that the attitude of local communities was reflected in the ballot box. He will know that ratepayers turn to the House and to individual members for protection against exorbitant rate increases.

We still want to take every opportunity to pursue the co-operative approach. We are well aware of the effective savings that have been made by many authorities, and it is the performance of the majority that has put into high relief the failure of a few really extravagant authorities.

Mr. Toby Jessel (Twickenham)

Is my right hon. Friend aware that I am anxious that he appears to have it in mind to reduce the grant of the Richmond on Thames borough council from £20 million to £18 million a year? This thinking flows from the fact that about two years ago, in an attempt to hold down rates, the council drew on its balances. That course could not be repeated the following year because the balances were no longer available to draw upon to the same extent. That meant that the council had to introduce a considerable increase in the rates the following year. As a result, it attracted a penalty, which my right hon. Friend is now intending to impose on it. This is seen to be inequitable and I ask my right hon. Friend whether he is prepared to re-examine the position of the Richmond on Thames borough council.

Mr. Jenkin

I can assure my hon. Friend that my colleagues and I have been examining carefully how the target will affect individual authorities. The holdback has not been confined to rating levels, for it has been placed as well on the level of expenditure. The tables show that the majority of authorities have been able to budget within the Government's expenditure targets. It is not asking too much of local authorities to continue to make the utmost efforts so to budget.

After consultation we shall introduce a Bill early in the new year that will give us power to select for rate control those authorities whose past spending has been clearly excessive. The new selective system will apply to the rates to be set for 1985–86. Obviously it cannot apply until the Bill is on the statute book. The Government hope that the selective limitation on rates, coupled with the rate support grant with taper, will bring local government spending within public expenditure plans. However, there remains the possibility that even this will not happen, and so there will have to be introduced a fallback power for limiting rate increases that are imposed by local authorities generally.

The majority of authorities need have no fear of selection. The authorities that face selective rate limitation have, even now, a chance to reconsider their stance as they prepare for the next rating year. It is for them to decide whether they want to be among the small band of councils in respect of which we shall have no option but to act. The general power, which I described as a fallback power, will be placed on the statute book, if the House agrees, in the hope that it will encourage authorities which might be tempted not to budget responsibly to take a more responsible approach. I hope that the power will never have to be put to the test. I know how unwelcome it will be to local authorities, especially to those whose record of spending would never bring them within a mile of selective control.

Our plans do not stop there. I have already mentioned the GLC and the metropolitan counties. In the early autumn the Government will publish a White Paper dealing with the abolition of these authorities. We shall set out in some detail our proposals for dealing with the functions they now carry out. These upper tier authorities in the metropolitan areas are an unnecessary and expensive tier of local government.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

They were created by a Conservative Government.

Mr. Jenkin

Their functions have changed. They are high spenders and the Government cannot continue to disregard the effects that they have on job-creating businesses and on the well-being of the ratepayers.

Mr. Simon Hughes (Southwark and Bermondsey)

rose—;

Mr. Jenkin

I read in the press that the leader of the GLC has threatened to take to the streets if his authority is abolished. I think that many Londoners would regard that as a good bargain.

There are important decisions to make that will effect a number of services and involve tens of thousands of employees. That is why we intend to consult widely with those affected, including staff interests, before legislation is introduced. The Bill will not be introduced until the next Session. It will therefore be introduced in the autumn of 1984. If Parliament passes the Bill, the restructuring will take place on 1 April 1986. I am aware that a number of my right hon. and hon. Friends are anxious for the upper tier of authorities to be ended sooner than that. However, it is more important that we get it right than that we do it quickly. We must therefore allow time for proper consultation and time to draft the legislation carefully. If we rush it, I suspect that we shall get it wrong. I do not intend to get it wrong.

Rate limitation and the abolition of the GLC and the metropolitan counties represent major changes for local government. That does not in any way remove the obligation on local authorities to keep their spending under tight control and to do their best to live within the targets that I shall set. The reports spell out the impact on local authorities of overspending and, in the case of the earlier one, the adjustment to the grant as later figures have become available. They flow inevitably from decisions that were announced by my predecessors and which were approved by the House. I therefore ask the House to give the reports its approval.

5.40 pm

Mr. Gerald Kaufman (Manchester, Gorton)

In Jean-Paul Sartre's play "Huis Clos", four bitterly quarrelling people are locked in a room together.

Mr. Patrick Jenkin

All contenders for the Labour party leadership.

Mr. Kaufman

As will become clear, the right hon. Gentleman gives it a rather longer lifespan than the one that I am about to propose. By the end of that play, the four people learn that they are in hell rather than Brighton and that they are doomed to continue their quarrels for eternity.

During these seemingly endless debases on rate support grant reports, the House might feel that we also are cursed by a malign fate in having to continue them for ever. It is undeniable—;it emerged again in the Secretary of State's speech today—;that the Government have created a form of hell for local authorities. Each year, councils ritually submit their budgets to the Department of the Environment. Each year they are equally ritually told that they are spending too much. Each year some of them are punished and then, as if none of those preceding events had occurred, the Secretary of State for the Environment of the day forces local authorities through the ceremonial process all over again.

Now, of course, there are differences. Each year the method of compiling the expenditure ceiling is changed and each year the method of assessing the penalty is changed. From time to time exemptions from penalty are inexplicably allowed and just as mysteriously withdrawn. Last year and the year before that, for example, local authorities that spent above their ceiling but below the grant-related expenditure assessments were exempted from penalty. There was never any logical justification for that. It was a political device to remove penalties from as many Tory local authorities as possible. This year, that exemption has been arbitrarily withdrawn for no better reason than it was introduced. It is a fact, however, that if the GREA amnesty was still in operation, 42 of the 153 authorities that are penalised in the 1983–84 settlement report would have benefited from that amnesty.

A Government change of mind is penalising 42 authorities which last year might have expected to escape. As it is, those 42 authorities have a justified sense of grievance—;but so have all of the 153 councils that are penalised in this supplementary report. All of them are being fined as overspenders, yet they are not overspending, for the simple reason that there are no overspenders. There are spending ceilings that have been arbitrarily laid down by the Secretary of State for the Environment and there are local authorities, which, for their own reasons, good in their eyes but possibly bad in the eyes of others, have decided that their budgets conform to criteria that are approved by their electors rather than by the Secretary of State for the Environment. That, in case it should strike Conservative Members as a novel notion, is what is known as local democracy.

The House wants to know what the future of local democracy is to be. On 6 July, the Secretary of State announced that he would publish a White Paper on the rating system towards the end of this month. There are only five more days in this month. Will the Secretary of State adhere to that commitment? He gave no sign in his speech that he would. [Interruption.] The right hon. Gentleman is now telling the House that he deceived it. I shall quote what he said on 6 July: I shall make it clear in the White Paper that we shall publish towards the end of this month that the proposals in it represent the Government's considered response".—;[Official Report, 6 July 1983; Vol. 45, c. 280.] The Secretary of State now says that he is breaking his word. Is that correct?

Mr. Patrick Jenkin

The right hon. Gentleman persists in living in a world of conspiracies, lies and deceits, all of which are of his own making. If he listened carefully to what I said, he would know that I said that I hope to publish the White Paper with the rate support grant targets early next month.

Mr. Kaufman

The right hon. Gentleman is breaking his word to the House because he said that the White Paper would be published this month. Next week is not this month but August. Moreover, next week Parliament will no longer be sitting and the right hon. Gentleman will not have to come to the House and justify his actions. He is now admitting that he is diving for the recess rather than coming to the House honestly with a White Paper that has already been drafted. He is deliberately delaying it to dodge the House. The Chancellor of the Exchequer did the same knavish trick yesterday and had to be made to make a statement.

We shall make further representations on this matter because we are not satisfied with that procedure, just as we are not satisfied with the fact that the Secretary of State has now told us that he is not prepared to present the targets—ceilings as they should more properly be described—;to the House before the recess. They were presented to the House last year before we went away. The right hon. Gentleman knows that he has them, so why is he not presenting them to us? Presumably it is because he is afraid to come to the House and justify his actions on the ceilings as on the White Paper.

The right hon. Gentleman is withholding from Parliament and local authorities information about the extent to which he will invent local authorities' overspending for the next financial year. I shall demonstrate what I mean by inventing the overspending. Even if the concept of overspending as defined by ceilings that are prescribed by and penalties that are imposed by Ministers was acceptable, the report would be quite unacceptable. It categorises as overspenders in 1983–84 local authorities that it is impossible to demonstrate are overspenders, even if there were such things as overspenders. Less than one third of the financial year has elapsed and outturn expenditure for the relevant financial year will not be known for another two years or so. That is why we have the 1981–82 report now.

Having invented a crime, the Secretary of State is punishing local authorities that have not even committed it. Local authorities are being fined for overspending simply because they have announced their budgets. It is as if someone is to be fined for shoplifting simply because he has been found in possession of a shopping list. Not only is the crime invented, not only has no one committed it, but the fines are ludicrous. That is not surprising, considering the incoherence and incomprehensibility of the formula for assessing the penalties.

Let us look at the formula for assessing the penalties, as given in the main report, published in January this year. It states: The principles in accordance with which the Secretary of State would propose to exercise his powers are as follows. He would set multipliers greater than 1 for authorities which exceed their expenditure guidance figures. The multipliers would be calculated so as to have the effect of continuously increasing grant-related poundages at the following rates". There is then a list under "class of authority". We are told: Additions to grant-related poundage are to be calculated by multiplying percentage overspend (calculated to four decimal places) by the figures below. For example, the calculation for non-metropolitan districts is as follows: throughout the first 1 per cent. overspend, 0.1367p; throughout the second 1 per cent. overspend, another 0.1367p; for overspending above 2 per cent., another 0.6835p.

The report continues: The split of the ratepayer abatement amount between tiers of authority in the same area is in proportion to each tier's share of grant-related expenditure (ie the same basis as the grant-related poundage schedule is split between tiers in this Report). The split between tiers of the abatement amounts would not be subsequently adjusted to take account of changes in share of grant-related expenditure made in supplementary reports. That is the gibberish on which local authorities are penalised. As for those figures—;0.1367p, 0.6835p and the rest of it—;no one knows how the Government have arrived at them or how they did it. The Government have simply plucked them out of the air. It is scarcely surprising that the way in which those penalties fall on local authorities is little short of berserk.

I shall give the House some examples. Let us take my authority, which has been referred to, of Manchester, and compare it with Hounslow. Manchester is accused of overspending £3,264,000 and is accordingly being fined £715,000. Hounslow is accused of overspending £3,250,000, which is slightly less than Manchester, yet it is being fined £3,512,000. That is five times as much as Manchester and more than its alleged overspend. Bradford is accused of overspending £2,847,000. It will be charged £598,000 for that prospective crime. Leicester is accused of overspending £2,815,000, which is slightly less than Bradford, yet its fine is £3,098,000. That is five times as much as Bradford and, once again, more than its alleged overspend.

Let us consider two inoffensive little Tory authorities— first-time offenders, one might say. Worthing is accused of overspending £121,000, and is being fined £39,000 for doing so. Malvern Hills has an alleged overspend of £120,000, which is slightly less than that of Worthing, yet at £139,000 its fine is four times that of Worthing and once again more than its alleged overspend. This is not financial control; it is Russian roulette. Those local authorities and many others that are equally illogically penalised do not understand their punishment for their non-existent crimes, and they cannot understand why on the one hand they are being urged by the Government to spend money, while on the other they face punishment from that same Government if they take their advice and spend the money.

This year, local authorities are being urged by the Secretary of State to commit funds for home improvement grants. Indeed, they receive a special grant for doing so. However, the problem is that the Government grant is guaranteed for this year alone. Any local authority that agrees to a grant now may well have to pay up in the next financial year. In that case, the Government subvention may not continue, and the local authority's own expenditure may lead to it to being fined for overspending.

Again, under what it calls its "Care in the Community" initiative, the DHSS—;with which the Secretary of State once had something to do—;is urging local authorities to take part in joint schemes for moving elderly people out of hospital into the community. National Health Service money helps to set up those schemes, which are very worthy. However, local authorities under those schemes eventually take over the running costs. Those running costs mount, yet they count against the council's spending ceilings. The Government refuse to exclude those costs from penalty.

Therefore, if local authorities do what the Government urge them to do, they will be failing to do what the Government urge them to do. Russian roulette becomes "Catch 22". Inevitably, in such intolerable circumstances, services are declining. No wonder there was so much gloom in the report by Her Majesty's inspectors, "Effects of Local Authority Expenditure Policies on the Education Service in England— 1982." That document was published only last week. I shall quote just a couple of passages from the lamentable documentation of the effects of the Government's spending cuts.

Paragraph 29 states: It has to be noted that there was clear evidence that (except, perhaps, in London) primary schools were frequently dependent upon parental contributions, not only for 'extras' but to buy books and basic materials. Paragraph 37 states: Overall provision of books in secondary schools was judged to be satisfactory in only two-fifths of LEAs. Library provision was often found inadequate to support the pupils' levels of learning, particularly those of the less academic, and, although in two-thirds of the work observed textbooks were in satisfactory supply, there were still too many cases where pupils did not have enough textbooks in subjects such as English, modern languages and, especially, science. The pupils' capacity to work on their own was therefore reduced. Yet many of those cuts are pointless and unnecessary because they are caused by the non-payment of grant which was wrongly withheld. If those are strong words, it is the evidence of the Government that confirms them. That evidence is contained in the 1981–82 report before us today; a report over which the Secretary of State slid in a sentence or two. However, it is a most significant report in the light of the 1983–84 report. The contradictions in the Government's policies become a chasm of futility when those two reports are compared. On the one hand, the 1981–82 report carries further the Government's policy of close-ending grant—;that is, reducing grant allocation because of grant overclaim by local authorities. On the other hand, the 1983–84 report deals with the very opposite problem—;the failure of local authorities, because of the incomprehensibility of the system, to claim all the grant to which they are entitled. Thus, they are getting some more which they did not ask for, because they did not claim enough, because they did not know how to claim enough.

Then again, as the Secretary of State has told the House, the 1983–84 report withholds £280 million in grant from local authorities that are accused of overspending for the current financial year. On the other hand, the 1981–82 report refunds £77 million grant to local authorities that were wrongfully fined for overspending in that year. Last December, the House approved a supplementary report. In it, 104 local authorities, simply on the basis of their published budgets, were savagely fines for overspending in precisely the way that this report is fining 153 authorities for overspending. But now that the actual spending returns of those 104 local authorities are in, it turns out that nearly half of them did not overspend at all, although they were fined. Most of the others did not overspend by as much as the Government believed they would. In this report, of the 104 penalised authorities, 43 will get back every penny of their fine, and another 12 will be refunded more than half their fines. In all 81 of the 104 will get back some of the grant which was taken away from them by the House last year on the recommendation of the previous Secretary of State.

The total penalty has been cut by more than one third, from £201 million to £121 million, because what the Government alleged last year to be an overspend of £544.1 million turns out, on the Government's criteria, to be only £224.7 million. That was last year's whopping error. What will this year's error be? The Secretary of State talked about a £700 million overspend, but he does not know. On the precedent, it will be much less than that. The Secretary of State made a 142 per cent. over-estimate and shrugged it off as being all in a day's work, yet if local authorities are one or two percentage points out he slices them up on the bed of Procrustes. The right hon. Gentleman said that local authorities know how to calculate, which is true. The problem is that the Secretary of State does not know how to calculate. He calculates 242 per cent. when he means 100 per cent.

Hon. Members will remember the debate after which the fines were imposed. We remember the present Secretary of State for Defence parading the scapegoats during that debate. We were told how wicked south Yorkshire was, but today hon. Members will vote to give back to south Yorkshire £329,000 of its fine. The evil west midlands will get back £1,709,000. Next came that notorious wrongdoer, west Yorkshire, whose refund is £372,000. Hounslow receives a refund of £147,000, and Lewisham receives £327,000. The previous Secretary of State rounded off his list of culprits with the arch-criminal, the dreaded Dr. Moriarty of local authorities—;Lambeth council. Last year the Secretary of State docked Lambeth £3,687,000 for its alleged profligacy. He is now refunding to Lambeth every penny of that £3,687,000, and the same hon. Members who voted to take it away will dutifully march through the Division Lobby to give it back and will say that they were right both times.

Mr. Patrick Jenkins

I admire the right hon. Gentleman's homework, but he is making extremely heavy weather of the simple fact that when councils saw what was proposed for their rate support grant they decided to change their budgets. They spent less, so the amount of holdback penalty that they suffered was correspondingly less. I should have thought that the right hon. Gentleman would have applauded a Government who were prepared to recognise that and to reduce the holdback.

Mr. Kaufman

That was a daft intervention, as I shall demonstrate clearly in a moment. When the House voted to fine those local authorities on their budgets the authorities had already completed their spending. I warned the Government at the time what would happen, and named authorities which the Government were pointlessly penalising when it was already known that they had underspent, although their earlier budgets were above the expenditure ceilings. During that debate I mentioned Knowsley, which is a problem-ridden authority on Merseyside. The right hon. Gentleman took £1,577,000 from Knowsley last year. Today he is giving it back the entire £1,577,000, but not because Knowsley suddenly changed its ways after it heard that it was going to be fined. When the Government asked the House last December to take that money from Knowsley, I told the House that they would have to give it back at some future date, thus causing the authority enormous inconvenience in its cash flow in the meantime.

However, the Secretary of State has learned nothing from that episode, because today, as well as being asked in this report to return that money to Knowsley, we are being asked to start the nonsensical cycle all over again by taking a further £513,000 from Knowsley. If the Back-Bench sheep in the Conservative party do as they are told, no doubt in a year's time they will equally obediently vote to provide the required refund. No wonder some Tory local authorities are so sickened by the Government's antics that they simply get on with providing the services that they believe are appropriate, regardless of the Department's ceilings and penalties.

Tonight Conservative Members, including Devon's full complement of Tory Members, will vote to take £1,941,000 from that county. The action of the Government, and of the county's Tory Members, has been dismissed with contempt by Mr. Keith Taylor, the vice-chairman of Devon's finance and performance review committee. He says: The cut has been taken into account and it will make no difference to the planned expenditure of our published budget … We planned it with our eyes open … Broadly, we said that if we did not spend the extra money, then the effect on services would be more severe than we reckoned was palatable." That is what Tory Devon says about the spending ceiling that the Secretary of State describes as realistic. At about 7 o'clock this evening Warwickshire's Tory Members will vote to fine Warwickshire county council £562,000 for overspending. Today the Association of County Councils local government finance committee has on its agenda a submission to the Secretary of State entitled "Warwickshire's case against spending targets". The Tory-controlled council states: The only way the County Council could hope to meet Government spending targets would be through drastic cuts in services … Warwickshire would have to reduce teacher numbers much faster than falling rolls; it would have to cut the amount spent per pupil on supplies and equipment rather than increase it; it would have to reduce personal social services and not be able to improve them; and it would have to think in terms of a smaller police force and not a larger one. The cost of not doing this would be rate rises of between 30 per cent. and 40 per cent., almost wholly to pay the Government's grant penalties. Without that punitive action, Warwickshire would be able to maintain the standard of its services to the public, and still levy rate increases no higher than the general rate of inflation. All Kent's Tory Members will no doubt walk through the Lobby this evening to take away £3,012,000 from that county. They will anger, but not perturb, Mr. Robert Neame, the chairman of the county council, who says: We were well aware of the penalty provisions when we fixed our precept for the current year … However there is always the necessity to balance the needs of services against the precept increase and when the County Council struck that balance last February we were aware that we were exceeding by 1.9 per cent. the Government's spending target … Although the budget figure exceeds the spending target it is well below the Government's assessment of what the County Council needs to spend to provide an average level of services … We regret that Kent will be penalised but our first duty is to ensure the provision of essential services at a cost acceptable to the ratepayers. Those are the words of responsible local government.

However, local government also has its quislings and collaborators. One of them is a gentleman named Mr. David Tweedie, a Tory councillor from Hammersmith and Fulham, who earlier this month wrote this toadying letter to The Times: At a time of financial stringency it is more than ever necessary for central government to curb the extravagance of local authorities if local electors are unable to do so.

Mr. Eldon Griffiths (Bury St. Edmunds)

Hear, hear.

Mr. Kaufman

The hon. Member for Bury St. Edmunds (Mr. Griffiths) is very loyal to Mr. Tweedie. Mr. Tweedie goes on: Here in Hammersmith and Fulham … our estimates for 1983–84, recently circulated by the Director of Finance, include such items as provision for the expenditure of no less than £670,000 on 'children's play', of which £512,000 is made up as revenue estimates for the salaries and wages of those involved in the play arrangements. Surely it must be a good idea for local authorities to cut back in such areas, which are really not essential, if by so doing inflation is curbed and the currency stays sound. I wonder what the prudent and frugal councillor Tweedie would say about one council which, the week before last, laid on a special works session at a luxury hotel for 35 of its councillors and officials. They started off with a snack lunch. Their talks were later adjourned for afternoon tea. More talks, and then a buffet dinner from which they could choose seafood salad or cider fruit cocktail, followed by roulade of ham, terrine du chef and a choice of four other main dishes, each served with a choice of asparagus tips, devilled bito and goujons of sole tartare. They finished off with sherry trifle and coffee, and the meal was accompanied by various wines costing £63 a case. No doubt those refreshments assisted them in their deliberations, the subject of which was what services would have to be axed or reduced, in order to accommodate the government's latest round of cash cuts to local authorities. The local authority concerned was councillor Tweedie's Tory-Liberal-controlled Hammersmith and Fulham, although, sadly, councillor Tweedie was not important enough to be invited—;just a trifle, no sherry.

The chairman of Hammersmith and Fulham's housing committee described this day, spent at the Cunard international hotel, as "a very useful exercise", and the council has found some aspects of expenditure to cut. For example, it has just started charging £5 a week for the home help service to people receiving attendance allowance, such as people like Queenie Calcott, who is paralysed in a wheelchair following a brain haemorrhage. The cost of the councillors' outing at the Cunard international hotel would pay her home help bill for two years.

That is what the debate is all about. It is not about financial control. Local authorities control their expenditure more efficiently than the Government do. It is not about overspending— none of these authorities has overspent a penny. It is about humanity, service and local democracy. The Government have spent four years trampling local democracy underfoot. They have now acquired a new supply of Lobby fodder that will tonight obediently vote, first, to put right last year's injustice and then to inflict this year's injustice. I call on my right hon. and hon. Friends to register their protest and their disgust in the Division Lobby.

6.15 pm

Sir Anthony Grant (Cambridgeshire, South-West)

We always enjoy the contributions of the right hon. Member for Manchester, Gorton (Mr. Kaufman), even when he quotes rather unhappily from Jean-Paul Sartre or, even more unfairly, gives examples. We could all do the latter. I could give examples at great length of the Greater London council, and the absurd antics upon which it spends money, which makes the example of Hammersmith and Fulham seem like a mildly puritanical tea party. I have some sympathy with the right hon. Gentleman's criticisms, but his strictures would carry more conviction if he had not been a member of a Government who failed to grapple with any of these problems and if he were not a member of a party that is notoriously the biggest and most irresponsible spender of public money that the country has ever known.

I do not wish to follow the right hon. Gentleman into particular points as this is, for me, a maiden speech, after a fashion. It is the first that I make as the hon. Member for Cambridgeshire, South-West. I do not ask the indulgence of the House in making my second maiden speech because there has been a lapse of 18 years since I first spoke in the House as the hon. Member for Harrow, Central. Making a second maiden is rather like the experience of Uncle Peregrine, the confirmed batchelor in Evelyn Waugh's novel, "Unconditional Surrender". He was asked whether he had ever been to bed with a woman, and said rather smugly, "Only twice"—;once when he was 20 and once when he was 45. When he was asked to tell his questioner about it, he said that it was the same woman.

The relevance of that observation is that, although my present and previous constituencies are different in many ways, they also have much in common. I am honoured and proud to represent a constituency that has agriculture as fine as that of anywhere else in Europe, and as many thriving small firms dealing in modern sophisticated goods and services as anywhere in this country.

It is agreeable that my new constituency is formed out of the constituencies of my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) and my hon. Friends the Members for Huntingdon (Mr. Major) and for Cambridge (Mr. Rhodes James), all of whom are personal as well as hon. Friends and all of whom are Members whom I greatly admire. It is people rather than geography who make a constituency and, therefore, I find something else in common with my previous constituency, which leads me back to the subject of the debate.

Cambridgeshire has been badly treated by the rate support proposals. It is the same old story of putting councils that have been prudent and cost-conscious in the past on the same level as the spendthrift authorities. It was the same last year and the year before that in Harrow, where the authority suffered because it cut expenditure in the year on which the rate support grant was based, while loony London councils frittered away money like water on the party political nonsense about which we all know too well. There were tributes to Karl Marx festooning their boroughs and idiotic trips abroad on all sorts of strange causes. Yet they were dealt with on the same basis as responsible councils such as Harrow and Cambridgeshire, with which I now have the honour to be concerned.

I agree with my right hon. Friend the Secretary of State for the Environment that the irresponsible councils should be hammered, and hammered hard. That was the policy that we put before the electorate, and it is what the electorate expect us to do. Cambridgeshire has heeded the siren voices of Treasury Ministers of both parties and the voices of the IMF. The county council has cut staff, it has cut out bureaucracy, reduced the number of chief officers from 13 to nine and, I am particularly pleased to say, has privatised some of its services, much to the benefit of ratepayers. Only recently, it made a decision, which I support, to go out to contract for the cleaning of schools in the area, and that will save the hard-pressed ratepayers vast sums of money. I hope and believe that the council will proceed further along this road, following this fundamental feature of the Government's policy.

The actions of the Cambridgeshire county council have been wholly in accordance with Government thinking and philosophy, all of which was put before the electorate and endorsed at successive elections. However peculiar, strange animals breed inside the Department of the Environment, called "GRE" and "Regression analysis", which sound rather like the ugly sisters, and with whom hon. Members will be familiar. These animals have weird effects. Cambridgeshire, despite its financial responsibility and prudence, is to be penalised to the tune of £1.5 million in 1983–84. This is because the rate support grant is based upon historic rather than current data. It is especially ironic, as I understand it, that the base in this case is 1978–79, when Cambridgeshire was responding to the clamour of the then Labour Government, no doubt with the IMF breathing down their neck, to curb local government expenditure.

The test of eligibility for the rate support grant should be based on people's needs. I remind my right hon. Friend the Secretary of State for the Environment that in recent years East Anglia has had the fastest growing population in England and that Cambridgeshire has been the fastest growing part of East Anglia. My hon. Friend the Member for Huntingdon (Mr. Major), who sits in silence on the Government Front Bench., will appreciate that the town of St. Neots, which I inherited from him, has been the fastest growing town in that area. The Secretary of State for the Environment had an opportunity to see the position when he went to St. Neots during the election campaign.

If Cambridgeshire is penalised or even put on the same footing as the more irresponsible authorities, that would provide vivid illustration of the fact that something is fundamentally wrong with the system. We all look forward eagerly to my right hon. Friend's White Paper on rate reform. It is a subject in which I have taken some interest and on which I spoke during the last Parliament. If we imposed a poll tax equivalent to the cost of a television licence and shifted teachers' salaries to the Exchequer, the rate support grant could be reduced and be far less significant. Local authorities would be more independent. During this short debate I cannot go into the whole subject of rate reform, but I give my right hon. Friend a sign of what I hope will be in his White Paper. Until the rate support grant is reduced, I ask my right hon. Friend to ensure that local authorities' good housekeeping is rewarded, not punished, and to bear Cambridgeshire in mind in this connection.

I support wholeheartedly the Government's policy to abolish the idiotic organisation called the GLC. I hope that the substantial savings that might accrue will benefit the more responsible authorities, such as Cambridgeshire.

I have great admiration for my right hon. Friend the Secretary of State for the Environment and I wish him well in his new job. He is a man of great experience. He entered the House on the same day as I did. We were pleased to see him when he visited the constituency during the election campaign. He has experience as Chief Secretary to the Treasury. I hoped that he might have been appointed Chancellor of the Exchequer, but he has a responsible post. I rely on him to cut through the jungle of officialdom in the Department of the Environment, which has served us ill when allocating the rate support grant, and which, unless something is done, will do so again in future.

One of my right hon. Friend's predecessors, in a Labour Government, said "The party is over." It certainly is. My right hon. Friend should visit his wrath on the drunks still lying on the floor after the party and not on those diligent people who have already started to tidy up the mess.

6.23 pm

Mr. Jeremy Corbyn (Islington, North)

During this debate we see the continuation of the argument that the Government have put forward during the past four years— that high rates are the responsibility of profligate local authorities. The reality is that the Government have spent the past four years penalising local authorities, taking money away from them, making their job harder, leaving them with the problems created by the Government's economic policies, forcing them to put up rates to maintain services, and then running a local propaganda campaign against Labour-controlled authorities for increasing the rates. Today we see a continuation of the Government's attack on local government. The amount cut from local authority support in London is astronomical. During those four years Islington lost between £25 million and £30 million and the problems facing the people of that borough multiplied.

We also see an attack on the constitutional position of local government. The Government continually say that local authorities are wasteful and spend too much money on services. Yet at the same time they claim that local authorities are independent and have freedom of action. Clearly they have not.

I was elected to the local authority in Haringey, first, in 1974 and then in 1978. The Labour party put forward a manifesto in the 1978 election based on the law then pertaining and upon the finance likely to be available from central Government under the rate support grant system. The manifesto was accepted and supported by the people, and the council was duly elected. Because central Government changed the rules over the following four years, the democracy that elects councillors is regarded as cheaper and second-rate compared with the democracy that elects Members to this House. The Government are saying that they hold in contempt those who have been elected in local government elections. The Government imagine that they can ride roughshod over the attempts of local authority members to provide services for the people whom they represent.

As my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) said, the reality is that the services that can be provided and the decisions that local authorities can make are controlled by central Government.

My experience of local authorities' rate-making decisions is not as described by the Government. All boroughs face horrendous problems—;multiple homelessness; people being forced into bed and breakfast accommodation because the local authority cannot provide decent housing; waiting lists for home helps; nursery provision; legitimate demands for support for more nurseries; support for a multi-ethnic community; and support for the unemployed. Most of those problems have been created by central Government.

In contrast, central Government lecture local government about not spending too much money on such people. That is the most disgraceful aspect. Ultimately, the decisions made in this place on the policies put forward by the Government mean that old people, who after a lifetime's work are perhaps confined to their homes and in desperate need of home helps, are charged for or, even worse, denied home help. Disabled people are denied the grants and assistance that they should have.

One can see the difference between the attitude taken by inner London predominantly Labour-controlled authorities that do their best to provide services for those people who are worst off and that taken by outer London boroughs that do the opposite and try to toe the Government's line by cutting services at their behest.

The north Tottenham-north Wood Green area is on the border between the boroughs of Haringey and Enfield. The borough of Enfield has been Conservative-controlled since 1968. People leave the borough of Enfield daily to go to Haringey because they know that they can obtain a cheap lunch at an old people's luncheon club there. Such lunches are not provided by the Tory-controlled borough of Enfield. A similar story is repeated all over the country. Mean Tory-controlled local authorities do not provide the services that the elderly deserve. I am sure that many of my hon. Friends could recount similar experiences.

The principle of central Government control of local government is put forward continually. We are repeatedly lectured that local government is wasteful and tries to provide unrealistic, expensive services.

I ask the House to consider the way in which local authorities' housing policies are treated by central Government. I wish that the homeless could organise themselves, turn up at this place and tell Members what it is like to live in bed and breakfast accommodation and to queue at housing action centres week after week knowing that, because of cuts in the amount available for building from central Government and in the rate support grant, no house will be available.

If a local authority wishes to provide housing for its homeless people, central Government will decide the cost and design of the properties that borough and district councils propose to build. Central Government reject those plans if they think that they are too expensive. There is then an endless toing and froing for months and months until some agreement is reached. As a result, the local authority is allowed to build the houses that it wants, usually of an inferior standard, with smaller rooms, smaller windows that are not double glazed, less insulation and smaller gardens. As central Government's attititude to a borough's building policy is so mean, social problems begin to increase. People are put into houses that are too small for them, and they pay more through vast heating bills, because of inadequate insulation.

If we are to have genuine democracy, we must give local government freedom of action to respond to, and meet, the needs of its local community rather than have it dictated to by a bunch of bureaucrats in Whitehall, whose spokesperson on the Government Bench cannot even be bothered to stay to listen to the debate.

The other great lie that is continually peddled about local authorities is that somehow they can be made more efficient by privatising the services. If Conservative Members had any knowledge whatever of the way in which local government is run, or if they talked to those who try to administer it, they would not preach the gospel of privatisation. If the House rises early enough tonight, I invite Conservative Members to take a bus to Wandsworth, to knock on the doors of any 20 houses and to ask the people what they think of the refuse collection service in that borough. If there is more time, they should go to Southend and ask the people there what they think about their refuse collection service. If those people complain about the service, they are referred to the private contractor who says, "It has nothing to do with me." He rejects the complaint, because he is much too busy making money.

The reality of the privatisation of local government services is not that the ratepayer gets a more efficient service or that the public purse is better off, but that jobs are cut, people are made redundant, and there is less control over the way the services are delivered.

Westminster city council recently decided that it would be cheaper if it privatised the cleaning of its town halls. Women workers who have given years of service, doing what in many cases was unpleasant work late at night or early in the morning, were told that they were surplus to requirements and that a private cleaning company would be brought in.— [HON. MEMBERS: "Quite right, too."] Conservative Members should get in touch with their friends on Westminster city council and ask why they could not even be bothered to meet the 25 women, some of whom have given 30 years' service and more, who were dismissed via a duplicated letter. That is the attitude of many councils to privatisation.

The Westminster city council claimed that by sacking a large number of town hall cleaners the ratepayers would be better off. Those people, instead of doing a useful job, were made redundant and forced to go through the indignity of queueing up week in, week out, for a measly pittance handed out by the state—;a charge on central Government funds. Therefore, unemployment was deliberately created and the profits handed over to a private enterprise cleaning firm. That story is repeated throughout local government.

When the Government preach the gospel of privatisation, in reality they are preaching an end to democratic control of local government and the handing over of vast profits to private cleaning companies that are accountable to no one. By doing so, they force workers, who had previously fought for and obtained satisfactory conditions, to accept worse conditions because the alternative is the horror of the dole queue. That is part of the attack on local government trade unionism and is an attempt by the Government to depress the living standards and wages of people employed in the public sector.

If a survey were taken of those in local government who must provide the street sweeping, refuse collection, gardening and other services, they would say that we were mad to dismantle a satisfactory system of democratic control and instead to bring in a private enterprise firm that was accountable to no one. Such a policy merely allows large profits to be made out of local government.

The Government have waged this insidious war of attrition on local government for the past four years. Instead of taking account of need and asking local authorities, "What are the needs and problems of the people whom you represent?", they are saying "We know better. We shall decide how much to spend, and halfway through the year we might decide to cut the amount of money available." As a result, the local authority is placed in a terrible position. It may be forced to sack workers or to reduce services halfway through the year. That removes a basic form of local democracy.

These reports are yet another nail in the coffin of local government, as is the attack against the metropolitan authorities and the GLC. We should be talking about genuine local democracy so that from one year to another local authorities have some idea of how much money they will get instead of taking away this right to control and provide local services and imposing on them a series of quangos.

The Minister's predecessor was supposed to be hunting the quangos. Instead, the Government seem to be trying to destroy the metropolitan authorities and the GLC by imposing self-appointed bodies—;presumably with the approval of Conservative Members—;that will administer local government and take away the democratic control that has been fought for over many years.

Even some Conservative Members must now feel that their authorities have on occasions been treated badly by central Government. I hope that they and my hon. Friends will look on these reports as the start of a major constitutional shift by destroying local democracy and handing greater power to central Government. By the end of this Parliament, if it runs its full term— which I sincerely hope it will not— we shall have not local government but a Minister supposedly responsible for local government. In the same way as the French education Minister used to decide local education policy, he will decide every iota of local authority expenditure.

Conservative Members may paddle a populist canoe for a while and argue that rate increases are the fault of local authorities for trying to provide services, but, come the cuts, people will begin to realise the truth. They will see through the lies that they have been told and will turn rapidly against the Government.

6.38 pm

Mr. Ken Hargreaves (Hyndburn)

I thank you, Mr. Speaker, for calling me to make my maiden speech. Maiden speeches can be something of an ordeal, for deliverer and listener alike. My own nervousness was hardly helped when one of my well-meaning constituents sent me a newspaper cutting quoting a former Member, not known for his reticence, as saying that he was almost unconscious with nerves when first called by Mr. Speaker.

I represent the new constituency of Hyndburn, which came into being through boundary changes. In effect, it is the former constituency of Accrington, to which has been added the township of Great Harwood and the village of Altham, previously part of the Clitheroe constituency.

I should first like to pay a geniune and sincere tribute to my friend, opponent and predecessor, Arthur Davidson, who represented Accrington. He was a Member cif the House for 17 years and those who served with him will agree that he had the respect of all parts of the House. He was a hard-working and conscientious Member and very popular with his constituents, many of whom have cause to be grateful to him for intervening successfully on their behalf when they had a problem. He served us well.

When my constituency's election result was eventually declared, having been the last in the country, I said that although I was delighted to be the first Conservative for 40 years to represent Accrington, I would rather have beaten anyone than Arthur Davidson. It was particularly hard for him to be beaten so narrowly after so many recounts. I had hoped that the Dissolution Honours List would have included his name, so that victor and vanquished could have been together at Westminster. However, it was not to be, and I wish him well in whatever he intends to do. I thank him for the service that he gave the people of Accrington.

The other part of my new constituency was represented by my hon. and learned Friend the Member for Ribble Valley (Mr. Waddington), now Minister of State, Home Office. If I discharge my duties to his former constituents as well as he did I shall not go far wrong. I am most grateful to him for his kindness to me in recent weeks.

To be elected to the House is always a great honour. To be elected by the people among whom one has lived all one's life and who consequently know one's faults and failings is an even greater honour, but one which makes one feel humble and anxious to justify the confidence shown in one. As my hon. Friend the Member for Bury, North (Mr. Burt) said in his maiden speech, It is a fortunate man who can represent his home town."—[Official Report, 19 July 1983; Vol. 46, c. 244.] Hyndburn is as typical a Lancashire industrial constituency as any to be found. Its history bears witness to the creative skills of Lancashire. The spinning jenny, which revolutionised the textile industry, was invented in my home town of Oswaldtwistle by James Hargreaves in 1764. I share his name, but not his blood— nor, I regret, his inventive genius. I understand that he died a pauper. After last week's debate, that may be the only thing that I shall eventually have in common with him.

We must never forget that this country prospered through the skills and hard work of the people in the textile industry and other industries. There is more than a little truth in the old slogan that Britain's bread hangs by Lancashire's thread. When those skills brought a further revolution in the cotton industry, Hyndburn and the surrounding areas were rewarded with more than their fair share of unemployment.

Hyndburn covers an area of 28 square miles and with a population of 79,000 it is the most densely populated area in north-east Lancashire. However, we have good provision of public parks and open spaces. The constituency is overlooked by the Pennines to the south and east and is on the edge of the forest of Bowland to the north. Among our most recent claims to fame is that the Accrington art gallery has one of the world's finest collections of Tiffany glass.

The Hyndburn work force is 37,000 and is renowned for its craftmanship, loyalty and excellent industrial relations, but it has been badly hit by unemployment, which is currently running at more than 15 per cent. Although we no longer depend so heavily on cotton because we have diversified, manufacturing industry still dominates the working life of the area and goods ranging from greetings cards to billiard tables and aerospace components are produced.

Hyndburn has severe problems—;many not of its own making— of high unemployment, large areas of dereliction, poor housing and hospital and rail services under threat. Given the opportunity, its people work hard for low wages. We are proud and independent people who would far rather give help than receive it, but we desperately need help now.

I supported the Government's decision in 1979 to withdraw assisted area status because our unemployment rate was just over 4 per cent. and it seemed sensible that if Government aid was to be given at all it should be concentrated on the areas of greatest need. Unemployment in my constituency is now more than 15 per cent., so it has become such an area. Not only has our submission for assisted area status been rejected, although neighbouring Rossendale has been granted development area status, but our application for designation under the provisions of the Inner Urban Areas Act 1978 has also been turned down. Neighbouring Blackburn has been upgraded from a designated district to a programme authority while Burnley has become a designated district. My constituency is therefore surrounded on all sides by local authorities which have been identified as areas of need and to which some form of Government aid has been given. That has increased and accentuated the economic decline of Hyndburn.

The borough council, of which I am a member, has always tried to keep its expenditure under control and was reducing spending of its own volition before cuts were imposed by central Government as we believe it to be in our ratepayers' interests to do so, not least because people on low wages cannot afford high rates. When central Government subsequently asked for cuts, we made those as well, only to be penalised further because other authorities overspent. We were therefore pleased when the Conservative Government departed from the old and foolish system whereby the more a local authority spent the more grant it received, at the expense of more prudent authorities.

The grant-related expenditure assessment seeks to establish an absolute level or yardstick by which comparisons can be made. I realise the enormous difficulties in the GREA exercise and in ensuring that the indicators, used accurately, reflect the costs and needs of each authority. I argue, however, that the GRE indicators heavily under-represent the needs of my constituency. The E7 and C19 housing indicators are of particular concern. If a local authority's expenditure is considerably above the GRE level, that implies that the authority is a relatively high spending authority or that the GRE formula does not accurately reflect the needs of that authority.

The selection and weighting of indicators in the GRE system for shire districts has been heavily influenced by regression analysis of past expenditure by local authorities. Therefore, there is a danger that authorities with needs which are untypical of previously high-spending authorities may have their needs underrepresented. I submit that the needs of Hyndburn and other urbanised north-east Lancashire authorities are not adequately reflected in GREAs. That is the main reason why five such authorities have expenditure guidances more than 15 per cent. above their GREAs.

I was therefore particularly pleased when my right hon. Friend the Secretary of State said that there was an element of rough justice in GRE. I agree with him, and my constituents are feeling the effects. Unemployment rates have only marginal importance in determining GRE, but high unemployment leads to significantly increased local government expenditure requirements.

The transport GRE fails to take account of the different needs of transport spending authorities within a county and whether the authority runs its own bus services. Because Hyndburn previously had one of the few profitable bus undertakings— it now makes a loss— its spending relevant to its GRE and its expenditure target has been seriously affected.

The system of GRE is an improvement on previous methods, but it is far from perfect. The failings of the system cause severe problems for many authorities. As my local authority is worried about the effects of high rates on its ratepayers, the present rate support grant system means that many of its traditional activities have been severely constrained and new initiatives with revenue implications have been virtually stopped. It is particularly ironic that the GRE system should discriminate against Hyndburn, as 80 per cent. of the houses are owner-occupied and especially as the GRE system never stopped Hyndburn aiding needy owner-occupiers.

I am grateful to the Government for following policies which have reduced inflation and interest rates, which play a significant part in the level of rates. I believe that the Government have a right and a responsibility to determine the overall level of public expenditure. I regret that what my right hon. Friend the Prime Minister referred to as the customs and conventions which govern the relationship between local and central Government have broken down. That, more than anything else, has caused my local authority's present difficulties.

I am glad to see from the report that the Secretary of State has considered the representations made by local authorities under section 8(4) of the Local Government Finance Act. I hope that he will seriously consider reviewing the GRE indicators so that authorities which set out deliberately to ignore the Government's policies are penalised and councils which genuinely seek to co-operate and are proved to have been reasonable will not suffer financially or from the humiliation of being classed with the Greater London Council as overspenders.

It comes as a shock to a council which in the years since reorganisation invariably had rates increases below the average suddenly to find itself classed as an overspender. Any system which requires a council to provide rock and roll on the rates, as we read in yesterday's newspapers, while another council is desperately trying to maintain essential services clearly needs to be examined and improved.