§ Order for Second Reading read.4.16 pm
§ The Secretary of State for the Environment (Mr. Tom King)
I beg to move, that the Bill be now read a Second time.
In response to a question in Hansard on 11 February from the right hon. Member for Manchester, Ardwick (Mr. Kaufman), about the urban development grants programme, I told the House that doubts had been expressed by some authoritiesabout their powers under section 137 of the Local Government Act 1972 to grant aid land acquisition and building works comprised in projects approved for urban development grant because one of the specific powers conferred on them is to make loans for these purposes.I said then that I was advised that there were sufficient grounds for doubt that it would be right to amend the law in England and Wales to clarify the matter, and that I intended to do that at the earliest opportunity. I have brought the Bill before the House today in an effort to discharge the undertaking that I gave the right hon. Gentleman. I made clear thatIn the meantime, I am prepared to pay urban development grant towards expenditure incurred for those purposes on approved schemes. I hope to announce the first list of project approvals shortly."—[Official Report, 11 February 1983; Vol. 36, c. 484.]I did that four days later.
§ Mr. King
I was grateful at that time for the general welcome that was given to the urban development grant scheme, which I think has been widely welcomed by all political parties as a way in which to direct and stimulate private investment, using public money as the pump primer to get more investment into inner cities and areas of social need.
§ Mr. Cunningham
I want to ask the Minister about his first sentence. He seems to be accepting that there is a doubt as to what the law is at the moment. Does that mean that this Bill is intended to remove that doubt retrospectively? Will this Bill have retrospective effect? Yes or no?
§ Mr. King
No. It does not have retrospective effect because it involves payments that are to be made in the year 1983–84. The proposals that I announced on 15 February concern schemes that will be implemented in 1983–84. Provided the Bill proceeds satisfactorily, I trust that there will be no question of retrospective effect.
I am grateful for what I believe is the general welcome that has been given to this proposal for urban development grants. It involves the powers of both central Government and local authorities to pay grants, in that the urban development grants element of the total expenditure is met under the normal urban programme provision of 75 per cent. central Government and 25 per cent. local government grant.
One of the merits of the urban development grant scheme is that it covers a wide range of projects. In a 360 moment I shall say a word about the latest batch, which further illustrates the variety of projects that are possible under the scheme. We are eager to encourage such projects. We are anxious that they should be supported and to see no impediment to the powers available to local authorities so that they can play their part and make their contribution to the projects that are approved.
I hasten to say that the Bill will benefit areas where there was doubt and it was thought that there were not adequate powers. However, we expect that for a considerable number of authorities, depending on the project involved—it may be a housing project or an environmental project—there will be adequate powers. It is in connection with the possible overlap with the Local Authorities (Land) Act 1963, as amended, that that doubt has arisen. We wish to remove that doubt. The other reason why there is variety in the individual authorities is that their powers depend on their local Acts, which vary. Right hon. and hon. Members will know that there is a considerable variety of local legislation that gives different powers to local authorities.
I do not want to labour this point as this is a technical amendment. The hon. Member for Islington, South and Finsbury (Mr. Cunningham) may wish to debate this point. There may be an implication that somehow the Bill increases the powers of local authorities to spend money under section 137 of the Local Government Act 1972. If they allocate the funds that are available to them under section 137 for these projects, that restricts the funds that are available for other projects. As those projects will have private sector investment, be approved by the Government and put forward by the local authority, they will be partnership schemes and in that sense will tend to reduce the scope for the abuse of section 137 that the hon. Gentleman has suggested has happened in certain areas, and which has given him great concern.
The fundamental aspect of section 137 is that it is the catch-all or provide-all provision that enables local authorities to incur expenditure up to the product of a 2p rate in any financial year for the purposes that in their opinion are in the interests of their area or its inhabitants. It is a well-known and useful provision, much valued by people in local government and used in the vast majority of cases responsibly and sensibly for a number of different purposes. It also gives valuable local discretion to local authorities.
There is a clear prescription in the Local Government Act 1972 that makes it clear that that power cannot be used where there already exists a specific power, albeit narrow, to incur expenditure. The problem that has arisen relates to the Local Authorities (Land) Act and, possibly, to local Acts where there are specific powers. The power provided under the amendment to the Local Authorities (Land) Act made it clear that a local authority can make a loan. The doubt was expressed that as there was a power to make an advance, but it could be only a loan, it prevented the use of section 137 where an authority wishes to make a grant for a similar purpose, whether for the acquisition of land or the carrying out of building works on land. There was doubt about whether that was a real uncertainty and difficulty, but I was satisfied that to avoid any possible doubt, it was sensible to invite the House to pass the amendment to the existing legislation, which is incorporated in the Bill.
The order-making power in the Bill may exercise the minds of some hon. Members. The Bill gives the Secretary 361 of State the final say in deciding whether an order shall be made. Subsection (3) enables the Secretary of State to limit the extent to which a local Act shall be disregarded for the purpose of determining section 137 spending powers, and subsection (4) provides for consultation between the Secretary of State and the local authority before an order is made.
I have spoken briefly about the amendment. I have not sought to go through the Bill because if one starts doing that one comes out at the other end before one realises that one has started. I have outlined the purpose of the Bill. It relates to a narrow point that I described to the right hon. Member for Ardwick in my answer to him. I do not underestimate the value that it can bring in respect of avoiding doubt over the implementation of the urban development grant. I think that it will prove to be an important new scheme.
I announced to the House on 15 February the first 41 projects that I had approved, which amounted to an additional £50 million of new investment, of which about £10 million will be urban development grant. They will attract £40 million of private sector investment, thereby achieving a ratio of 4:1. Today I am approving a further 16 projects amounting to a further £32 million of new investment in inner cities and areas of social need. That will comprise some £6 million of public sector contribution. There will be £4.5 million from the national Exchequer and £1.5 million from the local authority concerned. About £26 million of private sector investment will be attracted giving us a slightly better ratio of 4.5:1.
I shall quickly give the names of the authorities of which the projects that they have put forward in partnership with the private sector I am supporting. I think that I shall be acquitted of political prejudice. The authorities are Newcastle, Leeds, Wakefield, Sheffield, South Tyneside, Birmingham, Rochdale, Sandwell, Brent, Hackney, Southwark and Tower Hamlets. The projects covered involve housing, industrial units, craft workshops and a number of schemes that will undoubtedly be in areas and sites that otherwise would have remained derelict and unimproved. Now the inner cities will see economic activity once again and will provide employment, with the construction work involved and also with the subsequent occupations that will be created. The projects will play a useful part in removing further eyesores. I have therefore announced to the House so far under the scheme some £.16 million of urban development grant projects approved, which have now generated a total of £80 million of new investment. I hope that the House will agree that this was a most encouraging start.
The House will be aware that there are still a considerable number of projects awaiting assessment, appraisal and, I hope, approval. I point out to hon. Members who have raised the matter and to the local authorities concerned that I am aware that authorities are still awaiting a reply from my Department about projects. They will appreciate that this has been a new scheme for the Department to manage and that much additional work has been entailed. Local authorities, too, had to understand how to submit applications properly.
Only this morning I had a discussion with my noble Friend the Minister for Local Government about how we can speed up our end of the appraisal process. The House will appreciate that it is important that the appraisal is done thoroughly. Anyone who makes even a cursory study of the projects, especially some that have been rejected, will 362 know that we have to consider carefully the key issue as to whether the project would proceed, were it not for the public sector contribution. This is an important consideration in the management of and responsibility for public funds. Therefore, a careful appraisal must be made.
There are ways in which we can improve the processing and appraisal procedures and the final approval by Ministers. I am anxious that something is done. I know that private investors and developers have approached local authorities about projects and that the authorities are embarrassed because they have not had a reply from the Department. They are anxious to proceed with the schemes. I hope that we be able to give early replies about the projects which are still coming forward.
§ Mr. Christopher Murphy (Welwyn and Hatfield)
My right hon. Friend said earlier that he did not want to be accused of political prejudice, which I understand. However, I should like him to be a little politically prejudiced. Surely what he is saying is that he is liberating a large amount of private enterprise money which will go into areas which would otherwise not get an opportunity to be redeveloped for the good of the people who live there. Surely that is something that we as a Conservative Government should be proud of.
§ Mr. King
If my hon. Friend was under the impression that I was not proud of the announcement I was making, I am sorry that I misled the House. I am extremely proud of the urban development grant scheme. It makes a major contribution in a most important area. Anyone who makes the most limited study of the problems of inner cities—the House will know that I spend quite a bit of time on these problems—will know that there will never be the public resources that we need to tackle all the problems. Capital investment is needed. One of the tragedies of the last 10 years is that inner cities have seen investment decline. We must get investment back into the inner cities. The most effective way to do it is by enlisting the support, enthusiasm and skills of the private sector.
We must unlock the substantial resources that exist within private investment, in the pension funds, insurance companies, banks and building societies; these resources could make a major contribution to tackling some of the problems. The type of investment which institutions are prepared to make is important for improving the environment of inner cities.
§ Mr. Don Dixon (Jarrow)
The Minister has mentioned inner city areas many times. I was pleased that he referred to south Tyneside at the beginning of his speech. Will he not accept that urban areas such as south Tyneside have as many, if not more, social problems than some of the inner city areas that he keeps talking about? It is a misnomer to refer continually to inner cities as if they were the only areas with social problems. I remind him again that the area that I represent has more social problems than many inner city areas.
§ Mr. King
I used the term "inner cities" in a fairly wide context. I make it clear that urban dereliction exists in many areas. It is part of our programme to seek to remove it. The more we can bring in additional resources from the private sector and the more we do to ensure that such resources as exist within the urban area may be used to attack the problem across the widest front, the better. The hon. Member will know the language of the partnership 363 authority, the programme authority or the designated district. Several of the new schemes have helped to get away from too narrow a definition into other pockets of dereliction where we are anxious to see a contribution made.
It is exciting, and I hope the House will share the excitement, to be able to announce this year urban development expenditure of £349 million, which is some 28 per cent. above the provision for last year. The expenditure on urban deprivation or whatever phrase one uses, will be greater because I have been able to announce to the House on successive occasions substantial additional programmes of investment. On the derelict land grant I announced in addition to the public sector investment of £30 million a contribution of £200 million from the private sector. I am in the business of seeing how I can harness the most substantial resources effectively and viably. It is not just a case of pumping in subsidy but ensuring that there are viable improvements in inner city areas so that they can thereafter become self-sustaining. That is the approach I am seeking to adopt.
I want to ensure that there is no legislative impediment for the few local authorities that are affected by existing legislation; it is not possible to be certain how many are affected. Because I wished to respond to the local authorities which are concerned about the matter, I have brought forward this short Bill at the first opportunity to remove any doubts. It is against that background that I commend the Bill to the House.
§ Mr. Gerald Kaufman (Manchester, Ardwick)
I should say at the outset that we shall assist the Bill on its way to the statute book. We have some criticisms. We shall seek to improve the Bill, but we support the intentions behind it.
The necessity for the Bill is yet another example of the almost lunatic incompetence that has afflicted almost every move of successive Secretaries of State for the Environment during the past four years. Scarcely a week goes by without new evidence of the mess into which the Government have plunged themselves and local government as well. Every time they so much as touch anything to do with local government finance, it somehow seems to go wrong.
Last Thursday, for example, we had an extraordinary written answer by the Secretary of State who, in a move unprecedented even for him, chided local authorities for having claimed too little rate support grant. He warned them that, whether they like it or not, they will get more. It seems that local authorities have under-claimed rate support grant to the tune of £57 million for the new financial year and that, instead of the usual clawback that is the consequence of aggregate over-claim, there is to be yet another of the Government's innovations in local government finance. A new name will have to be invented for the bizarre process—possibly clawforward or handback.
The Secretary of State, whose sheer cheek knows no bounds, asserted in his answer that the unprecedented move was a result of the effective operation of the grant system, but it is really the result of a grant system so berserk in its methodology that local authorities have no idea how to claim. In despair, and knowing the 364 Government very well, they have claimed too little in the hope that, by doing so, they will fend off the evil eye of the Secretary of State.
§ Mr. Kaufman
I accept that, but we did not claim to have introduced a system so open and clear that no one could possibly misunderstand it. Nor did we claim, as the Secretary of State did in a desperate last sentence in his answer, that it was the result of the effective operation of the grant system.
The Bill is yet another example of the confusion that the Secretary of State generates wherever he goes. He referred to my question to him last month and his reply to it. When I asked whether the legislation governing urban development grants was effective, the Secretary of State airily replied that it was perfectly all right, but that as there might just be some small ground for doubt, he intended to amend the law to "clarify" the matter. We should always be wary when the Secretary of State uses that word. He first used it in its special sense in last year's rate support grant report when he discovered that the holdback scheme was illegal and announced that legislation would be introduced to "clarify" the law. The language of the previous Secretary of State was Heseltinese. We now have King's English, but that, too, requires translation. The word "clarify" is King's English for retrospectively legalising something that was illegal when the Secretary of State originally did it. Last month he was saying comfortably that there was no more than some ground for doubt about the right of local authorities to make grants, but the explanatory memorandum to the Bill flatly states:Section 137 does not at present authorise expenditure for a purpose for which other, albeit narrower, powers to spend exist.That is not doubt. It is prohibition, and the Bill rightly removes it.
§ Mr. George Cunningham
Perhaps I may put to the right hon. Gentleman the question that I put to the Secretary of State. Is it his understanding that the Bill has retrospective effect in making legal something that has already been done and which, but for the Bill, might be held to have been unlawful?
§ Mr. Kaufman
The Secretary of State, quite defiantly in his reply to me last month, said that although the position was as he described it, he was nevertheless prepared to pay urban development grant towards expenditure incurred for those purposes on approved schemes. The hon. Gentleman's understanding may be better than mine in these opaque circumstances. I understood that the Secretary of State was prepared to pay the money to the local authorities—there has never been any doubt about his power to do that—but that it was not certain that the authorities could use that money until the Bill authorised it. Therefore, I am not entirely sure whether the Bill is retrospective. As I shall show, however, other areas of the Bill are so imprecise that it is difficult to justify them in their present form.
The intervention of the hon. Member for Islington, South and Finsbury (Mr. Cunningham) illustrates the nature of the muddle. The position is the more reprehensible because, only a year ago, the Government 365 conducted a thorough review of section 137 of the 1972 Act but did not discover the flaw now being corrected by the Bill. At the time, of course, the Secretary of State was not seeking to provide greater powers for local authorities to assist urban regeneration. Indeed, he issued a consultation paper aimed at restricting those powers, proposing that the financial limits for such expenditure should be reduced from a 2p rate to a ½p rate and that aid should be limited to independent firms employing no more than 25 people. He further proposed that all local Act powers should be terminated and that section 137 should be repealed. There was an outburst of rage from local authorities, and in the Local Government (Miscellaneous Provisions) Act the Government abandoned the restrictions proposed in the consultation paper and expanded the powers.
The Bill is the latest stage in the long process of educating the Government in the value of local enterprise, but the Secretary of State has made a number of mistakes in the way in which he has dealt with it. First, he promised consultation on the Bill—for example, with the Association of Metropolitan Authorities—but there was no consultation.
Secondly, the right hon. Gentleman has compounded that failure in the text of the Bill, because clause 1(4) fails to provide for consultation with the local authority associations as well as with the local authorities. we shall seek to remedy that in Committee, and I hope that the Government will accept our amendment.
Thirdly, the Secretary of State gives himself power to discriminate between local authorities when making an order not restricting the use of section 137 and does not even require himself to give reasons for that discrimination.
As the AMA put it to me in a letter today, the Secretary of State now has even more ability to place one authority in a more advantageous position than another. He does not have to give reasons for his choice. He is required to consult only those local authorities affected by the order, thus effectively playing one authority off against another. That is unacceptable and we shall seek to change it. It is yet one more example of the Conservatives' local government legislation providing a blank cheque for the Secretary of State. The Bill must be almost unprecedented in giving a Minister power to amend enactments—namely, local Acts—without knowing that he intends to amend them until he decides to do so and possibly without even knowing of their existence.
The total lack of clarity was made devastatingly clear in a remarkable answer yesterday by the Under-Secretary of State to the hon. Member for Islington, South and Finsbury. It is worth calling attention to that answer today. The hon. Gentleman asked the Ministerif he will give the titles of any local Acts which he would propose to the designate under clause 1(2)(c) of the Local Authority (Expenditure Powers) Bill.The Under-Secretary of State replied:No. It will be for the local authority concerned, in the context of a particular UDG proposal, to draw my right hon. Friend's attention to the existence of any provision in a local Act which in its view inhibits its use of section 137."—[Official Report, 29 March 1983; Vol. 40, c. 98.]It is remarkable that the Secretary of State should seek power to amend legislation of which he is unaware. These are serious flaws in the Bill, and we shall seek to put them right in Committee.
366 Despite all that, however, we wholeheartedly welcome the intentions of the legislation. The urban development grant system is based on experience in the United States. Like other hon. Members, I have seen the excellent results achieved by the urban development action grants programme, which President Reagan wanted to kill off when he came to office but which public outrage compelled him to reprieve, although its funding was severely cut. Although urban problems in the United States are far more serious than ours, in many parts of that country urban renewal has been carried out far more imaginatively than in this country. Magnificent examples that I have seen include the regeneration of the waterfront in Baltimore and the renewal of the old town in Portland, Maine. The Americans are especially inventive and ingenious in converting disused buildings, such as old schools and warehouses, into excellent apartment blocks. I am glad that the same practice is now being followed here in my own city of Manchester as well as in Nottingham and other parts of the country.
§ Mr. Murphy
It is understandable that the right hon. Gentleman should praise Local enterprise, but I notice that he has not yet, for all his examples, praised private enterprise. Would he like to do so?
§ Mr. Kaufman
I shall have a word to say about private enterprise in a moment, but whether it will be to the hon. Gentleman's taste will be for him to decide.
One reason for the successes of urban renewal in the United States is the readiness of local businesses and banks there to put money—matching funds—into projects which they have the good sense to realise make their localities far more attractive for improved business and further investment. I am sorry to say that similar institutions in Britain have shown far too little loyalty to their areas. They seem to have little commitment to the towns and cities that provide them with their profits and the people who work for them. Of course there are exceptions. The UDG schemes that the Secretary of State published last month list some of them. No doubt today's list will do so as well. Many local authorities have responded to the opportunities with ingenuity and imagination. Anyone who has seen the work that is being done in Leeds will vouch for that.
I wish that the Secretary of State would give us more precise information about those schemes. When he made his statement last month, he failed completely to tell the House how much new money will be put into that initiative. Indeed, he seemed anxious to obfuscate rather than to illuminate. When he replies, I hope that the Under-Secretary of State will give more satisfactory information about the amount of new money that is going into those schemes. Last month, the Secretary of State spoke about 4,000 jobs being created or retained by the UDG schemes. When questioned about that, he was unacceptably vague about whether 4,000 jobs really are involved and, if so, how many will be new and how many will be continuing jobs as distinct from temporary ones during construction. He failed again today to give that information. We have a right to it.
We are pleased that the Secretary of State is willing to assist UDG schemes, but his horizons seem to be restricted. I wish that he would give local authorities much wider scope for job creation. Apart from urban development grants, many local authorities—which are almost invariably Labour-controlled—are pioneering 367 creditable new initiatives that have great potential. The West Midlands county council is especially active through its economic development board and its subsidised loans scheme. Other local authorities are also playing their part. I commend with special pride the decision of Greater Manchester council to buy the Midland hotel in Manchester, thus thwarting the Government's privatisation policies and retaining that outstanding hotel, which is a unique institution in Manchester, in the public sector.
If local councils are to be resource creators rather than resource consumers, they need far greater scope. The 2p limitation that is currently imposed on section 137 expenditure is regarded by many local authorities as highly restrictive and results in the stifling of local initiative. For example, the Association of District Councils informed me in a letter yesterday:Inner urban area programme authorities like Leicester and Nottingham are already finding difficulty in containing their expenditure on approved schemes within the 2p rate limit, and the ADC will wish to consider … whether to seek an amendment to the Bill to deal with this situation.The Labour party, in the campaign document that it published yesterday, reaffirmed its long-standing commitment to assist local authorities to create jobs and revive local economies. As part of that, we shall abolish—[Interruption.] The right hon. Gentleman had better behave himself. We are discussing a serious Bill and he should not heckle in a flippant way—[Interruption.] If someone is being frivolous, he brings a grin to one's face from time to time.
We shall abolish section 137 and replace it with a power of general competence for all local authorities to carry out whatever activities are not expressely forbidden by statute.
§ Mr. Peter Bottomley (Woolwich, West)
What projects that the GLC, for example, would like to go ahead with if it were not restricted by section 137—let alone the projects that it is using powers for at the moment—would the right hon. Gentleman approve?
§ Mr. Kaufman
I do not carry a list of the projects of every local authority in the country. If the hon. Gentleman wants to ask that question, he should write to the GLC about it. We do not believe that it is the business of central Government to act as an interfering nanny with local government. That being so, we believe that local authorities should have a power of general competence, excluding—
§ Mr. Kaufman
We shall legislate to provide it. However, we shall exclude some matters that we shall specify in statute.
§ Mr. George Cunningham
Does the Labour party nationally approve of the use of public funds to finance the administrative costs of meetings of Labour party leaders of exclusively Labour-controlled local authorities in London by Islington borough council, the GLC and between six and 10 other London boroughs? Moreover, does he envisage the new power—it seems to be a power of complete discretion—being used for political purposes with even greater abandon than now?
§ Mr. Kaufman
That is a matter for the local electorate and, if there is any alleged impropriety, for the district auditor. When, last year, the electorate of Islington had to 368 choose between the Social Democratic party, to which the hon. Gentleman belongs, and the Labour party, it almost completely destroyed the hon. Gentleman's party and returned mine to office.
§ Mr. Kaufman
Yes; but if the hon. Gentleman's party had won on 17 per cent. of the vote, he would say that that was vindication for his party.
It may be novel for the House to hear this after four years of this Government, but my point is that it is for local authorities to make their decisions. If their decisions are disapproved of by the local electorate, that electorate has a remedy. The local electorate had that remedy in Islington and they decided to throw out the people who had taken over without any right to do so and overwhelmingly returned a Labour council.
§ Mr. Kaufman
Let us see whether the hon. Gentleman is here after the general election to tell us about it.
The power of general competence that we shall include in our reform of local government will accompany the many other reforms that will strengthen local democracy following four years of the most centralist Government that the country has had in modern times. To be able to conduct the type of initiatives that we have been discussing—the Secretary of State has also discussed them—local authorities need not only legislative freedom, but money. In the end, we must return to the damaging effects of the Government's penal attempts to limit local authority expenditure.
In response to the hon. Member for Welwyn and Hatfield (Mr. Murphy), the Secretary of State said today that there will never be the necessary public resources. Of course there will never be sufficient public money to provide for all the things that we should like. Nevertheless, last year the Secretary of State cut rate support grant for the partnership and programme authorities and the designated districts by 10.7 per cent. This year the reduction is even worse at 16.2 per cent. Rate support grant holdback in the past two years for those authorities totals an unacceptable £157 million. Only yesterday the Chief Secretary to the Treasury blurted out that holdback in the coming year will reach the record level of £400 million. If local authorities were not being deprived of those huge sums, their ability to generate more employment and to freshen the faces of the towns and cities for which they are responsible would be enhanced.
The analysis of urban deprivation published by the Secretary of State last month is a daunting and depressing picture of the grinding poverty that afflicts too many of our urban centres—overcrowding and loneliness, isolated pensioners and single parents, children without sufficient chance in life and high mortality rates. That poverty of the body is accompanied by poverty of the soul, by ugly and derelict buildings, waste land strewn with rubbish, meanness of circumstance and degradation of spirit. Any action that lifts up the eye and the heart, that provides better homes and a better chance of a job must be welcomed. This Bill removes some barriers to the achievement of those objectives and, for that reason, the Opposition will grant it a fair passage. But it is only a tiny 369 start. Others must take the action that will get to grips with our urban wastelands on the scale required if their problems are to be solved.
§ 5 pm
§ Mr. George Cunningham (Islington, South and Finsbury)
The debate, even so far, has proved the usefulness of considering the Bill in the normal way. However, that was not the original intention. Both Front Benches intended to discuss the Bill in a Second Reading Committee.
§ Mr. Kaufman
The hon. Gentleman is, I am sure inadvertently, inaccurate. It was never proposed that the Bill should be discussed in a Second Reading Committee. The Labour party would not have accepted that proposal, and the Government did not make it. The Government wished to take all the stages of the Bill today, but we disagreed with that. That is why we are having the Second Reading today and why the Bill will go to a Standing Committee. I hope that the hon. Gentleman will withdraw his remarks.
§ Mr. Cunningham
I know about the alternative proposal, but I was told—I shall not name names—that the first intention was that the Bill should be taken in a Second Reading Committee. Someone must have had the idea, because I remember having to argue against it. If right hon. and hon. Members on both Front Benches wish to sort out whose idea it was—[HON. MEMBERS: "Withdraw."] If the Opposition do not wish to have a Second Reading Committee, they can put a stop to it, as can almost any group of Members. I am glad to hear that the Labour party objected to the proposal to take all stages in the House today. I, too, objected strongly to that, and the debate has shown the need for taking the Bill in the normal way.
The Secretary of State said that if he went through the Bill bit by bit he would come out of the back before he got inside the front. However, the Bill is rather like Doctor Who's police box—its internal dimensions are larger than its superficial appearance. That will be found as we examine the Bill, both here and in Committee.
The Secretary of State spoke mostly about the purposes to which the Bill and accompanying legislation can usefully be put in the inner cities. I do not dissent from his general philosophy—the desirability of a major effort in the inner cities, part of which I represent, and of cooperation between the public and private sectors in that endeavour. That is all very worthwhile, but considerations arising from the Bill are more mundane and worrying than that.
May I first discuss the drafting point that I put to the Secretary of State in an intervention. The right hon. Gentleman says that there is doubt whether, but for the Bill, the combination of section 137 of the Local Government Act 1972 and section 3 of the Local Authorities (Land) Act 1963 has the effect that some local authorities fear. I do not understand how there can be much doubt about that. Section 137 says, in effect, that one cannot use that section if one has powers, for a purpose, in another piece of legislation. The giving of assistance by means of grant or by loan are not separate purposes. The purpose is the same, although they are different devices. I do not understand how it can be argued that if one has power to give assistance for one purpose, but that it must be by loan on commercial terms, that is 370 not a purpose that embraces the provision of a grant. Presumably, such thinking induced local authority legal advisers to believe that a difficulty existed.
If we accept for the moment that the difficulty exists and that such legislation is not otiose but achieves a change in the law, my next question is: does it achieve a change in the law only for the future, or does it achieve a change in the law in respect of the past? I shall not discuss the drafting point at length, because we can debate it in more detail in Committee, hut clause 1 is drafted in a cackhanded way. It states:The powers conferred on a local authority by any enactment to which this section applies shall not be regarded as restricting the powers".The flavour of the wordsshall not be regarded as restrictingsuggests a declaratory provision, not a law-making provision.
In addition, the fact that no date is specified for the coming into force of the Bill, other than when it receives Royal Assent, may support my interpretation. If it is declaratory, it is by definition retrospective in effect, in that we are declaring the meaning and interpretation to be put upon words that are already on the statute book. However, a court considering that point, which until now would have gone in that direction, would examine the long title of the Bill and see that it is a Bill to "remove certain restrictions". That wording suggests that it is not declaratory but that it will change the law from the moment the Bill comes into force.
I ask the Secretary of State, and the Minister who will deal with the Bill in Committee, to ensure that someone examines the wording to see whether it is respectably drafted. I suggest that it has not been so drafted and that a judge having to interpret the wording of the Bill as it stands would make the same criticisms as I have just made. It would be easy to find an alternative way of doing this. The sensible way would be to qualify the words "any other enactment", which are the last words in section 137 (1) of the Local Government Act 1972. The real purpose of the Bill is to say that those words at the end of section 137 (1) "should not include any other enactment listed in the following subsections." That is the nature of the change, and if it were done in that way the courts would find it much easier to follow.
I am slightly confused about the effect of the Bill, because the Secretary of State, naturally, chose to speak about it in the context of the principal topical use of the provisions. I may have done my homework wrongly—I hope that I shall be corrected if I have—but I believe that section 3 of the Local Authorities (Land) Act 1963 is a general provision. It does not always spring up only when the Secretary of State uses his powers to carry out the inner urban renewal operation about which he spoke. It states that whenever the local authority sells or lets land to a person for the purpose of erecting a building on it, it may provide loans at commercial rates to the person to whom it has sold or let it, but it cannot provide grants.
That situation can arise in circumstances entirely different from those to which the Secretary of State referred. Let us be rather far-fetched, although in the Eight of some of the things that some local authorities are doing, especially in Islington, my constituency, it is not so farfetched. Let us switch the party for the moment arid say that a Conservative local authority is selling a piece of land to the local Conservative association which has the 371 intention of building on that land a Conservative party headquarters. As I understand it, under the 1963 Act the local authority may advance, on commercial terms, money for the purpose of erecting that building—here my homework may be wrong—without the approval of the Secretary of State.
We are now saying that the local authority can not only advance money on commercial terms to the local Conservative association, but can make a grant to the local Conservative association, or a loan on soft terms, subject to all the general provisions about reasonableness, duty to its ratepayers, striking a balance and so on, that apply from the general law on local government. My point is that these provisions and the relationship between them have general significance and do not just become applicable in the context of current topical operations for inner city renewal, which is what the Secretary of State was talking about.
§ Mr. John Heddle (Lichfield and Tamworth)
The hon. Gentleman referred to his homework. So that the House may be clear and follow his line of argument, does he agree that section 3 of the Local Authorities (Land) Act 1963 does not refer anywhere to "commercial terms"? If I follow correctly what the hon. Gentleman was saying, he was paraphrasing subsection (4) of that section, which says:An advance made under this section shall carry interest at a rate not less than one quarter per cent. greater than that fixed by the Treasury".There is no reference to commercial terms.
§ Mr. Cunningham
I was using those terms as a paraphrase, as the hon. Gentleman suggests, but several subsections in the 1963 Act describe the terms upon which such advances can be provided. We can argue all day about whether those definitions constitute commercial terms, but they are a great deal more commercial than the provision of a grant or loan at 2 per cent. or something of that order. I prefer to continue using the phrase "commercial terms" if I may.
There is then the problem raised by the right hon. Member for Manchester, Ardwick (Mr. Kaufman) about the application of the Bill not only to the 1963 Act, which is listed in it, but to any local Act which the Secretary of State chooses in future to designate. I was surprised to receive from the Minister the answer to which the right hon. Member for Ardwick referred. If it is the intention of the Government immediately to designate some local Act or Acts under the Bill, the Department of the Environment should at least list those local Acts and should be in a position to say more to those who ask questions about this than that it will be entirely up to the local authority to bring forward a local Act applying to it and ask the Secretary of State to use his power in relation to it. No doubt we shall have an opportunity to go into that more thoroughly in Committee.
More generally, this is an odd time to expand the discretion of local authorities to spend money under section 137 of the Local Government Act 1972. Although the Secretary of State suggested that in a way this was actually limiting discretion under section 137 by saying that in so far as some things that are good can be done under the section, and that leaves less out of a 2p rate to be spent on undesirable projects, that begs the issue whether every new use of section 137 by reason of the Bill 372 will be good in anyone's opinion. To say the least, whenever there is a suggestion that the discretion of local authorities should be expanded and restrictions should be removed, the antennae should go up, not because I should wish to restrain the discretion of local authorities in general—it has been limited too much in recent years—but because the abuse of local authorities' spending power that is taking place at the moment is so offensive, so monstrous and so widespread.
The abuse is not only in London. The characteristics that were thought to be particularly restricted to London are spreading outside London. Local authorities are now using public funds for purposes which no one in the Labour party would have tolerated or supported for an instant up to just a few years ago. When the Labour Government were in power, there was no question of removing section 137 of the Local Government Act 1972, and there was no suggestion by the Government, of which the right hon. Member for Ardwick was a member, that local authorities should be free to spend anything that they pleased on whatever they thought was in the interests of their electorate.
It is significant that the spokesman for the Labour party on environment matters refuses to condemn, as does the leader of the Labour party, the use of public funds to finance the administrative costs of a purely Labour party series of meetings. It is unbelieveable. When one mentions this fact to old Labour party hands, who have been in local government finance for years, they fall about laughing at the very idea that it may be legal and that people have the gall to do it. Therefore, it is against the background of manifest and widespread abuse of current spending powers that we have to consider any proposal to expand those powers.
It would not be in order for me to go in great detail into the abuses that take place. I have had other opportunities to do that and I shall have further opportunities, but let us consider them in brief. At the moment in London, public funds—ratepayers' money—are being stolen to finance Labour party meetings. I refer to the so-called London Labour leaders' group, which is costing about 10 local authorities in London a small sum, approximately £2,000 each, to finance the salaries of two council officials who appear on the strength of Islington borough council, one in the secretaries department and one in the finance department and whose role will be to act as staff men to the London Labour leaders group.
This is breathtaking in its insolence. Let us imagine the Government saying that they think there should be some means by which they can consult local authorities, that this would be in the interests of the country, but that they would do it only with Conservative councillors and so they were setting up the Government—local authority consultative Conservative commission and the administrative costs would be taken half out of local authority rates and half out of national taxation. Would the Labour party sit silent? Would the Leader of the Opposition say, "That is all right by me; no objection to that; perfectly proper use of public funds and taxation and rates"? Would the right hon. Member for Ardwick sit quiet and not say a word about it? Of course not, because it would be wrong and they would say so. There is no difference between that and the financing of the London Labour leaders' group. But—and this is the most significant point in the context of the Bill—it is doubtful whether it is unlawful.
373 The provision for local authorities to spend on local government associations rests in section 143 of the Local Government Act 1972. I assure the House that I shall make this relevant to section 137. Section 143 states:A local authority may pay reasonable subscriptions, whether annually or otherwise, to the funds—It does not say, "By the way, any such local authority association cannot be constructed on a political basis." Why not? Because no one ever imagined that local authorities would dare to put their hands into the public's pocket and take out money for Labour party meetings. Therefore, the statute does not specifically prohibit it.
- (a) of any association of local authorities formed (whether inside or outside the United Kingdom) for the purpose of consultation as to the common interests of those authorities and the discussion of matters relating to local government, or
- (b) of any association of officers or members of local authorities which was so formed."
I believe that it is, nevertheless, unlawful under the general provisions of fiduciary duties to the ratepayer and so on, and that it would be so held by a court. At the very least, there is a doubt. At this stage we do not know whether the district auditor in question will form the opinion that it is unlawful and, therefore, that the matter needs to go to a court.
That is one illustration of where our statutes are at fault, because they never anticipated that the Labour party would go as barmy as it has done and use public funds for these unlawful purposes.
§ Mr. Cunningham
There are other things relevant to the Bill, such as the decision by Islington borough council to provide premises in Islington for occupation by the London Labour leaders group and to provide premises at Islington for occupation by a new free newspaper which will have an official link with the Labour party. I am not referring to the normal abuse of many local authorities of producing their own newspaper that sings a political tune. That is nothing. That is done in Islington as well. But that does not go far enough. Islington wants an allegedly independent newspaper, for whose editorial policy the council will have no responsibility, but which will support the Labour party line.
When an application for a grant to finance such a newspaper was put forward on the ground that it would create employment for about 10 people in Islington, that grant was provided. Just in the last week or two, decisions have been taken about the provision of premises in Upper street, Islington, for occupation by the staff of that newspaper. That is where the Bill comes in, because if Islington council were to sell a piece of land, on which a building were to be erected, to such a body, it would have to provide assistance on commercial terms.
Following the passing of the Bill, the council would be free to provide grants. Its power under section 137 would not be negatived by the fact that it had already sold a piece of land for such a purpose. We are dealing with a completely new dimension of abuse of public funds for political purposes.
At GLC level, we are all aware of the use of the so-called Londoner free newspaper. We also know that grants are being provided to endless numbers of organisations 374 whose purposes are, to say the least, bordering on the political and which are assisted for party political reasons rather than general policy reasons.
We are talking, not of only £1,000 or £2,000, but of hundreds of thousands of pounds, especially in London. When all that is going on, the least that should be done is to ensure that, when we expand any local authority discretion, we build a safeguard into the expanded discretion.
Unfortunately, that is all that I shall be free to propose in Committee. Because of the narrow nature of the Bill, I shall not be able to introduce a clause to prohibit political expenditure generally under section 137. That would be outside the scope of the Bill. However, I can certainly move that such a restriction should apply whenever the expanded discretion created by the Bill is employed. I shall move an amendment to achieve that purpose.
The scope of such an amendment will, however, be extremely narrow, and in practice it will probably never operate. We need a provision that prohibits the political use of public funds generally under section 137. That cannot be done by myself or any other hon. Member, nor can it be done by the Government, even as author of the Bill, because it would still be out of order. That is what irritates me intensely.
When the Department of the Environment knew that a Bill on local authority expenditure powers was to be introduced, and in view of the abuse that is now taking place, it should have said, "We will take this chance, because God knows when we will have another suitable Bill in which we can insert a clause to prohibit the misuse of funds for political reasons." That is what ought to have been done. The Government, even after today's Second Reading, should take the Bill away, stop the Easter holiday of the officials and draftsmen concerned, and get them to produce a clause that prohibits the worst abuses of the use of public funds for political purposes.
If the Bill is taken away and brought back with such a clause, we shall be in business to pass the clause on to the statute book. If the Bill remains as it is, that cannot be achieved, because of the rules of the House. However, there is always the House of Lords, but it would not be sensible to rely on the House of Lords to do so, even though it has no rules and can do more or less what it pleases.
During the last week I put that suggestion to a number of people, including the Prime Minister, and I regret to say that the answer I received just immediately before the debate began was that she thought that the job was too great to be achieved in the time available. A decision will have to be taken in the time available on my amendment to prohibit political expenditure within the confines of the expanded discretion created by the Bill. Therefore, no additional effort is needed to make up one's mind about prohibiting political expenditure in the context of the use of section 137. The Government must make up their mind whether to accept my amendement or to resist it. If there is a majority on the Committee in favour of it—which I hope—the Government will have to live with the result, and if they can do that on a narrow front, they can do so on a much broader front.
The Government have lost a great opportunity to prohibit the worst abuses that are occurring at present. With the best will in the world, they could not have introduced a Bill that cleared up the whole issue. I 375 recognise that if they were to expand the Bill to that extent it would never get through before the end of the Session. I merely ask for a modest change to be made.
In justification for the rush, I invoke some of the recent judicial decisions that have been taken, for example, about the use of council newspapers for political purposes. The Minister was kind enough to refer me to some of those cases. I refer him back, as it were, to what seems to be the conflicting cases of the Lothian Chronicle and the Greenwich Civic News, where one decision indicated that very political argumentation in a locally financed newspaper was legitimate and the other case suggested that it might not be.
We are all the time encountering the failure in the past to prohibit such political things, and I doubt whether we have succeeded in prohibiting them in past statutes. This issue cries out for legislation, and until we have that legislation we shall have Labour authorities in London—the GLC, ILEA, Islington and many others—helping themselves to the public's money for party political purposes.
It is an urgent and crying scandal and there is still an opportunity to correct it if Conservative Members will persuade the Government, after the Bill's Second Reading, to bring back the Bill in three weeks with the addition of just one clause to remove the opportunity for the worst of the abuses.
§ Mr. John Heddle (Litchfield and Tamworth)
The House always listens with great interest to the contributions made by the hon. Member for Islington, South and Finsbury (Mr. Cunningham). His knowledge of the Chamber and of the constitution is written at least into the political history of the 1970s and will be read by students of politics for many years to come.
I have some sympathy with the general argument of the hon. Member for Islington, South and Finsbury. Those of us who are London ratepayers and contribute to the GLC's antics must be concerned at the sheer abuse of ratepayers' money in the hands of Mr. Livingstone and his friends across the water. They have no experience of business or of balancing books, and to them prudent finance has no definition.
I must cross verbal swords with the hon. Member for Islington, South and Finsbury when he illustrates his argument by referring to section 3 of the Local Authorities (Land) Act 1963. The House will recall that the hon. Gentleman said that that Act gave local authorities the power to make grants. He used the example of a Conservative-controlled council making a grant to a Conservative club. I may not have done my homework as thoroughly as I should, and I stand to be corrected, but, having read and reread section 3 several times, I can find no reference to "grant". The phrase "advance money" is used in section 3(1), and subsection (4) states:An advance made under this section shall carry interest at a rate".Subsection (5) refers to the mortgage deeds "securing an advance" and lists the conditions that should be attached to the mortgage. Nowhere in clause 3 can I find any reference to "grant".
§ Mr. George Cunningham
I intended to say that section 3 of the 1963 Act does not at the moment allow 376 a council to give a grant or soft loan. But, after the Bill that we are now considering is enacted, a council will be free to do so because its powers under section 137 will be liberated, not nullified, by the existence of section 3 of the 1963 Act.
§ Mr. Heddle
I am grateful to the hon. Gentleman for that clarification. It confirms that I did not misunderstand or misinterpret section 3. However, it seems that I misunderstood what the hon. Gentleman was saying. It appears that the hon. Gentleman's argument could be met by a qualification of section 137 to ensure that any advance, whether by way of a loan, mortgage or grant, should be strictly for non-party-political purposes. I believe that there is a way through this legislative wood but, as I am not a lawyer, I shall stand corrected if my hon. Friend the Under-Secretary of State tells me when he replies that he is advised by his officials that a qualification of section 137 is not the appropriate route. If it is not, I agree with the hon. Member for Islington, South and Finsbury that the issue should concern us deeply.
I understand that the Bill has been introduced by my right hon. Friend the Secretary of State for the Environment to remove any doubt in law about the power of local authorities to make grants under section 137 of the 1972 Act, as amended by the Local Government (Miscellaneous Provisions) Act 1982. Doubt arises about the relationship between that section and other local authority powers, because section 137 cannot be used for a purpose for which a specific power already exists.
The powers of local authorities under the Local Authorities (Land) Act 1963 to make loans for industrial developments on their own land were extended to cover loans for the acquisition of land or buildings on any land by section 43 of the Local Government (Miscellaneous Provisions) Act 1982. I am certain that doubt arises in my right hon. Friend's mind as to whether the extended powers to make loans preclude the use of section 137 to make grants for such purposes.
The difficulty seems to arise where local authorities wish to grant aid for land acquisition and building works for projects approved for urban development grants. The House should not lose sight of that fact.
I accept that the abuses to which the hon. Member for Islington, South and Finsbury referred will continue until the loophole is closed. However, I hope that the House will not throw out the baby with the bathwater. As my right hon. Friend said when introducing the Bill, the intention is to ensure a breath of fresh air and the introduction of realism into the inner cities, the take-off of urban renewal, the creation and refurbishment of homes, the building of factories and, most importantly, the creation of jobs.
The decay of the inner cities started when private sector capital flew to the more amenable pastures of the suburbs and new towns—areas where local authorities encouraged industries to locate themselves, to start up in business and to create jobs and wealth. Those authorities did not wish to cane commerce or industry by levying absurdly high rates on empty business premises.
Private sector capital went to the suburbs and the new towns because the Labour party, in the late 1960s, sought to nationalise land, to stifle the free market and to reduce the availability of land for industrial and commercial development by the introduction of the Land Commission Act 1967, which the incoming Conservative Government of 1970 rightly repealed. The Act was seen in three short 377 years to be impotent, to stultify development and to stifle urban renewal. The Government are now grasping and grappling with the problems of development and urban renewal with considerable success. Their predecessors having been beaten, the next Labour Government implemented the Community Land Act 1976. Again, their legislation had the same effect—no land, no new investment in the inner cities, no homes and no jobs.
§ Mr. Heddle
And, as my hon. Friend says, there was no hope for those who lived in the inner cities. In the words of Vera Lynn, "When will they ever learn?"
So we find in the Labour party's manifesto, which was thrust across the Table yesterday afternoon, a reference to the inner cities. We now know what the right hon. Member for Manchester, Ardwick (Mr. Kaufman) and his team think. The manifesto states:The decay, squalor and level of unemployment in our inner cities are a national disgrace.Yet the right hon. Gentleman fiddled like a political Nero when he was in Government and did nothing whatever about it. it goes on:Labour is determined to reverse their decline. We will provide more resources, more investment and more jobs. We will act to ensure, through the policies set out in this campaign document, that people living in the inner cities have access to decent homes, health and education—and that there is proper accountability for the police.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. I hope that the hon. Gentleman will relate his comments to the Bill. I am having difficulty in seeing their relevance at the moment.
§ Mr. Heddle
I anticipated your remarks, Mr. Deputy Speaker. According to my interpretation of section 137, my remarks are relevant. I was endeavouring to say that for the inner cities to live again and for urban renewal to take place and take place quickly, the private sector, not the public sector, should be providing the money. It should not be the case that, in the words of the Labour party's campaign document,The decay, squalor and level of unemploymentshould be overturned by providing more resources from the taxpayer and the ratepayer. That can be achieved only by creating a mixed environment where home ownership goes in partnership with public ownership and where the private and public sectors can work in harmony for the good of the community and those who live in the inner city areas.
That is why I welcome the statement of my right hon. Friend the Secretary of State at the Dispatch Box, that in 1982–83 the Government have provided £350 million for urban development and derelict land grants and that in 1983–84 they propose to invest a further £423 million. That contrasts vividly with the £160 million that was provided by the right hon. Member for Ardwick before the Labour Government left office in 1979.
As a Member who represents a west midlands constituency, I welcome the statement by my right hon. Friend that a further £32 million is to be invested by the public sector and that four and a half times as much will come from the private sector, particularly to revitalise and renew parts of Birmingham and Sandwell. In Birmingham, £674,000 is to be given to a company to enable it to demolish an obsolete factory and construct light industrial units for much-needed jobs in the inner 378 city. Furthermore, another company is being given £300,000 to convert and refurbish obsolete industrial buildings to provide small workshop studios and units to provide much-needed jobs in the Spencer street and Augusta street areas of Birmingham. In Sandwell, £3.4 million has been given today by the Department of the Environment to reclaim a derelict site and to build 152 low-cost homes for sale in the Dudley road west area of Tividale. The inner cities can be revitalised and renewed by the use of public money, but with private capital playing its part to provide small workshop units—the seedcorn industries of tommorrow—and opportunities for employment and self-employment in the inner cities. It is the lack of employment opportunities that has caused the inner cities to die.
The right hon. Member for Ardwick quoted from a letter sent to him by the Association of District Councils. It rightly said that the Bill raises the wider question whether local authority expenditure on urban aid schemes approved by my right hon. Friend the Secretary of State should be excluded from section 137 altogether. Some inner urban area programme authorities—the right hon. Gentleman referred specifically to Leicester and Nottingham—are already finding difficulty in containing their expenditure on approved schemes within the 2p rate limit. I have no doubt that that is a matter that my right hon. Friend the Secretary of State and my hon. Friend the Under-Secretary of State will wish to debate further in Committee. However, the way through the problem—there is clearly a problem of definition here—is not by the irresponsible commitment that was made this afternoon by the right hon. Member for Ardwick—to give local authorities powers of general competence. I challenge the right hon. Gentleman to define here and now at the Dispatch Box precisely what "general competence" means and how it can be enshrined in an Act of Parliament.
§ Mr. Peter Bottomley
The right hon. Member for Manchester, Ardwick (Mr. Kaufman) should relate that to the recent activities of councils such as Greater London, Greenwich, and others in north London. He has remained remarkably silent through a small litany of some of the things that they have been doing. I do not know whether my hon. Friend can get him to say whether he supports such activities or whether he intends to maintain a becoming Trappist silence. Does my hon. Friend agree that to talk about general competence, when the whole issue has arisen because of the incompetence and political motivation outside the general responsibilities of Labour authorities, ill becomes local authorities and Labour Front Bench spokesmen who remain silent?
§ Mr. Heddle
I am particularly grateful for the intervention of my hon. Friend the Member for Woolwich, West (Mr. Bottomley). He inspires me to challenge again the right hon. Member for Ardwick to answer the point that not only he but the hon. Member for Islington, South and Finsbury raised. The right hon. Gentleman's silence is telling.
There is a role for the local authority to act as a site assembler to enable it to bring together all the strands of the development process and to enable the private sector to provide the homes and jobs that the inner cities need. 379 However, we must bear in mind that the prospective tenants of the small workshop units in Birmingham and Sandwell will not usually have had experience of business and therefore will not necessarily be as acceptable as commercial covenants to banks, building societies and pension funds as more established operations and industries might be. My right hon. Friend the Secretary of State might consider with my right hon. Friend the Secretary of State for Industry whether the Government could extend the small business loan guarantee scheme to enable new industries to take leases on factories and workshop units developed not necessarily by the local authority but by the private sector. The Government could protect the developer, the investor and the fund from any risk that might exist as a result of letting premises to inexperienced and first-time business men by introducing some form of covenant guarantee scheme.
Surely the way to solve the problem is more clearly to define the powers and terms of reference of the district auditor. Should not my right hon. Friend the Secretary of State outlaw any activity by a cowboy council that is seen to be squandering the ratepayers' money on overt and blatant party political materials and activities? With that proviso I welcome the Bill.
§ Mr. Sydney Chapman (Chipping Barnet)
You will be the first to remind us, Mr. Deputy Speaker, that the Bill is narrowly drawn. It seeks to amend section 137 of the Local Government Act 1972 toenable local authorities to provide financial assistance towards the acquisition of land, or the carrying out of building works on land, in a form other than that provided for by section 3 of the Local Authorities (Land) Act 1963.Unfortunately, in one sense it is not a local government miscellaneous provisions Bill. It it were, we could raise anything relating even remotely to local authorities.
The House will be aware that when the Local Government (Miscellaneous Provisions) Bill was introduced I was one of a number of hon. Members successful in getting the Government to agree to a new clause for the licensing of sex shops. I trust that within the ambit of this Local Authority (Expenditure Powers) Bill I shall be allowed a make a brief remark about the expenditure of the Greater London council.
I am impelled to follow the hon. Member for Islington, South and Finsbury (Mr. Cunningham) who has done the House a service by raising the matter of the total abuse by the GLC of ratepayers' money for overt party political propaganda. Although I do not disagree with the hon. Gentleman, I fear that he is being a little too optimistic in believing that the House could necessarily define what "party political activities" means. Many people have referred to the district auditor in London certain aspects of the expenditure of ratepayers' money by the GLC on various propaganda issues. The district auditor gave the determination that the GLC was not acting outside the law.
I trust that my hon. Friend the Minister will seriously consider whether a suitable clause can be added to the Bill. If it cannot be done—if I am on the Committee I shall keep an open mind—I trust that the hon. Member for Islington, South and Finsbury and others will be aware that, to my knowledge, many hon. Members on this side of the House, who do not hold office, wish to press the Government to 380 give a commitment to introduce in the next Session a Bill of the kind suggested by the hon. Member for Islington, South and Finsbury, whether that be this side or the other side of the general election. In a bipartisan spirit, many hon. Members will be indebted to the hon. Member for Islington, South and Finsbury for what he has said.
I agree with the hon. Member for Jarrow (Mr. Dixon), who said that it was wrong for Ministers to talk solely in terms of inner city problems. The term "inner cities" is a geographic misnomer for what I believe the Government are trying to do and what previous Governments were trying to do in bringing specific help to certain geographically defined areas of the country with acute social and environmental problems.
Will the Government seriously consider dropping the phraseurban development and inner citiesand finding a more specific phrase to deal with this geographic, social and environmental problem? I suggest "special priority areas". As everything must have an acronym, "SPA" would not be entirely unsuitable to draw attention to a pressing need for central and local government action.
I welcome the Bill, however narrowly defined it is, because it is yet another instance of underlining what I believe to be the key to the solution of the problems that face these special priority areas. If the Government are to have the remotest chance of being successful, it is essential to have a partnership between local authorities and the private sector. The local authorities will probably own the land that needs redeveloping or utilising, and they have the prestige and confidence of the local inhabitants to carry out the necessary works, while the private sector has the financial capability to assist local authorities and the entrepreneurial skills of developers. That is of fundamental importance.
This Bill is yet another one which underlines the fact that our local taxation system must be examined and reformed. The rating system is illogical, unfair and out of date. It is illogical, because people do not necessarily pay according to the services that they use; it is unfair for patently obvious reasons, which I need not deploy on this occasion, and it is out of date because, in any case, almost 60 per cent. of total local authority revenue comes from the Government by way of a rate support grant allocation. Until the Government tackle the iniquities of the rating system we shall never be able to do the things that could be done and urgently need doing, in a partnership between local authorities and the Government or local authorities and the private sector if our towns and cities are to become decent places in which people can live and work.
§ Mr. Tim Sainsbury (Hove)
I welcome the opportunity to return to debates involving Department of the Environment matters after a period of enforced silence. I had a reason for my silence. I regret that the right hon. Member for Manchester, Ardwick (Mr. Kaufman) remained silent without reason when challenged on whether or not he supported and approved of the activities to which the hon. Member for Islington, South and Finsbury (Mr. Cunningham) and my hon. Friends have drawn attention. The silence of the right hon. Gentleman is less excusable than mine on this subject.
I intervene briefly to welcome the intention of this Bill to remove any element of doubt associated with the 381 operation of urban development grants. The urban programme in its various forms goes back a long time. When I examine the conditions in some of our inner cities I wonder whether what has been done up to now is satisfactory. My hon. Friend the Member for Chipping Barnet (Mr. Chapman) put his finger on the weakness by saying that until now the expenditure had been made by the Government and by local government but had not brought into partnership the private sector. The partnership concept is the best and most effective way forward and is the element that has been lacking in the programme.
The urban development grant is a splendid new initiative. I will quote from a pamphlet written by the former Secretary of State for the Environment. He referred to the urban development grant as being ableto encourage imaginative projects to come forward. No restrictions are placed on the type of project that can be submitted for grant. They can be industrial, commercial, housing, recreation, sporting schemes or a combination of any of those.The way forward it to seek the maximum flexibility and, more importantly, the maximum involvement of private sector capital that gives not just the gearing but the variety and speed of the initiative.
The announcement made today by the Secretary of State for the Environment has brought the urban development grant to a total of £82 million of investment for the coming year but will use only £16 million of Government money. That is a tremendously effective way of getting jobs, activity and vitality back into our inner cities. In addition, it leaves us with more urban development grant to use on similar, imaginative projects in the years to come. On that point, I entirely welcome the Bill and am very much in favour of the urban development grant as an additional weapon in the armoury of initiatives that are being used so well by the Government in tackling the formidable problem of inner cities.
Like some of my hon. Friends, I think that the hon. Member for Islington, South and Finsbury (Mr. Cunningham) has done the House a service in drawing attention to the serious problem of the widespread abuse of ratepayers' funds by certain authorities on the far Left, for party political purposes. It is an abuse on which the right hon. Member for Ardwick remains curiously, and perhaps uncharacteristically, silent. He tends to go overboard when he is speaking, but this time he is going overboard by remaining silent. There is undoubtedly a serious abuse, but I am not sure that the Bill is the best means of dealing with it, because, as my hon. Friend the Member for Chipping Barnet said, there is the difficulty of definition. We may first need wider exposure of the funds. If there is any suggestion of those funds being used for party political purposes it might be necessary to make special publication provision and to make them the subject of a full debate, and if necessary a debate in full council. At least that would bring the issue into the open and might make it easier for the district auditor to give it his attention.
§ Mr. George Cunningham
The hon. Gentleman said that there was some difficulty in getting at the facts. However, there are problems. Indeed, at the moment people have problems in Islington because of that council's excessive secrecy. Normally, one does not have any difficulty in getting at the facts. The difficulty lies in having the situation corrected. I accept that the words used to define "party political activity" might present a 382 problem, but it is better to accept that problem and to leave it to the courts to decide—as we usually do—than to ignore it.
§ Mr. Sainsbury
I accept what the hon. Gentleman has said about not addressing the problem. I query only whether this Bill is the right means. However, I am not sure that I entirely agree with the hon. Gentleman about the ease of getting at the facts. I have made inquiries, and there are other councils, in addition to Islington, that seem to adopt excessive secrecy in their approach to such matters.
I hope that my hon. Friend the Under-Secretary can at least reassure the House that the problem is being given urgent attention. If the Government do not feel that the Bill is the right vehicle for taking action, I hope that they will seek an early opportunity to do something about a situation that is clearly of justified and increasing public concern.
§ 6.2 pm
§ Mr. Peter Bottomley (Woolwich, West)
I wonder how the right hon. Member for Manchester, Ardwick (Mr. Kaufman) would feel if the Government paid for a free newspaper to be delivered to every household in Islington, Greenwich and within the GLC, spelling out exactly where the Government disagreed with those councils, listing the items that they had spent money on and calling on local ratepayers, residents, employers and employees to take effective action to stop the abuses that the Government saw in those local authorities. The right hon. Gentleman would be up in arms. He would end his silence and would campaign vigorously.
At present, local authorities—presumably using section 137—are doing just that. The hon. Member for Woolwich, East (Mr. Cartwright) and I have seen local authority vehicles in our borough going around with anti-Government signs on them. If the right hon. Member for Ardwick went to Wellington street, SE 18 and looked at the town hall, or Peggy Middleton house, he would see a sign saying "Defend London from Heseltine". I do not know whether that is a hangover from my right hon. Friend's period at the Department of Environment or whether it refers to his new post at the Ministry of Defence. If the reverse were true and every Government building had a sign saying "protect London from Livingstone", or "protect London from Islington borough council", the right hon. Gentleman would be on his feet and would no longer be silent.
I must admit that the right hon. Member for Ardwick normally writes better than he speaks, although we saw a smile from him in the middle of his speech today, which is a rare sight. I borrowed the right hon. Gentleman's book "How to be a Minister" from a clergyman who had been given it by a parishioner who had not looked inside, but had seen the title. We know from his book that the right hon. Gentleman spent his time in government defending planning agreements. When he was a Minister I attacked him on that and tried to find out what they meant. However, we had to wait three or four years for an answer. We had to wait until he had written guidance for other aspiring Ministers, to discover that he did not know what he was doing at the time. Indeed, he did not discover what he was doing even after he had asked the person who had cooked up the idea and sold it to the Labour party.
The right hon. Gentleman has given us a preview of what any future Labour Government would do. They 383 would expand the spending powers of local authorities within what he calls their "general competence". If that ever came to pass, we would no doubt discover, four years later, that the right hon. Gentleman—who is very honest and open—did not know what he was doing. Today, he has not reacted to our invitations to give his own comments or those of his party on some of this excessive and perverted spending. I use the word "perverted" in the strict sense of spending ratepayers' money on items that are clearly not expected of local authorities, and using it in such a way as to put up the backs of many people, including Labour supporters, who would regard such spending as unjustifiable and inexcuseable.
The right hon. Gentleman is not supported by any Labour Member, because nearly every other Labour Member of Parliament cannot stomach hearing what some Labour local authorities are spending money on. They cannot defend the rate increases that Labour authorities impose on many of their poor old ratepayers—both commercial and domestic. That is at least true in London, if not in other areas of the country.
This Bill seeks to lift restrictions on local authorities. Many people would think that it was more important to impose restrictions on many of our local authorities because of the level of their spending and the purposes for which that expenditure is used. The Bill has been approved and put forward by Ministers in the same way as a Minister who is given a pair of brown socks to wear with a grey suit might then put them on without realising what was going on. I hope that my hon. Friend the Under-Secretary of State will at least try to see whether the criticisms that have been made of the Bill on both sides of the House can be remedied, either in this Bill or in another.
The element of doubt that may apply to urban development money is not anything like as important or as urgent as the large rate increases that we have seen, or the way in which local authority money is spent. I return to the views—or absence of views—of the right hon. Member for Ardwick. If a Tory GLC decided to spend £500,000 on promoting the possession of nuclear weapons against Government policy, would he regard that as being within their general competence, either under present law or under the law that we have been promised by a possible future Labour Government? I do not know whether the right hon. Gentleman has given thought to that. If he has not done so, he has not considered his new proposed powers seriously enough. If he does not know whether it would be legal or right under present powers, I can understand why he does not want to comment on what the Labour-controlled GLC spends its money on—which is, of course, exactly the reverse.
I do not want to go into the merits of nuclear weapons, but the right hon. Gentleman and his colleagues should state their view on whether a metropolitan local authority should spend a vast amount of its ratepayers' money on such a campaign. Is the right hon. Gentleman satisfied with the way in which the GLC is spending its money on that issue? Would he be satisfied if a Conservative-controlled GLC did exactly the reverse? He has already been challenged about how he would feel if several Tory-controlled local authorities got together and gave ratepayers' money to a Conservative leaders group, using 384 premises and meeting rooms and spending money on staff to provide a back-up. Is that really the sort of thing that any right hon. Member should keep quiet about?
The right hon. Gentleman has had many opportunities to comment. Is he ashamed to comment? Does he not have a view, or does he believe that the House of Commons is not the place to give it and that it is better to wait until the Labour party conference where he can stand up and say, "I kept silent on 30 March against partisan attacks from those who do not believe that a Labour authority should spend ratepayers' money on purely party political groups."? We are waiting for an answer. It appears that we will have to go on waiting for an answer. We have a second smile from the right hon. Gentleman but absolute silence. Is it that he and other Labour Members want a packed audience of those who agree with them before they are willing to speak on these issues?
§ Mr. George Cunningham
I hope that the right hon. Member for Manchester, Ardwick (Mr. Kaufman) is not expecting to reply to these points later in the debate. It would be entirely wrong for the Labour party alone to speak twice in the debate. Therefore, it is important that the right hon. Gentleman should respond immediately to these questions by means of an intervention.
§ Mr. Bottomley
Not only would I be willing to give way to the right hon. Gentleman but I am sure that he would have the leave of the House to speak again. Sadly, no other representative of the Labour party is willing to give a view. The right hon. Gentleman is alone. The issue is apparently important. If it were not important, a growing number of Labour authorities would not be using the present powers in ways which are clearly rejected by most other Labour local authorities and by most people with common sense and a sense of fair play about how ratepayers' money should be used.
It is curious that there appears to be greater power over the political funds of trade unions—or the non-political funds of trade unions—than over the non-political funds of local authorities. I believe that the rules governing the powers of certification officers over trade unions are not strong enough. I certainly believe that the powers over the new trend in political spending of local authorities should be tightened.
I ask my right hon. and hon. Friends to use the Bill, if they can, as an opportunity to bring more attention to the issue and to put that right, as the case has not been properly made in the explanatory memorandum of the Bill:The Bill is intended to clarify the purposes for which those sections may be used and no significant additional expenditure under those sections is expected to result from the Bill.No significant expenditure was expected on party political propoganda and for party political purposes under the other provisions which govern local authority expenditure. No Labour authority believed five years ago that it would get away with half of what authorities appear to be getting away with at present.
§ Mr. John Cartwright (Woolwich, East)
The hon. Member for Woolwich, West (Mr. Bottomley) will know that the co-ordination of Labour local government in London is nothing new. Regular meetings have taken place between Labour leaders in London for several years. Co-ordination took place regularly when I was the chief whip of the Labour group on the London Boroughs Association. In those days the Labour party paid for it out of party funds and not out of ratepayers' money.
§ Mr. Bottomley
Perhaps the Labour party is running out of funds. The headquarters of the Labour party at Walworth road may sack another 25 of its staff. Will the Labour party then go to the local authority and ask for employment protection money? Will the Labour party ask the local authority to buy the headquarters building and then rent it back at a low rent, or perhaps ask for a soft loan to maintain employment? Does the right hon. Gentleman think that that would be within the "general competence" of the local authority, either now or in the future?
We are beginning to see a slackening of the proper controls over local authority spending and over the purposes of that spending. As the Bill is concerned with lifting restrictions on local authority expenditure, there should be more controls on spending. I shall not spend too much time on this issue because, although it would be in order, it is slightly beyond the purposes of the Bill. Does the Minister believe it appropriate that rates in the London borough of Greenwich should increase by 30 per cent? Can he respond to those of my constituents who wish to see restrictions over such inflationary job-destroying and confidence-destroying rate increases?
I carried out a survey among small businesses in Greenwich and discovered that many of them were paying between £12 and £24 a week in rates for each employee. For rates to go up by 30 per cent. in one year with the same rate of increase expected in future years—
§ Mr. Bottomley
The Bill removes some of the expenditure controls on local authorities. If the Government are putting forward the case for lifting some of the restrictions, I believe that I should be able to put forward the case for opposing some of the restrictions or should at least be able to ask whether the proposed lifting of restrictions is sensible. That is a perfectly normal Second Reading procedure.
A rates increase of 30 per cent. this year with a possible 30 per cent. increase next year to make up for the robbing of the balances and to pay for some of the continuing expenditure to cover new commitments of the London borough of Greenwich is a reasonable issue to put to my hon. Friend. If he cannot answer in this debate, I hope that he and the Government take notice of the representations, the protests and the anguish of my constituents and the ratepayers in the London borough of Greenwich.
I received a letter from a pensioner today which said that, while the pension increase was welcome, it was far outweighed by a rates increase of more than £100 a year. The right hon. Member for Ardwick quoted from the proposed Labour party programme—the emergency programme—as though it will do good for pensioners. Those pensioners are suffering because of Labour authorities in the town halls, and are already seeing the penalties of a split anti-Labour vote, having given control, even though only temporarily, to a Labour council which has moved to the Left. The right hon. Gentleman will wake people up so that more of them will vote for the party of the hon. Member for Woolwich, East (Mr. Cartwright) or for the Conservatives. Too often people have not believed the Labour party. I hope that they now will.
I am sorry that my speech has been relatively brief but I think it would be in keeping with the mood of the House if I conclude fairly soon. I have not been able to tempt the 386 right hon. Member for Ardwick to his feet to give his views on this subject. My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) made a small mistake. Vera Lynn did not say, "When will they ever learn?". I think it was Pete Seeger who said that. I believe that most of the ratepayers of London are now beginning to learn. Regardless of who first used the words, the ratepayers will say, "We do not want Labour; we do not want extra powers for local authorities, apart from the minor provisions intended in the Bill; we want Labour to go and we want political spending stopped."
§ The Under-Secretary of State for the Environment (Sir George Young)
I feel slightly inhibited about replying to the debate, because far more questions have been asked of the right hon. Member for Manchester, Ardwick (Mr. Kaufman) than of the Government. None the less, I welcome the right hon. Gentleman's support for the Bill. As a simple housing Minister, I shall not follow him down the intricate path of local government finance. That has always been complicated, and if some people tell me that it is less complicated now than it was, I am happy to believe them.
The Bill is needed not because of any problem for the Secretary of State but because of problems for local authorities, as the right hon. Gentleman recognised. The local authorities came to the Government after the announcement about urban development grant to express their anxieties about their powers to pay. In order to maintain the cordial relationship which we enjoy with local authorities we have decided to help them by means of the Bill.
With regard to consultation, because of the need to make swift progress, there was little time to consult the local authority associations but we did keep them fully in touch with what we were intending to do. Local authorities have been informed about what we are doing and, of course, it was the local authorities which asked us to amend the law in the first place.
The Bill does not have retrospective effect. It will have effect in the financial year in which it is enacted. If local authorities are worried about past payment, my right hon. Friend the Secretary of State would be prepared to consider sanctions under section 16l of the Local Government Act 1972 in appropriate cases.
One can only sympathise with the problems facing the hon. Member for Islington, South and Finsbury (Mr. Cunningham) in the London borough of Islington. Et is worth pointing out that all three Islington Members have resigned from the Labour party—due, no doubt, to the activities of the Socialists on Islington council.
Specific questions have been asked about local act powers. We cannot anticipate what provisions in local acts might obstruct section 137 and the paying out of money for urban development grants. We have a long list of local authority acts that contain powers to assist industry, but it would not be practical to list them all, because we might leave some out. That is why we need clause 1(2)(c), which gives power to the Secretary of State to designate enactments within local acts. Clause 1(3) enables the Secretary of State to apply the clause to the enactmentonly to such extent as is specified in the order.The hon. Member for Islington, South and Finsbury mentioned the possibility of a Labour council in Islington, with the connivance of a Labour Government, giving 387 money to support a Labour club. The sale of land to a party political organisation by a local authority could not be financially assisted under section 137. It is doubtful whether such assistance would be properly for the benefit of local authorities and all or some of their inhabitants. The district auditor would investigate such expenditure very quickly.
I am grateful for the support of my hon. Friends, who have welcomed the Bill. My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) asked me to follow up certain points with the Secretary of State for Industry, which I shall do. He asked me about the district auditor. There are powers for the district auditor to conduct an extraordinary audit. There was an Adjournment debate on that matter, in the context of Islington, a few days ago. Various items of expenditure have been referred to the district auditor, some by the hon. Member for Islington, South and Finsbury. The Government are considering the case for an extraordinary audit of Islington in the light of information that has been made available to us.
My hon. Friend the Member for Chipping Barnet (Mr. Chapman) supported the case for a review of the laws on political activity. He also asked the Government to take on board the problems of areas that were not necessarily inner city areas. Any local authority can apply for an urban development grant. The Government are currently reviewing regional and inner city policies, with a view to ensuring that they complement each other and that there is consistency and coherence.
It was a pleasure to hear my hon. Friend the Member for Hove (Mr. Sainsbury) speaking once again on environmental matters. He asked how one defined political activity. Political parties are not referred to in local government legislation. There are problems in defining political activity because, in a sense, anything done by a local authority that is controlled by politicians is likely to be political. That is one of the problems with the suggestion to tack on to the Bill a slightly broader clause to inhibit certain expenditure under section 137.
My hon. Friend the Member for Woolwich, West (Mr. Bottomley) has to put up with a Left-wing council in Greenwich that has harrassed people who want to exercise the right to buy. Were Livingstone ever to become a Minister, he would have no hesitation in using taxpayers' money to finance propaganda with the same profligacy that he currently uses ratepayers' money in London.
§ Mr. Peter Bottomley
The GLC is spending money on the campaign against nuclear weapons. Parliamentary election expenditure is strictly controlled, yet £500,000 is being spent to support what appears to be one of the four legs of the three-legged stool of the Labour party. That must be stopped. Labour party money is being spent in an attempt to have its own people elected by converting people to its views.
§ Sir George Young
My hon. Friend raises two points—whether such expenditure is legal and, if it is legal, whether it should be so. The first point is for the district auditor, not the Government. The second point raises broader issues about which I shall say something later.
I do not think that anyone wishes to impede the progress of the Bill. The hon. Member for Islington, South and Finsbury has written to me supporting a scheme for urban 388 development grants in his constituency. All hon. Members who have spoken have been anxious to see the UDG scheme get off the ground. It would be unacceptable for the introduction of a major Government initiative to be endangered by what are essentially technical legal doubts about the scope of section 137.
Some hon. Members, including my hon. Friend the Member for Woolwich, West, felt that the Bill should have gone wider. We will take on board what they have said today. Broader issues have been raised about the activity of some Labour authorities, especially in London, which we shall wish to look at a great deal more closely.
In saying that, I repeat the promise made last year during the debates on the Local Government (Miscellaneous Provisions) Bill. We made it quite clear then that we would want to keep a close eye on the use authorities made of their new powers and see how appropriate they were in a rapidly evolving situation. Section 137 has always been a widely drawn power; the great diversity of projects funded by it—not just in industry and commerce—demonstrates fully the value in which it is held by local government.
I share the concern that has been heightened by the activities of the GLC and Islington. That has led to calls for restrictions on section 137. But we must not lose sight of the original reasons why we accepted the need for flexibility. Many of the schemes that are undertaken using section 137 powers have the direct financial backing of Government—whether in the main urban programme or by way of UDG, and they cover a wide range of projects. We reaffirmed our view last year, following extensive consultations and discussions in this House and in another place, that authorities do have a legitmate role to play in assisting economic development, especially in helping to encourage small local firms which cannot always take full advantage of the regional incentives offered by Government. We were helped in reaching that conclusion because it was clear from the consultation exercise that local government, for the most part, agreed that its activities should be complementary to those of central Government, and not in opposition to them.
Whether the fact that that freedom has been abused should lead to a general restriction on section 137, is not the matter before the House today. If that was tacked on to the Bill, it would only impede its progress and arrest the implementation of urban development grants. I do not think that any hon. Member wishes that to happen.
Our immediate aim in tabling the Bill is to ensure that no doubts remain about the introduction of urban development grant. The creation and retention of jobs, especially in the construction industry, is one of the key benefits which my right hon. Friend had in mind in approving UDG projects. The 41 projects he has already announced could bring up to 1,000 immediate construction jobs and could retain or create 2,800 permanent jobs in the longer term. Insofar as the Bill enables some of those projects to go ahead which might have been held up it will certainly help employment.
Some hon. Members have rightly pointed out that the Bill marginally widens the scope for local authorities' own programmes of economic development. There is however, nothing objectionable about the use of section 137 to provide, for example, grants for industrial property development by the private sector where a local authority judges that to be in the best interests of its area. I regard 389 that as no more than the legitimate exercise of local direction. That is the sort of project that needs the Bill for it to proceed.
Let me repeat that the Bill is not a general invitation to increase expenditure. Financial assistance is subject, first, and as before, to the 2p rate product limit, secondly, to capital expenditure controls and, thirdly, to the constraints imposed by rate support grant. We have no intention of increasing capital expenditure allocations for that purpose or of increasing the aggregate amount of block grant available for local government.
The right hon. Member for Ardwick asked me for details of the schemes that had been approved, and the contributions from the private and public sectors. I shall write to him on those matters.
I am sure that right hon. and hon. Members will now appreciate the limited intention of the Bill and, at that same time, the importance of its receiving a speedy passage through the House. I am sure that all hon. Members will wish to safeguard the future of the UDG scheme, which has been so widely welcomed in the debate.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).