Rates Bill

HC Deb 28 March 1984 vol 57 cc309-84

2nd ALLOTTED DAY

As amended (in the Standing Committee), further considered.

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

On a point of order, Mr. Speaker. I seek your advice. Bearing in mind leaks, without which successful Government cannot prosper, we are led to believe that the Government have something of importance to say on changes in the Bill. Those changes may have significance and will have a bearing on the clauses. Will Government Ministers say something on this matter now, or do they not wish to do so in case that prejudices the vote?

Mr. Speaker

Fortunately, I am insulated from leaks.

4.37 pm

Mr. Charles Morrison (Devizes)

I beg to move amendment No. 31, in page 8, line 1, leave out clauses 9 to 12.

My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) clearly referred to rumours about amendment No. 39. This morning I read those rumours in the press. The rumours are that the Government are to make a concession along the lines of amendment No. 39. I welcome that concession, as I welcome any concession the Government make. Such a concession does not detract from my opposition to clauses 9 to 12. Amendment No. 39 limits the extent of the application of the general powers to control rates. I am opposed in principle to such powers. It is hard to foresee when such powers can be used.

My right hon. Friend the Secretary of State has said more than once that it is unlikely that he will use those powers. Why, therefore, legislate for them? If we generally applied the proposition put forward by my right hon. Friend and legislated to give a power to the Government in case they should need it, not only would the House have a hectic life—at least for a short period, after which it would have nothing to do—but soon we would have endowed the Government with powers that are unacceptable within a democratic state. If the proposition is not to be adopted generally by the Government, why is it to be adopted with regard to rates and local government?

In Committee, the Secretary of State described the circumstances in which part II might be used. I shall refer to a few of his remarks which I believe to be relevant to the consideration of the amendment. He said: First, part II is aimed at circumstances substantially different from those which pertain now. He later said: Taken together, therefore, the existing pressures, plus part I of the Bill, should combine on present trends—I stress those words—to secure our objectives. He added: I said that on present trends existing procedures, plus part I of the Bill, should combine to secure our objectives. Why 'on present trends'? The answer, of course, is that the scenario could change. The kind of policies that we now see in a small number of authorities … might prove contagious and spread to a much larger number. If 60, 80 or 100 local authorities were spending and rating in the way that a small minority does today, any Government would have to take action to defend the ratepayers in those areas."[Official Report, Standing Committee G, 6 March 1984; c. 934–936.] Undoubtedly such circumstances are substantially different from those that now pertain. However, given the Secretary of State's refusal yesterday to accept a limit on the number of local authorities that may be designated under part I, the provisions of part I could cover even the circumstances which my right hon. Friend described in Committee and to which I have referred. Therefore, I remain entirely opposed to part I, because in reality it involves provisions for the most major transfer of power from local government to central Government ever to come before the House.

In effect, the Secretary of State or his successors—they must never be forgotten when we are legislating—are to be enabled to assume responsibility for the budgetary processes of all local authorities. Such a proposition is mind-boggling as it means that the Secretary of State perforce will be asssuming the power to control the cost of local authority policies and the policies themselves. If that happens, local government is at an end.

There is an argument to the effect that nowadays we do not need local government. After all, we are a small country and we have pretty good communications. Why bother to have local government at all? Even if we did not have local government, the services covered by it would have to be administered. I have little doubt that most people, however often they may grumble about local government, still prefer local government services to be run by locally elected representatives in town halls or county halls. Secondly, whatever yells of horror there may be from Whitehall about local government costs, I have no doubt that the costs would be very much higher if local government services were administered from Whitehall. I should like to think that I might even get agreement from my right hon. Friend on that issue.

It is because of these views that, in my judgment, the arguments in support of the continuation of local government hold sway. If that is broadly agreeable to the House, Parliament must continue to maintain a sensible balance between the powers of central Government and those of local government.

4.45 pm

Part II undermines that balance. What will happen if it remains in the Bill? I have little doubt but that many more local authorities will say to themselves, "If the Government want to treat us as irresponsible, that is what we shall be." Many local authorities that are faced with major problems and poor services will decide to pass the buck to central Government. They will increase rates to challenge the Government and it will be the Government who will have to take the blame either for the high rates, to which they implicitly agreed, or for cuts in services. It will be better by far to leave out part II entirely. It will prove to be a bed of nails upon which the Government will come to regret they ever laid their reputation.

Mr. Allan Roberts (Bootle)

I support the amendment, which seeks to delete that part of the Bill which would give the Secretary of State, or any future Secretary of State, the power to rate-cap a number of local authorities. In implementing that power, he would be able to place an order before Parliament, on which there would be one debate, that listed the local authorities that he wished to cap. The process would be put into effect and implemented without the principles behind it on which the Secretary of State had decided to cap the authorities being adequately laid down. The principles would be published later at the discretion of the Secretary of State.

Such an order could be placed before the House without adequate consultation with the authorities included in the order or with the local authority associations representing them. There would be no right of appeal and no right of representation would be enshrined in the Act. Unless the Government wanted consultations to take place and to allow the right of appeal, the authorities would not have those rights. Those are the circumstances in which part II comes before us.

Amendments were tabled throughout the Bill's consideration in Committee—they were supported by all local authority associations but especially those that are Conservative-controlled — which would have changed the nature of the Bill slightly to allow consultation, the right of representation and the right for local authorities which were to be rate-capped to be included in separate orders to be presented before Parliament. Those amendments would have given Parliament the chance to discuss them and debate them adequately, so there would have been at least some parliamentary scrutiny of the draconian powers that the Secretary of State had assumed. Every amendment that was tabled along those lines—amendments that would not have destroyed the basic principles of the Bill but which would have improved it, especially in the eyes of Conservative local government —was rejected by the Government and voted down. It is in that light that the general powers in part II remain in the Bill. It is in that light also that the House is being asked to support part II.

The hon. Member for Devizes (Mr. Morrison) has asked when such powers will be used. That is the question to which we addressed ourselves throughout the Bill's consideration in Committee. We cross-examined the Secretary of State and my hon. Friend the Member for Copeland Dr. Cunningham) did an excellent job in repeatedly putting the views that were passed to Opposition Members from local authority associations and asking when the right hon. Gentleman envisaged implementing such wide powers to rate-cap a series of local authorities. The answers that we received from the right hon. Gentleman were inadequate. First, the Secretary of State said that he did not envisage that the powers would be used. Why do we need the powers at all if they will not be used? The Secretary of State said that they would deter local authorities from behaving in a profligate manner. The powers would be necessary in case local authorities suddenly changed their behaviour. He hoped that they would not be used. They were a form of local authority independent nuclear deterrent that would not be used because their effect was too terrible and draconian to contemplate.

Those were the sentiments, if not the very words, of the Secretary of State. We asked him in what circumstances such a sudden change would be likely to occur in local government to make such deterrent powers necessary, but he did not really have an answer.

Dr. Alan Glyn (Windsor and Maidenhead)

I am grateful to the hon. Gentleman for giving way. Is he taking the line that the general powers of part II could be used by this Government and any successive Government, who could assume direct responsibility for local authorities at any time? Does the hon. Gentleman also agree that, unless amendment No. 39 is passed, good and prudent authorities would be rate-capped irrespective of their merit?

Mr. Roberts

The answer to the question asked by the hon. Member for Windsor and Maidenhead Dr. Glyn) in relation to my argument is that the Government, while taking those powers, deny the need for them.

But a weapon has never been invented and stockpiled that has not been used eventually. As the hon. Gentleman says, prudent local authorities, including the metropolitan district of Sefton, which covers my constituency in Bootle, are anxious and fearful, although they claim to support the legislation.

Every prudent Conservative or Labour-controlled local authority has heard the Government's arguments before. When the Local Government, Planning and Land Act 1980 introduced the block grant system, we were told that prudent local authorities would not suffer. We were told, when the Local Government Finance Act 1982 was passing through the House, that prudent local authorities would not suffer. The proof of the pudding has been ir the eating, as prudent authorities have suffered under both Acts, and it has not been only the profligate, Labour-controlled overspenders that have had their grant held back. The metropolitan district of Sefton, which I have often called a paragon of underspending virtue as it wields the axe with great pleasure, has lost £1.9 million in the recently negotiated rate support grant settlement. Many local authorities that have kept tight ships have suffered from the Government's legislation. Conservative and Labour-controlled associations fear that the powers will be used against them if they are put on the statute book.

There is a further reason for believing that the powers will be used. There was an intimation of the circumstances in which they will be used when the Secretary of State for the Environment made two major speeches in the middle of the night, when the press and everybody else had gone home. It was reported in the newspapers that the Treasury was very angry. The Secretary of State made his speeches in an attempt to reassure local authorities and associations and Conservative Back Benchers that the general powers would not be used, and told the Committee what savings would result from the use of the specific powers. Nothing that he said was in line with the public expenditure figures in the White Paper. As I said yesterday, this is not Department of the Environment legislation — it is Treasury legislation.

The more the selective powers are used, the greater will be the pressure to use the general powers. If selective powers are used to prevent profligate local authorities from putting up their rates and spending money on services in a way that the Government do not want, they will receive more from the Government in rate support grant as a reward. Higher public expenditure will result from selective rate-capping, which will increase the public sector borrowing requirement. The Treasury has a fixation about PSBR, and will cry, "Whoa! We are not having this. You must reduce the total amount of public expenditure to get PSBR right. The use of selective rate-capping is pushing up public expenditure on local authorities."

The Under-Secretary of State for the Environment(Mr. William Waldegrave)

The hon. Gentleman's argument that the proof of the pudding is in the eating is no more convincing for the frequency with which he and others repeat it. The Treasury would be delighted, as I said yesterday, to spend more Government money. For example, if all local authorities hit their targets and there were no holdback, public expenditure would be within the limits set by the White Paper. The hon. Gentleman is making a fallacious point.

Mr. Roberts

I do not believe that. If Conservative Members believe it, they are more naive than I thought. Successive Governments, including Labour Governments, are past masters at making sure that public expenditure cuts are blamed on others. Everyone is in favour of cutting public expenditure, so long as they are not blamed for the rent increases and cuts in services that arise from lower public expenditure. The Government will not create a position in which their expenditure increases and local authority spending is reduced and they have to increase taxation to compensate for lower local authority rate demands. That will not happen, because the public sector borrowing requirement would increase.

It is fair enough to count rates as a part of public expenditure, which the Treasury does. However, if rates were held down that would cause a higher Government borrowing requirement because grants to local government would be higher. That might get out of hand and the Treasury would not accept it. Nor would it accept—the Bill achieves this in a delightful way — that the responsibility for cuts and rate increases should rest squarely on the Government's shoulders, as the amendment suggests.

Conservatives will no longer be able to appear on television or in their constituencies and blame Labour local authorities for rate increases with which they disagree, or blame them for driving industry from their areas. The rate increases will be forced by the Government. It will not matter whether the council is Conservative, Liberal, Liberal-Conservative or Labour. The Government will make sure that the electorate know about the powers. Indeed, the controversy over the legislation, especially the powers that we are debating, will make the issue clear and local politicians will have no need to tell their electorate about it.

What will local elections be about in future if part II remains intact? I remember that local elections were fought about the balance between services for which the electorate—the ratepayers—could afford to pay and the services that they demanded. Local authority electors want good services and low rates. The arguments concern the balance to be struck between the rates levy and the level of services in relation to rents and other charges, based on the Government's rate support grant settlement. Councillors at the grass roots of many constituency Conservative and Labour parties argue in their communities, take an interest in local issues and come along to party meetings to argue that very issue and to put it before the electorate.

The rates have generally been higher in Labour-controlled local authorities, where services may be better. In Conservative-controlled local authority areas, rates have been lower and the services have not been so good, although some people may disagree with that assessment and refer to efficiency in cutting out waste.

We have been increasingly efficient in cutting out waste since the late Anthony Crosland made his "The party is over" speech, which I remember well. I had an eight-course meal with him at Manchester town hall at the time. We have been cutting waste and becoming more efficient, yet we still argue and have local elections. Heaven knows, the number of people who vote in local elections is low enough already. There would be nothing left to argue about if the Government decided the balance between local rates and service levels and determined GREs, targets and expenditure limits and the service levels for each local authority as a means of deciding whether to rate-cap. What is left for the locally elected representatives to do?

5 pm

The whole of the legislation strikes at the heart of local government democracy. Part II of the Bill centralises local authority powers. That is unique outside the Soviet Union. No other western European country is setting about destroying local government in the way in which the legislation does.

Mr. Waldegrave

The hon. Gentleman should not get carried away. Can he name a single western European country where the upper tier of government, whether national or federal, does not have some powers over the rate base and rate limits of the lower-tier authorities?

Mr. Roberts

I cannot. That was true in this country before the Rates Bill was introduced, but the extent to which one takes those powers matters.

No one argues that local government should not function within the framework of legislation and the financial regime laid down by the Government. That is the traditional relationship between the Government and local authorities. Within that framework, the local authorities can take local decisions. Those traditional sacrosanct areas of local decision-making are being destroyed by the legislation, and I and others take exception to that.

In America, the opposite is happening. That is the place that people who are not of my political persuasion point to as the enterprising society, with a President and central Administration intent on cutting public expenditure and reducing the budget deficit. If they contemplated interfering with local government and democracy and the right of the local electorate to control its own affairs within the states and the local government communities, the American people would be up in arms.

Mr. Waldegrave

The hon. Gentleman may be making just a general rhetorical point, in which case I apologise for interrupting him, but is he aware of the controls in each tier of American government over the power of the lower-tier authorities to tax, which are very exact?

Mr. Roberts

I know exactly what happens in America, having studied it there. I know that if the Executive, Congress or the Senate decided to introduce such legislation, the people would be up in arms. They would not allow it to happen. Local democracy is vital. The Americans elect even the dog catchers, let alone the chief constables. They determine and control expenditure within the framework laid down by the Government.

The Conservative Government are extending the frontiers of the state. The tragedy is clear in part II. The decision-making process is not handed over to Ministers when the powers are taken away from local authorities, but is handed over to civil servants. The system of calculation is complicated and difficult to understand.

Ministers in Governments of all political persuasions take political decisions and, if the civil servants control the Departments, the Ministers take the ultimate responsibility. Political decisions are taken by Ministers, not by civil servants who are the servants of Ministers. However, if the Government take upon themselves the powers to control up to 100 or even 400 local authorities, the detailed job that will be necessary under the general powers of rate-capping will not be done by Ministers. The principles cannot be assessed in relation to each local authority, and the calculations cannot be made. Political decisions will be taken away from democratically elected councillors and given not to Ministers but to civil servants and bureaucrats. Do you really want in your locality—

Mr. Deputy Speaker(Mr. Harold Walker)

Order. I wish that the hon. Gentleman would not bring me into these matters. I have problems enough.

Mr. Roberts

I apologise.

Do hon. Members on both sides of the House really want the situation to be changed so that at their surgeries they can no longer say to their constituents, "This is a local authority matter, so I shall get in touch with the local authority. Have you seen your councillor?" That will not be possible because the councillors will say, "I have no power over this. We have been rate-capped. The Government have intervened. You had better go and see your Member of Parliament." The queues at the surgeries will grow longer.

Do Conservative Members really want to turn every local authority in the land into the quango that the water authorities have become? There is no accountability, and when the rate bills come through the door people say, "It is absolutely scandalous. Who is in control and to whom do I complain?" Mark my words, constituents complaining about social services, education, housing and so on will come to hon. Members, not to councillors, if the legislation is pushed through in its present form.

We have tried throughout Committee and Report stages to save the Government from themselves. I do not know why we are doing it. They are in an impossible position. It reminds me of what happened to a previous Labour Government when they tried to introduce "In Place of Strife". They knew that they were doing wrong. Ministers did not believe in their speeches in Committee as they followed their briefs. Everyone is opposed to what they are doing, but they will not listen. [HON. MEMBERS: "That is wrong."] It may be wrong, but I challenged the Secretary of State to name leaders of Conservative-controlled councils who support the legislation. He named one. Ministers named leaders of Tory groups who opposed profligate Labour authorities, but they could name only one leader of a Conservative-controlled local authority, Ron Watson, the leader of Sefton local authority, which covers my area, who supported the legislation.

Mr. Waldegrave

I should like to give the hon. Gentleman another example. The leader of my own local authority of Bristol city council, Mr. Bob Wall, is a strong supporter of the Bill.

Mr. Deputy Speaker

Order. I have no power to prevent Ministers or other hon. Members from intervening, but I hope that the Minister will appreciate that we are trying to have a debate, not a dialogue. Several hon. Members are waiting to speak.

Mr. Roberts

I apologise. I shall bring my remarks to a conclusion shortly.

Two names have now been given, but in Committee only one was given. I have been in the House for only five years and have served on many Committees, including Committees on Housing Bills and Finance Bills, but representatives of Conservative-controlled local authority associations have never before attended meetings of Labour Members on a Bill to brief them on behalf of Conservative councillors. The majority in the ADC and the ACC wanted us to help them to try to persuade their Government to change their minds.

Part II is the crux of the Bill. I believe that Labour-controlled local authorities are doing a good job, but they will be rate-capped under the selective powers. I do not accept this, but the vast majority of people who believe in local democracy might accept that the Government have the right to intervene exceptionally when local authorities overstep the mark and go outside the normal parameters of the relationship between the Government and local authorities. However, to take general draconian powers, as the legislation does, is to destroy local democracy and centralise power in a way that all good democrats who believe in freedom should reject. I hope that the House will reject part II of the Bill.

Mr. David Howell (Guildford)

The amendment of my hon. Friend the Member for Devizes(Mr. Morrison) brings us to the part of the Bill that presents the most difficulties for some of us and is the most puzzling to come from a Conservative Government.

The Bill falls into two completely distinct parts. The purpose of part I is to protect the ratepayers from gross abuse. No one is stronger than I in supporting the ending of those abuses. I believe that in many ways the protection of the ratepayer provided in part I could be stronger. I would like to see a move towards industrial derating and other measures for protecting the ratepayers more rapidly. Nevertheless, I believe that the purposes of part I are right. The supreme example of the abuse of the ratepayer has been the antics of members of the Greater London council.

I understand that the GLC will be abolished in due course. although my personal view is that some form of replacement will be needed.

Part II of the Bill deals with expenditure control. Ministers have said again and again—and I believe that they are right in their presentation—that the Bill is basic to the Government's strategy which aims to achieve stable public expenditure in real terms, giving us room for the tax cuts which I believe to be the key to new jobs and an expansion of our prosperity. Admittedly, I myself would argue that, in a way, the tax cuts will determine whether public expenditure cuts succeed, rather than the other way round. However, broadly speaking, I support the Government's strategy.

It would therefore be wrong for me to be critical of part II unless I can answer two fundamentally important questions. First, is overall control of local government expenditure essential if the Government's basic strategy is to succeed? Secondly, is this the right way to establish that control? In answer to my first question, I believe that such control is right. The previous Labour Government also took the view that it is right for the Government to seek overall control of total local government expenditure. They sought to do so, and the present Government rightly seek to do so, too. It is right to do so, not so much in order to conform with the precise PSBR targets and the scientific monetary absolutism that has sometimes been advanced.

It is absurd to be over-precise. If one considers the figures for the next few years, the fiscal adjustments alone show that the figures are subject to enormous margins of error. It is right because Conservatives believe in less, and better, government. We want a lighter burden on the citizens, particularly those who are trying to start new businesses and create new jobs. It is, therefore, right for the Government to seek overall control of all local as well as national government expenditure.

The second question has been the subject of constant debate, notably in recent exchanges with Ministers at the Dispatch Box. Is this the right way to achieve the aim of lower public spending, which is essential to the success of the Government's strategy? The Under-Secretary of State began bravely yesterday by suggesting that no serious commentator could doubt that the measures would work. He immediately found that a number of serious commentators doubted it.

The issue is a difficult one. My best guess is that the measures will probably work and that there will be cuts in overall expenditure, although central Government expenditure may rise if the rate support grant rises as a consequence of the Government's success in capping the rates. I believe that the measures will probably work, but what will the price be? If there are expenditure savings, they are uncertain. The political cost of part II is certain, and will be very high. First, there is the constitutional issue. I congratulate the Secretary of State and other Ministers on having now made it clear that they understand that this is a matter of major constitutional significance. Earlier, it was not clear that some Ministers understood that.

Secondly, the Bill is a centralising Bill and promises to lead to an even more unholy tangle between Whitehall and local government. Thirdly, I am sure that in another place their Lordships will try to chew it up.

5.15 pm

So the political price will be high, and it is uncertain whether part II will produce economic gains that will contribute to the Government's basic strategy, of which I approve. Any such gains will probably be very small. At this stage in the passage of the Bill, the Government would do better to limit the general powers and accept some of the amendments that have been tabled, possibly exempting authorities that stay below their GREs and keeping the wider powers for the wild men. In that way they might find it easier to achieve their overall aim of controlling expenditure in line with the basic strategy.

It is easy to say that, but what better means of expenditure control could be found? First, the Government should not underrate their own success so far. The penalties and grant abatements have been fiendishly complicated and in some cases unintelligible, but they have had some effect. Although they have produced unfairnesses and need refining, they have had an effect in reducing the rate of increase in rates and in local government expenditure. That is a start, but it is not nearly enough. In due course, the Government will have to move towards the reform of the local government structure, a clearer definition of local government powers and a much more vigorous promotion of the privatisation, contracting-out and hiving off of many functions which have been unnnecessarily assumed by overblown local government.

The rates may be here to stay, as my right hon. Friend the Secretary of State for the Environment said at the weekend, but there is enormous scope for making local government more consumer-responsive, more local and more efficient, and tightening up its accounting methods. Yesterday, my hon. Friend the Member for Bristol, North-West (Mr. Stern) made a useful contribution on that point. As it stands, part II will not achieve that. It does not reinforce the vital expenditure control which, I understand, Ministers are as determined as I am that we should secure.

There is an analogy with the attitude to the National Health Service. If we continue to cut at the edges, we shall in the end create the maximum aggravation and the minimum gain. The reform of local government structure and the redefinition of its powers is a nettle that will have to be grasped if we are to achieve better expenditure control. Part II of the Bill is not a move along that path. It shows signs of an impatience with events which is not good for our party, for the Government or for the country. I hope that the Government will listen carefully to the considerable experience which my right hon. and hon. Friends have acquired on these matters and will amend the Bill to remove those dangers.

Mr. Simon Hughes (Southwark and Bermondsey)

I doubt whether the Secretary of State and his colleagues are quite as concerned about the representations made from this side of the House as they are about those made by Conservative Members who are warning them about the powers that they are seeking to persuade us to give them to limit the rates and precepts which may be raised by all local authorities. The constitutional point has been made in every speech today. The Government are attempting considerably to change the constitutional balance, in order to provide themselves with a weapon of economic management which may or may not succeed. This is causing great dissatisfaction to those involved in local authority management, who would rather see many other reforms in place of this one.

Part I is a warning that if local authorities misbehave there will be a rifle shot in their direction. Part H is a machine gun aimed at them all. It is a "You just dare" type of provision. It is not even as though the Government are introducing it, like the prevention of terrorism legislation, as an emergency power that the economy needs for a while but which will not remain in normal circumstances. The history of the House is that, once legislation is on the statute book, it is difficult to retrieve the powers that it provides as it is difficult to persuade the Government to relinquish them.

Later amendments suggest that the principle that amendment No. 31 would prevent being changed could be compromised. There are reports in today's papers that the Government intend to buy off critics on their side by accepting that the general powers will be used only in certain circumstances. That is unsatisfactory. It shows the unprincipled nature of the Government's approach. They are able to back down only on the ground of pragmatism to ensure that predominantly Conservative-controlled authorities which are represented by Conservative Members here are less likely to be the victims of the powers given by part II. It is an unprincipled compromise that is unacceptable to the alliance and does not change the validity of the amendment, which says that part II should go.

The Secretary of State recently said that the 10-year search for reform of the rating system which was initiated by the Prime Minister in 1974 is over, but the Government have not come up with an alternative. Part II interferes with the system that determines how local authorities raise their money rather than approaches the matter from how the Government should deal with how they control the financing of local government as they always have and always will. By the Government's choosing, rates are a form of local authority finance. They should be left as such and not become a hybrid form of local authority finance with Government controls and curbs around the edges.

If the Government are unhappy they can, through rate support grant and other mechanisms, show their unhappiness. If the Government are unhappy about the responsibilities that are exercised by local authorities, they are entitled to set economic priorities at Westminster. However, that is not the way forward. The Secretary of State is now taking two steps forward rather than one. If he honestly believes, as he has admitted, that the powers provided by part I have had an effect on rate levels for the forthcoming financial year, he should wait to see whether that is sufficient and whether local authorities accept that they must fall in line with the Government's strategy. We should then think again about the fundamental problem that part II addresses — the entire structure of local Government finance, the services that it provides and how they are financed. We should not have, just around the corner, this amazingly powerful weapon which the Government believe can deal at a stroke with all of the expenditure problems of hundreds of local authorities.

This House sits for more hours in a year than any other legislature in any other democracy—

Mr. Robin Maxwell-Hyslop (Tiverton)

The Liberals do not.

Mr. Hughes

On the basis of all of the statistics, we are the most overworked Parliament in the world because we refuse to devolve power. Indeed, we insist on bringing more power to Whitehall. We cling on to debates on orders about dogs in Northern Ireland and matters that are important perhaps only to people living on the west coast of Scotland. Under the Bill we are adding to Whitehall's powers and the duties of the House when we already have far too much to do. We should hand power back to the people.

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

Will the hon. Gentleman explain why his right hon. and hon. Friends in the alliance continue to table amendments on all parts of the Bill, insisting on more and more matters being subject to orders that are debatable in the House?

Mr. Hughes

The Secretary of State knows full well that, for the purposes of debate, we must accept the premise of the Bill's long title. We do not like the Bill, nor do we like the powers that it provides—we want elected and accountable local authorities to retain their powers.

Mr. Patrick Cormack (Staffordshire, South)

rose—

Mr. Hughes

I shall not give way again as others wish to speak. There are many ways in which the Government could deal with the problems of financial management. They must put their own house in order first. If post-war Governments had done a wonderful job we might be prepared to give them more powers, but that is neither the view nor the wish of most British people. They believe that successive Governments have done a pretty poor job. It is, therefore, much more satisfactory to curb the Government's powers and leave local authorities their powers until the Government can prove that they are worthy of the trust for which the Secretary of State asks.

We should resist this unconstitutional part of the Bill. I hope that, today or in the near future, right hon. and hon. Members will make it clear to the Government that such powers can never and should never be used.

Mr. Beaumont-Dark

On a point of order, Mr. Deputy Speaker. We now have with us the Secretary of State who, the press informs us, has something to tell us. As amendment No. 39 is to be debated later, would it not be helpful if the Secretary of State made a statement now?

Mr. Deputy Speaker

We are debating amendment No. 31. No doubt the Secretary of State will try to catch my eye at an appropriate moment.

Sir Peter Emery (Honiton)

Most right hon. and hon. Members, prima facie, take an instant dislike to general powers being taken by a Government to give them absolute authority over the finance of all local authorities in England and Wales. They are all-embracing, and the authority to centralise all financial control that the Bill gives the Secretary of State must make part II suspect.

Such action is entirely out of character with Conservative philosophy and the nature of my right hon. Friend the Secretary of State, with whom I have had the pleasure of serving as a Minister at the same time and in the same Department. Indeed, we even served in the same local authority and held the same office as chairman of the housing committee. However, we shall not go into that. We must therefore analyse carefully and completely the reasons that the Government have given for the need for part II.

The Conservative party's manifesto pledge has not yet been mentioned in the debate, but it is relevant. Our 1983 general election manifesto said: There are, however, a number of grossly extravagant … authorities whose exorbitant rate demands have caused great distress both to business and domestic ratepayers. We shall legislate to curb excessive and irresponsible rate increases by high-spending councils. That, I believe, is what part I of the Bill is setting out to do, but then there is a subsequent clause which says: and to provide a general scheme for limitation of rate increases for all local authorities to be used if necessary. The relevant part of that clause is "if necessary". If that were not in the manifesto, no Conservative Member who was elected on that manifesto could reasonably object to part II of the Bill. I believe that it is necessary, therefore, to see what the necessity is for these powers

5.30 pm

Let us analyse the situation. Of course, there is a possibility that at some time in the future a number of local authorities, either jointly or individually, could considerably overspend, running their own local authority expenditure massively contrary to the whole of Government policy and then calling on the taxpayer, through the Chancellor of the Exchequer, to meet 53 per cent. of that expenditure. It must be wrong for the ordinary taxpayer to have to finance services that some high-spending authority is willing to give to its ratepayers but which he does not obtain from his local authority. There is, therefore, a reason why the Government should wish to have the power to ensure that, if that arises, they can deal with it.

I can understand the argument according to which the Government should wait until that happens before taking the powers, but I believe that the House would be somewhat concerned if, after it had gone through the whole of this Bill, that situation arose in the future and there had to be yet another Bill to deal with it.

I can therefore understand the Government wanting powers that will enable them to deal with the possibility of considerable overspending in the future, but surely that does not mean that they need powers to control expenditure by authorities which have co-operated and are permanently co-operating with Government policy.

It is this, I believe, that has brought so much unrest and so much criticism of the Bill, not just from Conservative authorities but from authorities all over the country—the feeling that it would be wrong for the Government to rate-cap them or take powers to control them when they have at all times complied with Government policy.

The Government have said, both in winding up on Second Reading and in assurances outside the House, that where authorities are complying with their policy they will not want to interfere. That is in accordance with the aspect of Conservative philosophy that I outlined at the beginning of my speech. The Government can, in fairness, point to clause 10(2), which would allow them to exempt certain authorities from the working of the order which would be introduced to carry out part II.

I am, I suppose, a fairly new boy in this place. I have seen a change of Ministers only occasionally in my 25 years, and Governments have come and gone. But I ask, why cannot these assurances be put into the Bill so that they are part of the Act when it is in on the statute book? Unless the Government were willing to do that, I would have no compunction about supporting my hon. Friend the Member for Devizes(Mr. Morrison) in this amendment, because I believe that it is quite wrong for the Government to take powers which they know they never intend to use against a whole host of local authorities.

I would like an assurance that the Government will definitely accept some of the later amendments on the Order Paper. We need to know this now in order to know how to vote on the present amendment. I want to extract a categorical assurance from the Minister that, if we do not press this amendment, he will put into the Bill in another place the assurance that those authorities that have complied with the guidance given by the Government as defined under the Act—which is normally known as targets—or, if those targets do not exist, have complied with GREA, for a period of two years, will be exempt from part II of the Bill.

That is the important matter, that the good boys, the authorities which have abided by Government edict and policy, shall never have any fear that they can be rate-capped. I am certain that that is what the Government mean, but, if that is so, let us have a definite assurance during this debate.

On my calculation, as of today there are 200 out of 413 authorities in England and 30 out of 45 authorities in Wales which for the last two years have complied with Government targets. Why should they be under threat? The sort of assurance that I want from the Minister would immediately, therefore, cut from the effects of part II at least 50 per cent. of all the authorities in England and Wales.

Mr. W. Benyon (Milton Keynes)

We are in the most appalling difficulty, as my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said, because I want to clarify what my hon. Friend is getting at. His amendment, which we have not come to yet, deals with year 1. What happens in year 2?

Sir Peter Emery

Well, what happens in year 3, 4 or 5? I seek an assurance from my right hon. Friend that if at any time a local authority had not in the two previous years complied with the conditions I have outlined, it would be regarded as not complying with Government policy. I want to go a stage further, however, which I think will help my hon. Friend, because there is yet another point of considerable importance. A number of local authorities have for a very considerable time been below GREA and often on target but have just, perhaps this year particularly, had to go above target. I feel that those authorities which have been very low-spending on the whole also ought to be exempt from action under part II. I ask my right hon. Friend the Minister whether he can contrive to find words—as I have not been able to at this stage — to include that section as well as the provably good boys in the specification on which I have asked for an assurance.

Mr. Tim Rathbone (Lewes)

rose—

Sir Peter Emery

May I, before I give way to my hon. Friend, make one further point before the hon. Member for Southwark and Bermondsey (Mr. Hughes) leaves? He has suggested that the type of assurance, or the amendment, would concern only Conservative authorities. That is absolutely untrue. There are a number of urban authorities which are above GREA but are meeting the targets. Therefore, even authorities which were spending above GREA but were meeting the target figure would be exempt, and those are mainly urban authorities. It is not just the Conservative country authorities, and I thought that I ought to explain that to the hon. Gentleman.

Mr. Simon Hughes

Will the hon. Gentleman give way?

Sir Peter Emery

No. The hon. Gentleman did not give way. However, I promised to give way to my hon. Friend the Member for Lewes (Mr. Rathbone).

Mr. Rathbone

I am grateful to my hon. Friend. I wanted to add an accent to the point that he made. The problem for the authorities to which he referred is cumulative. If they keep under the levels set by the Government and even though they are far below GREA, they establish a lower base from which future expenditure can be made.

Sir Peter Emery

I agree with my hon. Friend. Indeed, he outlines the position of my county council. The assurances that I am asking for do not cover that council, so there is nothing personal in what I say.

I believe that my proposal is right. If the Secretary of State cannot give the assurances for which we have asked, it will be difficult for us not to support the amendment.

Mr. Patrick Jenkin

I think that it would be the general wish of the House, as reflected by my hon. Friend the Member for Birmingham, Selly Oak(Mr. Beaumont-Dark), that, in view of the speculation in the press, I should intervene at this early stage.

I apologise profoundly to my hon. Friend the Member for Devizes (Mr. Morrison). Owing to an unavoidable engagement, I was not here for his speech, but I have been given a note of what he said and I entirely respect his view about the Bill. though he will not expect me to say that I agree with him. I respect his right to express his view, but I believe that he is wrong and I shall ask the House to reject his amendment.

I also missed most of the contribution of my right hon. Friend the Member for Guildford (Mr. Howell) but I am told that he made a characteristically profound speech about the relationship between central and local government. I accept much of what he said. However, my right hon. Friend was being a little unfair when he accused the Government of impatience in wanting to see part II in the Bill. As I shall explain, all sorts of safeguards are built into the operation of part II and they are integral parts of our policy.

Our firm wish is that the powers in part II will never be needed. I said on many occasions in Committee that it was my fervent wish that we would not even have to use part I, because local authorities should live within the general guidelines approved by the House.

I say firmly that it is intended to hold the powers in part II in reserve and to use them only if it becomes absolutely necessary. I hope and believe that the pressures of the existing system, reinforced by part I, will achieve our objectives and that part II can for ever remain contingent and unused. I hope that that view will underlie everything that I and others say in the debate.

I have been asked about the circumstances in which I might wish to come to the House and ask for part II to be implemented. I described the sort of circumstances on Second Reading: Any decision about whether there should be a move to general limitation must depend on the future spending decisions of not just a few authorities but of a significant number of authorities. If it becomes apparent that, for whatever reason, a substantial block of authorities are spending irresponsibly and so are pursuing a course calculated to overturn the Government's expenditure plans, then we should have to consider asking the House to implement the general scheme. But I repeat that we do not want to have to do that. Only if the spending decisions of a substantial number of authorities cause us to act would we contemplate asking the House to activate the power."—[Official Report, 17 January 1984; Vol., c. 174.] That is not the situation today. The hon. Member for Blackburn (Mr. Straw) referred yesterday to the public expenditure White Paper figures and said that the only way that the Government could achieve those figures was by implementing part II straight away. I say categorically that we have no intention of doing that. I have dealt at length with the significance of the figures in the White Paper and I have pointed out that year after year we have had to add on to the spending figures substantial sums to achieve realism. It is not our intention to introduce part II at the outset or, as I have said, at all.

Indeed, the pattern of local authority current spending shows that in each of the past three years, taking local authorities as a whole, there has been an ever-closer convergence of total public spending with the Government's targets. That has been reinforced this year with the prospect of rate-capping being dangled before some of the high spenders. I have previously quoted an extract from the report of the Newcastle upon Tyne finance committee, which spelt that out. For 1984–85, we have the lowest rates increase for 10 years. It should be lower, but it is commendable.

Our problem is the tiny minority of high-spending authorities whose behaviour clearly stands out against the general trend. Their high spending pushes up the figures dramatically and has an inevitable effect on the toughness of the targets that we have to impose on everyone else. I believe that, on present trends, part I will secure our objectives. However, those trends could change. Suppose that the sort of policies pursued by the minority of councils proved contagious and the disease spread to a much larger number. Suppose that 50, 70, 90 or 100 local authorities were involved. Many might be captured by extreme Left-wing elements after an election.

Mr. Jack Straw (Blackburn)

Elected.

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Mr. Jenkin

No, I mean "captured".Mr. Livingstone was not the leader of the GLC when he was elected. Mr. Kendall was not the leader of Hackney council when he was elected. It has happened, and the hon. Member for Blackburn is as unhappy about it as any other hon. Member.

Mr. Straw

I am not as unhappy about it as any other hon. Member. The Secretary of State knows full well that there are as many changes in the leadership of Conservative groups as there are in the leadership of Labour groups. The right hon. Gentleman displays a thoroughly objectionable contempt for the wishes of the electorate by seeking to impose his views in place of those of the electors.

Mr. Jenkin

I am content to let my case stand. The electorate of London did not elect a Labour majority to be led by Mr. Livingstone, but they got it within 24 hours.

Mr. Straw

Would the Secretary of State now like to have elections in London, with Mr. Kenneth Livingstone as the leader of the GLC, and see what happens?

Mr. Jenkin

Mr. Kenneth Livingstone is on record in 1979, 1982 and 1983 as saying that it would be very much better if all the services were devolved to the boroughs. That is the Government's policy.

We shall be able to deal with the minority of councils under part I. However, if we found that a large number of authorities began to indulge in the same sort of excessive spending and rating, we could not stand by. It would go much further than the situation with which part I has been designed to deal and we would have to ask the House to implement part II, both to safeguard the Government's overall public expenditure strategy and to protect the ratepayers in those areas. The House would have to consider that matter at the time. It is not the condition at present, but it is conceivable that it could arise.

The second point that arises out of what I said on Second Reading and what I have said today is that part II is aimed at catching extravagant spenders.

Mr. Charles Morrison

My right hon. Friend referred to part I, so could he explain in a little more detail why it cannot cope with such circumstances as those that he described? It is possible, given that he did not accept yesterday a limit on the number of local authorities to be designated, for him to make use of part I even in those circumstances that he described.

Mr. Jenkin

Perhaps my hon. Friend will allow me to put my case, as the point will become clear. The essential point is that under part I we are dealing essentially with those authorities of which the spending is, by any standards, excessive. The procedures and the philosophy of part I are aimed at dealing with that. I said yesterday, and I say again today, that we do not expect, or want, to deal with more than between 12 and 20, but, as I also said yesterday, I do not want to be tied precisely to those figures.

To demonstrate that moving to part II would represent a new phase, and not just an extension of part I, we have built in a number of safeguards. Part II cannot be implemented without an affirmative order being passed by both Houses of Parliament. Before we lay that order, we are obliged under the Bill to consult the representatives of local government. There would, therefore, be a wide public debate before both Houses came to decide the matter. That in itself represents a safeguard.

Mr. Allen McKay (Barnsley, West and Penistone)

I am still puzzled over the answer that the right hon. Gentleman gave me in Committee about this stage of the proceedings. When would he decide that the general powers should come into being? How many authorities would have to come into the rate-capping procedures before the general powers are used? He is talking about 12 to 20 authorities, but would he increase that to 30, 40 or 50, or will part I be used to bring in so many authorities under the rate-capping legislation that, as his hon. Friends think, part II will not be implemented?

Mr. Jenkin

I made it clear that we should not want to take part I beyond 20 or thereabouts, but I do not want to be held to an exact figure. I was asked yesterday whether I would not stop at 25. I think that it would be better to leave the limited flexibility, but I give the hon. Gentleman that assurance. It is if the number goes substantially beyond that that part II will be implemented. Part II is a considerable step, as my right hon. Friend the Member for Guildford pointed out. It will represent—I do not shrink from this — a significant change in the relationship between central and local government. It will not be a step to be undertaken lightly, and that is why it will be only if we find ourselves with a substantial number of authorities that we shall feel it right to come to the House.

Secondly, we shall make sure that the general scheme will not put restrictions on sensible and responsible authorities. We made that clear in the rates White Paper, and I can quote the paragraph. This brings me to the point made by my hon. Friend the Member for Honiton (Sir P. Emery). Chapter 4 of the White Paper is about the general scheme and paragraph 4.5 says: the levels would be set in such a way that authorities could generally be expected to contain their expenditure within them". My hon. Friend the Member for Honiton has interpreted that not unreasonably by saying that it is not intended to impose severe restrictions on authorities whose spending is reasonable and in line with the Government's guidelines. My hon. Friend has tabled a later amendment and I understand his point that it would help him to decide how to vote on amendment No. 31 if I could give some sign of how we shall respond to that amendment. He asked why, if his interpretation is correct, it cannot be put into the Bill. As I understand it, that is the heart of his proposition, which has a good deal of force behind it. I hope that he will accept the proposal that I shall put before the House.

I have studied with some care the details of amendment No. 39. I fear that we cannot accept it as drafted as it has some technical defects. My hon. Friend has linked his amendment to the question whether it is certain that an authority's spending is below its GREA or target for two years. Technically, one cannot know that until the authority's accounts have been audited, and that may be as much as 18 months or two years after the event. That would make it difficult to know whether or not an authority should be excluded from part II. Therefore, it would be difficult for us to accept the amendment as it stands. Perhaps he will accept my assurance that we accept the principle.

Mr. Peter Hordern (Horsham)

The amendment tabled by my hon. Friend the Member for Honiton (Sir P. Emery) is defective in one other respect in that it seeks to contain those authorities that have not gone above their target level, but, as my hon. Friend said earlier, those authorities have stuck most closely to the levels of low expenditure, and West Sussex is the most commendable of all authorities. They have, for this year alone, had to break their targets. Therefore, any formula that my right hon. Friend may suggest must allow for those authorities that have consistently been below the GRE level.

Mr. Jenkin

I entirely understand my hon. Friend's point, and I endorse the praise of West Sussex council, of which the spending record is most commendable. It is one of the few local authorities that have managed to achieve the Government's target of reduction in its level of public expenditure. My hon. Friend's point is a fair one. I point out to him, and to my hon. Friend the Member for Honiton, that if they may be persuaded not to press amendment No. 39 to a Division when it comes, I shall give a firm undertaking to study the matter and to table an amendment in the other place that meets the substance of the case that my hon. Friends have put.

Sir Bernard Braine (Castle Point)

The words that my right hon. Friend has just uttered are helpful, but I am sure that he will not mind if I probe a little further. He will know that I represent a county that is one of the lowest spenders in the kingdom and one that for five years has consistently kept below its GRE level. It has been praised both by my right hon. Friend and his predecessor for its prudent management. Can he say, to ease the anxiety of those who represent low-spending authorities such as Essex, that the formula he has in mind will cover the county of Essex?

Mr. Jenkin

My hon. Friend is ingenious in his questions. He will realise at once that the implementation of part II is contingent and that it would not be introduced unless there were changed circumstances. What the situation might be in relation to any particular authority is not a question that I can answer. I think that Essex will not fall within the terms of the amendment of my hon. Friend the Member for Honiton this year because it has decided, as a conscious act of policy, to go above the target level for a year or two and has explained that to the ratepayers. I am expecting to get the sharp end of Councillor Williams' objections through my letter-box in due course, as one of those ratepayers. The point made by my hon. Friend the Member for Horsham (Mr. Hordern) is that there may be some way of recognising those councils that, over several years, have broadly followed Government guidelines. I undertake to study ways of how we can implement what is clearly the wish of many of my right hon. and hon. Friends.

Sir Peter Mills (Torridge and Devon, West)

Would my right hon. Friend not agree that what is needed in this difficult situation is for the same determination that he is showing to curb the excessive spenders to be applied in assessing those which have been spending not so much?

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Mr. Jenkin

I must be cautious not to be drawn further than I would wish to go. I say this advisedly. There are many authorities—and I am not sure that Essex is not among them — whose view of their spending differs markedly from that of the district councillors within the county looking at the same facts and figures. I understand the point that my hon. Friend makes about Devon.

Mr. Maxwell-Hyslop

I understand the drafting defects in amendment No. 39. In drafting amendment No. 16, I took the words of my right hon. Friend from part I for precisely the reason that he has given, so that amendment No. 16 does not have such a drafting defect. It covers the case of a council which, because it has been a consistent low spender, has had a low target and has had to exceed that target, not because its expenditure is in any way unreasonable but because over the years it has been a consistent low spender. Amendment No. 16 imports the Minister's own criteria, which he rightly said were not included in amendment No. 39, and covers the case where expenditure is over the target, because the target is so low, but is under GRE, his own assessment of need.

Mr. Deputy Speaker

Order. I do not think that the hon. Gentleman can intervene to make the speech that he hopes to make when we reach amendment No. 16.

Mr. Jenkin

My hon. Friend was allowed to continue long enough for me to get the drift of his question, which put much the same point as that made by my hon. Friend the Member for Horsham in a somewhat different way. My hon. Friends are seeking to ensure that, when an amendment is tabled in another place, it will exclude from the operation of part II those authorities which have consistently been following the Government guidelines. That is the undertaking that I am giving.

Mr. Cormack

Does not every dainty step on the road to conciliation that my right hon. Friend now seeks to take illustrate that it would be far better to take the bold step of accepting the amendment eloquently moved by my hon. Friend the Member for Devizes (Mr. Morrison), knocking part II out of the Bill entirely?

Mr. Jenkin

I have made sympathetic noises to my other hon. Friends, but I am bound to tell my hon. Friend that I cannot accept that. I believe that our duty to protect the Government's expenditure targets and the ratepayers means that, if we ever had to come to take that step—and I have described the quite extreme circumstances—we would need to act with the consent of the House, and to act fast. The alternative would be to come back to the House with fresh legislation, in which case, instead of dealing with the matter promptly in the next financial year, we might have to wait one financial year, or perhaps two financial years. In the circumstances that I describe, that would not be tolerable. I therefore asked the House to include part II, but with an amendment, when it comes back from the other place, to reflect the undertaking that I have given.

Mr. Geoffrey Rippon (Hexham)

If the matter is to be reconsidered when the Bill goes to another place, why not include the amendment in part I and drop part II altogether?

Mr. Jenkin

I fear that my right hon. and learned Friend is asking me to do something different from that which I have undertaken to do. That I cannot do. A number of amendments in the names of my hon. Friends appear on the amendment paper, and we shall wish to study them all carefully. I hope that the amendment tabled by my noble Friend Lord Bellwin in another place will meet with the approval of the majority of my hon. Friends.

Mr. Straw

The right hon. Gentleman said that he hoped to ensure, by an amendment introduced in the other place, that those local authorities that had observed the Government's guidelines would not be caught by the operation of part II, if, indeed, it operated. By guidelines, has the right hon. Gentleman in mind target and UREA, whichever is the higher?

Mr. Jenkin

The amendment refers to target and GREA or, if there is no target, GREA alone. I have indicated my ambition, once the selective rate-capping scheme is working and in operation for a year or two, that we might be able to dispense with the machinery of targets. The Government can give no undertaking on that, but I am sure that it would meet with the approval of the hon. Member for Blackburn if we could achieve it. In using the word "guidelines", I was thinking of guidelines from year to year and not for one year only.

I hope that what I have said indicates why part II is needed on the statute book and the somewhat extreme circumstances that would have to arise before it would be necessary to ask both Houses to implement it, and shows that we are prepared to see a substantial exclusion of those councils whose spending and rating over the years has been regarded as reasonable and in line with Government policy.

Sir Peter Emery

The assurance that my right hon. Friend has given goes a long way to reassure Conservative authorities and Labour authorities which have combined to work for Government policy, and to make the Bill much more acceptable.

Mr. Jenkin

If all interventions were as agreeable as that, I should be ready to give way more frequently.

I hope that the House will now feel it right to reject amendment No. 31.

Mr. Straw

I am sure that all hon. Menibers will wish to examine with great care what the Secretary of State has said. There is something slightly rehearsed about the leaks in the newspapers yesterday, the pressures from the softer Conservative Members who have reservations about the Bill, the little concession that the Secretary of State has made today, and the yielding by those softer rebels a short time ago, for we all recognise the ways of the Whips, and the discussions that take place behind the scenes may have something to do with this.

It is important to examine carefully whether the Secretary of State will be able to meet the serious objections that have been raised, not only by his hon. Friends but by the Conservative-controlled local authority associations, to this part of the Bill.

We had informal contact with the Association of District Councils and the Association of County Councils on these amendments. I hope that I do not put words into their mouths when I say that I understand that the policy committee of the Association of District Councils met today and was highly sceptical, to say the least, about amendment No. 39 and its associated amendments, as was the Association of County Councils. As my hon. Friend the Member for Copeland (Dr. Cunningham) reminded the House, when speaking on the first series of new clauses, the Association of County Councils and the Association of District Councils stated: The Secretary of State has said nothing which would meet the criticisms of the Bill by the local authority associations… The Bill represents a massive shift towards the centralisation of local decision making by giving the Secretary of State effective power to fix expenditure and rate levels for all councils in England and Wales. One of the key questions that Conservative Members must consider, despite the protestations of the Secretary of State that he hopes never to use the power in part II, is why he is determined to see part II on the statute book. Indeed, why was he unwilling to accept restrictions to limit the selective scheme to 20 or thereabouts? As the right hon. and learned Member for Hexham (Mr. Rippon) said, why was he unwilling to accept into part I that which he is apparently now willing to accept into part II? The answer lies in the Government's public expenditure plans. As the Under-Secretary has made clear on many occasions, the principal purpose of the legislation is to ensure that local authority expenditure falls into line with the Government's plans.

It is important for Conservative Members to consider the matter. Under the plans, local authority current expenditure is due to fall in real terms by £1,500 million during the next two years. Paragraph 11 of section 2.18 of the second volume of the White Paper states that current expenditure relevant for RSG in Great Britain is planned to rise by only 2¼ percent. in 1985–6 and 1¾ percent. in 1986–7. That is against a background of an inflation assumption of 5 per cent. in both years. If the Government achieve that 5 per cent., they will be more than pleased, especially in view of the pressure on inflation, not least from abroad. The figures involve a cut of £1,500 million in the real level of spending by local authorities. It is a massive amount. The question is whether that can be achieved without part II of the Bill.

When we discussed part I, the Secretary of State admitted that the most that could be achieved if he rate-capped 20 or so authorities was a gross saving of about £300 million. There is no dispute about that. In net terms, the figure would be nearer £200 million, because if the rate-capped authorities reduce their expenditure they will qualify for more Government grant at the expense of other, lower-spending authorities.

Where will the Government find the other £1,300 million saving to which they committed themselves in the White Paper? The Secretary of State said that he would find it by using the pressures of targets and GREAs on authorities. We have already found this year that, if the Secretary of State pushes GREAs and targets on authorities to an unrealistic level, even the most willing Conservative authority that wishes to observe the Secretary of State's guidance will refuse to do so. That is why Essex and West Sussex have spent above target.

If the Government next year and the year after were again to impose targets that involved a real cut in the level of spending, authorities would spend above target. We must remember that next year county councils go to the polls and, therefore, councillors are especially sensitive not only about rate increases but about cuts in services. I remember that in 1981, Conservative-controlled Lancashire, among others, was concerned about further service cuts. If such authorities are faced with a target that they believe to be unattainable and that will result in wholly unacceptable cuts in services, they will again spend above target.

6.15 pm

The Government cannot achieve the saving simply by using targets. Therefore, to achieve a saving of £1,300 million they must use the powers in part II. The Secretary of State is shaking his head. Time and again, both in Committee and on the Floor of the House, we have asked him how he intends to ensure that the savings required in the White Paper can be achieved by the existing mechanism. It is a matter of simple arithmetic that those savings cannot be achieved simply by the operation of part I. That is patent and has never been in dispute. If the savings are to be achieved, part II must be brought into operation—or the White Paper is not worth the paper on which it is printed.

Mr. Allan Roberts

Is there not a third possibility—that the savings can be made under existing legislation without the need for either part I or part II of the Bill, which means that the whole of the Bill is unnecessary?

Mr. Straw

If that is the case, the Bill is unnecessary. However, I doubt that it is the case.

Conservative Members have rightly represented their local authorities and their constituents during the past four years. They have told the Secretary of State that, in current parlance, their authorities have been good boys who have observed the guidance and cut to the bone. Yet three quarters of the shire counties have run up against target and spent above it. The Conservative authorities over target are, by definition, those that have cut to the bone and realised that they cannot go any further. Conservative Members know better than I do that those authorities will not be willing to make further cuts because that would not only go against their principles but could lead to electoral suicide.

Mr. Charles Morrison

A number of Conservative-controlled local authorities have been warned by Government Departments about cutting costs because they are barely living up to their mandatory responsibilities.

Mr. Straw

I am grateful to the hon. Gentleman for his intervention. Local authorities are in a vice. Statutory responsibilities are placed upon them by this House, and those responsibilities will not be amended by the Bill. The authorities will still be expected to meet the requirements of the Children and Young Persons Act, the Education Acts, the social services Acts, the public health Acts—

Mr. Richard Holt (Langbaurgh)

I recently asked my town clerk how many Acts it was necessary for the town hall to employ people to operate, and I was told that there were 88.

Mr. Straw

I am grateful to the hon. Gentleman for his remarks.

Despite the Government's intention to produce less legislation, it is inevitable that all Governments produce more legislation and impose more duties on local authorities. Obviously I have political disagreements with Conservative county councillors, but I know that they seek to serve their local communities and to fulfil their statutory duties. They hate the possibility of not fulfilling the statutory duties placed upon them by the House—by the rule of law—and worry about the consequences of no longer being able to serve their communities. They exist, as do Labour councillors, to serve their communities.

Because the Secretary of State has not offered, even though he has been given many opportunities, a satisfactory explanation of how it will be possible for the Government to meet the expenditure target in the White Paper without using part II, I urge Conservative Members to be sceptical — as I believe Conservative local authority associations are sceptical—before they accept all that the Secretary of State has said.

Mr. Chris Smith (Islington, South and Finsbury)

Apart from the danger that targets and GREAs might be deliberately moved down to meet overall expenditure targets, does my hon. Friend agree that the concession that the Secretary of State has given, or hinted at, offers nothing to the two thirds of county authorities that are being forced to spend above their targets and GREAs at present?

Mr. Straw

I agree. Most of the two thirds are Conservative authorities and they will gain nothing from the amendments, because they have been over targets, and in many cases over GREA as well, for at least one of the past two years. If the Government seek to accommodate them next year by increasing their targets, they will not meet their own public expenditure targets. That is the Government's dilemma. The Government keep saying that they want to help Conservative-controlled authorities, and I believed the Under-Secretary when he said that, but he has to persuade the Chancellor of the Exchequer that increasing the targets and GREAs—it is the only way to do it; there is no other way to do it within the existing financial mechanisms—can be done within the existing public expenditure White Paper. Of course, that is not possible. If the Government reduce the targets—that is one way to meet the public expenditure White Paper proposals, possibly without part II — Conservative authorities will be in an even greater jam next year than they are this year. The Secretary of State is on the horns of a dilemma, and he has not explained to the satisfaction of the House how he will get out of it.

No doubt for understandable reasons, the Secretary of State's offering this afternoon was connected with the fact that he has to conduct negotiations with the Treasury. Those of us who have had the privilege of working in the Government machine know how offerings on amendments get crawled over by one Department after another, and sentences with main verbs only suddenly have a string of subordinate and conditional clauses attached to them.

When we read the Official Report tomorrow, I suspect that we shall find that the Secretary of State has certainly made an attestation of good faith — we have never doubted that; I am glad to see the right hon. Member for Guildford (Mr. Howell) smiling, in an inscrutable way, sphinx-like at what I said about the Treasury crawling over these undertakings—but that we shall find that a good deal less than we think has been offered. Of course, something will happen in the Lords. However, may I point out to Conservative Members, who are even more worldly than we are about the way of politics, that the best chance they have of extracting the maximum number of real concessions from the Government is not to withdraw the amendments but to pursue amendment No. 31 into the Lobby this evening. It is only as a result of pressure from Conservative Members who are courageous enough to back their opinions with a vote in the Lobby against the Government that the Government have even gone this far.

To doubters who may wish to duck when even a crumb is offered, I say, "Think about what may be coming your way if you stand firm with those who have stood firm and continue to stand firm." If all those who are thinking about accepting the amendment march through the Lobby with the hon. Member for Devizes (Mr. Morrison) and his friends, part II, to which the overwhelming majority of Conservative councils rightly object, will be defeated. That is the prize, the prospect, if hon. Members have the courage of their convictions. If they do not, they will get crumbs from the Secretary of State's table. The amendment that will be moved and carried in the Lords on the basis of what the Secretary of State said NA, ill be meaningless in terms of the difficulties that this part of the Bill will cause for many Conservative authorities if it comes into force.

Mr. Rippon

I welcome the assurance from my right hon. Friend the Secretary of State that he now contemplates amendments in another place to mitigate the immediate impact and effect of this measure. I still cannot understand why these proposed amendments cannot be applied to part I and why part II cannot be eliminated. As we saw yesterday, the real danger is that the selective power in part I can be extended almost to cover the number of authorities that will be affected by the general powers.

Mr. Patrick Jenkin

I should have said, in answer to my right hon. and learned Friend's intervention, that an exemption is already written into part I which exempts any authority that spends below its GRE. It is already there.

Mr. Rippon

Yes, but the difficulty is that the Minister said yesterday that the principles that were set out in Committee were liable to be amended at any time. That is one of our objections. However, I am grateful for my right hon. Friend's assurance that all my colleagues who jumped up so excitedly need have no further fears about part I. If amendment No. 39 or the equally—if not more—admirable amendment No. 16 or a combination of amendments is accepted in principle, I have a feeling that the Government are acting on the expediency of the moment and that what may be the convenience of today may prove a grave embarrassment in the future. It was remarkable how many right hon. and hon. Members jumped up and asked what the position was for this or that authority.

The truth is that even under selective rate-capping the interests of prudent authorities are not adequately protected. Whatever can be said about the justifiable nature of rate-capping for selective authorities which are proved to have abused their powers or acted improvidently, there is no justification for part II. Nothing that the Secretary of State said this afternoon should lead people, for that reason, not to vote for the exclusion of part II.

In my opinion, a Government should not take powers for which they say, quite openly, they see no present requirement. If the situation changes in future, the Secretary of State should introduce primary legislation to deal with a situation which, if it arose, would be—in his words—a major constitutional matter. So far today, we have not discussed this major constitutional issue. That arises directly under part II. It gives a Government wide, sweeping general powers of a kind that have not hitherto been regarded in this country as being in accordance with the rule of law.

The Secretary of State says that we are unitary state. The Soviet Union says the same thing of itself. Section 2, I think, of the Soviet constitution says that inferior bodies are always subordinate to superior bodies. That is not our view in this country. Local authorities have rights and responsibilities, given to them by this House by statute, which have survived for a long time. I do not believe that it is right to take general powers such as are in part II to interfere with the historic relationship between central and local government.

Of course, in the last resort, Parliament is supreme. I quoted some authors that members of the Cabinet might refresh their minds by reading. I think that my right hon. Friend the Secretary of State for Education is fond of reading lists. I suggested yesterday that the Cabinet might read the Lord Chancellor's "Dilemma of Democracy", the Secretary of State for Education's "Freedom under the Law", John Locke, Professor C. K. Allen's "Law and Orders" and the Under-Secretary's admirable books. Perhaps today I should refer to two other authorities—both of whom I understand are very popular with the Government. One is Professor Hayek.

6.30 pm

I played some part in helping Professor Hayek in the days when he was writing a splendid book, "Road to Serfdom". Hon. Members should read what he said about the rule of law. He said that not everything is defined by law but, on the contrary, the coercive power of the state can be used only in cases defined in advance by the law and in such a way as it can be foreseen how it will be used. It is clear from all the interventions this afternoon that we have no idea how or in what circumstances part II will be used. All we have is the Government's assurance that they do not think that it will have to be used. That is not good enough.

In the famous case of the Bishop of Rochester's cook in the time of Henry VIII, Parliament resolved that the said Richard Rose should be boiled to death without benefit of his clergy. That was the supremacy of Parliament, but, as Professor Hayek says, it is hardly the rule of law. That is why a Bill of this kind should be limited in its extent. A power to rate-cap selectively should be applied carefully and each case considered on its merits. Moreover, such a measure should be limited in time, particularly as it is necessary to have some reorganisation of local government finance, rather than that there should be an indefinite continuation of this measure.

Mr. Maxwell-Hyslop

Might not the particular circumstance of the Bishop of Rochester's cook be the one and only one on which the hon. Member for Cambridgeshire, North-East (Mr. Freud) might have made a useful contribution to our debate?

Mr. Rippon

We are always glad to have a contribution from the Liberal Benches. Certainly, they should be supporting the amendment. However, for the moment I am addressing myself primarily to the House as a whole, particularly to my hon. Friends.

When I was trying to produce a philosophy of the radical Right, there were helpful contributions from the Conservative Political Centre, which published "Freedom under the Law" by my right hon. Friend the Secretary of State for Education and Science. It publishes books given to young Conservatives as a guide as to the principles and precepts that they should follow. Another Right-wing thinker, fashionable at present, is Mr. Russell Lewis. In his "Principles to Conserve" he wrote: Local Government, once the lifeblood of liberty, falls increasingly under the sway of the central administration. Who can now say that the Bill embodies any reversal of that process?

It is not right that Conservatives should say in Opposition that we stand for town hall, not Whitehall, that we do not believe that the gentlemen in Whitehall know best, that we want a devolution of power, that we accept the freedom of local government and that we believe that that is one of the twin pillars of our constitution, yet in Government produce a Bill such as this, particularly with the wide, sweeping powers that are contained in part II.

Whatever hon. Members may think about the merits of selective rate-capping, I hope that they will have no hesitation in supporting the amendment tabled by my hon. Friend the member for Devizes (Mr. Morrison).

Mr. Jack Thompson (Wansbeck)

I consider it an honour and a privilege to follow the right hon. and learned Member for Hexham (Mr. Rippon), who represents a part of the country from which I come. We are close neighbours and I support what he has said. I am afraid that I shall not achieve his eloquence or witticism, but I have not been in the House as long as he has. However, I respect his opinions and knowledge of local government.

I was somewhat surprised — the right hon. and learned Member for Hexham referred to this—when the Secretary of State hinted what will happen in the changes. Before becoming a Member of the House I spent most of my working life —about 11 years — in local government. I was at the receiving end of what came from Whitehall and Westminster, and that experience made me rather suspicious. Hints appear in the press or in letters to local authorities but when it comes to the nitty-gritty matters are slightly different. I would rather see something in writing. I think that many of my hon. Friends would prefer to see in writing this small concession that we have been told about today.

I am reminded of the school room where the teacher has the tawse. There may be those who are too young to know about that. The teacher tells the class that he will use the tawse on those he considers to be naughty. They will be bent over the bench and the tawse will be swung six or seven times as a punishment. Those who have offended less are shown the tawse and told that that is what it is all about. We now find from the Secretary of State's comments that there is a hint of some sweeties in the desk. I am not sure whether they are nice-tasting or not. I would rather see the quality of the sweeties.

I was rather astonished to hear the Secretary of State comment on the leadership of the GLC—I think it was a throw-away comment—and the fact that following its election the Labour group on the GLC decided to change its leadership. I was leader of the political group which controlled my county council at the time of the 1981 elections. Last year I resigned that leadership when I became a Member and, therefore, the leadership changed. We did not have an election.

As a member of the Association of County Councils, that illustrious body near Sloane square, I saw its leadership change in 1981. It was a good job that it changed, and it did so because the controlling Conservative group of the ACC decided that it wanted to see such a change. That is probably part of the reason for the Bill. A far more responsible leadership took over—Conservatives with a better understanding of local Government than previously. I respect the attitude that has been taken since the change in leadership. We have been assured that as far as possible that leadership will not be dominated or pushed around by the Government. When the leadership of the Tory party is changed — there seems to be some sign that that might be in the pipeline—I hope that we shall have a general election. It will be nice to have a general election at that time.

I have not been able to read all of the documents, but it is clear from those that I have and from the debates that I have listened to carefully that one area has not been touched on. There have been various side comments but nothing specific has been said about an important area of local government which clauses 9 to 12 affect—local councillors. We tend to talk of local government as a collective organisation and local authorities as a corporate management organisation. We have never really talked about the local member of an authority, whether it be metropolitan county, metropolitan district, shire county or shire district authority. We have never talked about what individuals feel about the propositions that have been put to them.

I have spent 10 or 11 years alongside many councillors, not only from my authority but elsewhere, of all political shades, from the extreme Left to the extreme Right of the Conservative and Labour parties. I am not sure where the Liberals stand. They are all responsible people.

We must understand what is involved in being a councillor. It does not end with knocking on doors at election time, working hard up to polling day and perhaps being elected. I recall that when I first joined my county council I was under the impression that I would attend county council meetings' perhaps four times a year, with possibly a fifth attendance on budget day. I was soon made to realise that life as a councillor was not like that.

Years later, shortly before resigning as leader, I would arrive at county hall at 9 o'clock in the morning, remain there until 4 in the afternoon, leave to go to my work by 5 in the evening and arrive home at 1.30 the following morning. The following day, and the one after that, I did the same. I accept that I may have been an exception, but there are thousands of county councillors doing much the same job in much the same way.

In my county, because of the location of the county headquarters, councillors travel 100 miles a day to attend meetings. They do not do that because they are receiving the salaries of Members of Parliament. Not long ago they were receiving £14.85 a day, less tax, which in aggregate meant that they were getting about £8. Some people would hardly stand up for £8, let alone travel 100 miles to attend a meeting.

Councillors give up their leisure time, their privacy and much of their family life. I know of one man who lost his job because of his local authority involvement. Certainly thousands of councillors lose their promotiom prospects, as I lost mine for a time. Such matters must be borne in mind when we talk about local government changes.

These people accept responsibility for their communities, a responsibility which in some cases involves a negative return in the sense that on many occasions unpopular decisions must be taken. Some decisions are the result of Government pressure such as being forced to close small schools. I regret that the hon. Member for Berwick-upon-Tweed (Mr. Beith) is not in his place, because, before I came to this place, he and I fought battles over the closure of small schools. We tried our best to close schools only for educational reasons. Since 1979, however, we have had to consider closing schools for financial reasons.

Some local authorities have reached rock bottom in terms of cuts and will be hard pressed to cut further. That is why there will be resistance to further pressure to cut. Indeed, that is why some authorities are making a militant stand, and while I do not agree with them I appreciate why they are taking such an attitude. More and more authorities will be making a stand, and they will not all be Labour authorities.

6.45 pm

There are likely to be some changes in the control of local authorities in 1985. Councils which have never imagined being under our control will be Labour-controlled as a result of the local elections—that is, if there are still people available with the same degree of interest in local affairs. One of my greatest fears is that the sort of people we need in local government — those prepared to devote time to the work that I have described—will not be available.

For example, the chairman of Northumberland county council during the war was also chairman of the local education committee. If she had been paid by the hour for her work for the local authority, she would be a millionaire. She has devoted a lifetime to local government. The likes of her we shall never see again, especially if the Bill is unamended.

What are the Conservatives in general, and the Secretary of State in particular, trying to achieve? Since 1980, the tree of local government has had some of its major branches chopped off. Nobody seems to want to cut the tree down. If the Government want to cut it down, let them say so; if they want to do away with local government and its present composition, let them be clear about it so that we know what we are discussing.

They must stop chopping away at it because the point will be reached when local people will not be interested in participating in local affairs, and then we shall well and truly have central control. If that is what the Government want, let them say so, and we can talk about a new form of control at the local level, be it by way of Government commissioner or some other form of devolved central administration.

I was discussing this issue with my chief executive in Northumberland before leaving to come to the House. I asked him, "How do you see the situation?" He replied, "I see a clear distinction between being a local government officer, responsible to the people of the area, with whom I identify"—he came from outside Northumberland to be our chief executive, so he is not a local man—"and I want to talk to the local people across my desk and in our committee room. I have no desire to be a civil servant receiving directives from the Department of the Environment each Monday morning telling me what to do that week and having to report back each Friday." He made an important point. Unfortunately, we seem to be heading in that direction.

Sir Bernard Braine

My first reaction to the Secretary of State's statement was one of relief, and I thank him for what he said, as far as it went. I say "as far as it went"—

Mr. Straw

It did not go far enough.

Sir Bernard Braine

—because up to that point we who represent low-spending and prudently managed local authorities, such as Essex, felt that we were being treated unfairly. Indeed, as Essex has consistently kept below its GRE figure for the last five years and has one of the lowest per capita rates of expenditure on services in the country, we felt that we were being treated unjustly.

The Secretary of State will recollect the strong representations that were made to him not only by hon. Members who represent Essex constituencies but by the leaders of the Essex county council. To borrow a phrase from the most distinguised Essex Member of Parliament of all time, the situation had reached the point at which, frankly, "up with which we would not put". I made that clear when we debated rate support grants some weeks ago.

We did not enter the last general election with a pledge to penalise well-run local authorities which consistently co-operate with central Government. We said that steps would be taken—in my view, rightly—to deal with the relatively small minority of reckless and profligate authorities. That is what my constituents and I understood.

I can claim—no doubt other hon. Members will do the same in respect of their authorities—that Essex is one of the best-managed local authorities in the country. Its expenditure on local government services is 7.4 per cent. below the shire county average, which itself is 27.4 per cent. below the metropolitan areas average, and is 90.2 per cent. below the London average. Yet it has been put in an impossible position, needing to spend £480 million in the coming financial year just to maintain its relatively low current level of services. That figure takes no account of increasing population and the effect of new legislation. Under the rate support grant settlement, the Government have set a target for the county of £473,500,000. That falls short of its 1984–85 budget by £6,500,000.

The dilemma faced by Essex or by any low-spending county is that it must either reduce its expenditure on services or raise rates, and run the risk of attracting penalties. The irony is that my right hon. Friend's predecessor appointed private sector management accountants who reported in 1983 that they detected no areas where significant savings could be achieved. Indeed, my right hon. Friend wrote to the county council in October 1983 saying that he was glad that the consultants had confirmed that Essex is running a tight and efficient ship. None of us had the faintest idea that an authority of that calibre and with that kind of responsibility was going to be penalised by this Bill.

I realise that, at this stage, it is impossible for my right hon. Friend to reveal his intentions, other than in general terms. If he expects my vote in the Lobby and wants me to assure Conservative councillors in Essex that the Government are doing the right thing by local authorities, he must say a little more. He must tell me that he will ensure that low-spending counties, such as Essex, which have co-operated with the Government and which are faced with increasing expenditure simply because they have an expanding population and have kept their per capita expenditure—that is the figure that matters—within reasonable bounds, will be given more realistic targets and not be penalised.

Mr. Jenkin

I spoke for quite a long time previously, and I did not intend to intervene again. I cannot add to what I said before. The circumstances in which part II will be implemented are as yet unknown. I intend, in accordance with the undertakings I gave, to exclude from the operation of part II those authorities whose spending has been broadly in line with the Government's guidelines, as measured in the amendment tabled by my hon. Friend the Member for Honiton (Sir P. Emery). I said that I will consider other amendments as well. I am sure that my hon. Friend recognises that, at this stage, I cannot give an undertaking that that measure will affect any individual authority. We are talking about something that is unforeseen and unforeseeable.

Sir Bernard Braine

The fact that my right hon. Friend intervened just then indicates that his intentions are sound, even if he cannot go into detail. It is unnecessary for me or my colleagues in Essex to press him further on what he has said. I trust his judgment on this matter. I thank him for the way he received my somewhat caustic remarks. He knows that the last thing a Conservative Government should do is to penalise those who have managed their affairs prudently, who are guardians of the ratepayers' interests and have co-operated with the Government, as they intend doing in the future. Between us, I feel sure that we shall find a solution to the problem.

Mr. Chris Smith

Hon. Members have just witnessed an extremely interesting exchange. The hon. Member for Castle Point (Sir B. Braine) highlighted one of the central problems of the way local government finance operates and part II will operate. He identified the inadequacies of the arrears and targets system as it will operate for his authority. Because of those inadequacies, the Secretary of State cannot give a categorical response about whether his concession will apply to a particular authority. The hon. Gentleman lauded Essex as a prudent and sensible spending authority, although I should describe it as an inadequate spending authority. Even such an authority can none the less fall foul of the Government's target system, and that says volumes about the inadequacies of the system.

I shall briefly comment on the general content of part II. I support the amendment that seeks to delete it. The Secretary of State put the position extremely well when he said that he did not know the circumstances and the manner in which part II would come into operation. That highlights the problem faced by all hon. Members when discussing this part of the Bill. It highlights also why part II is a bad part of a bad Bill.

If the Secretary of State is worried about the possibility of a plague of left-wingedness on local authorities spreading to more than the present 20 or so authorities he has in mind, why does he not envisage using part I? There is no limit to the number of authorities he can select under part I. Yesterday he deliberately rejected amendments that would have placed a limit on the number in the manner he said he has in mind. Why does the right hon. Gentleman not intend to use the powers selectively to have a go at those authorities? That question was asked on Second Reading and in Committee, and the Secretary of State has not yet adequately answered it. If part I contains powers to tackle the problem, why does he in part II take upon himself further powers to tackle it?

If the right hon. Gentleman cannot envisage any circumstances in which part II is needed, and if he cannot know, as he has admitted, the circumstances in which he would want to implement it, why is that measure in the legislation? Legislation should be introduced only to meet a proven need or a definite circumstance. Legislation based on a hypothetical scenario of circumstances in the dim and distant future is not good legislation. That is what the right hon. Gentleman has done under part II.

We can argue passionately, as I did yesterday, about the provisions of part I when applied to specific local authorities and areas, especially my constituency. We can have a fair political argument about the needs of people in those areas, the way they should be met and the actions of particular local authorities. That is a definite circumstance about which we can have a definite and detailed discussion, but the powers in part II are quite different, for they are based upon a hypothesis and an unknown circumstance which the Secretary of State has refused to identify. He has refused to set out the circumstances in which he would envisage implementing that legislation.

It is for that reason that I still believe that Conservative Members should address themselves to the relatively small concession that the Secretary of State has hinted at and to the basic purpose of part II in its entirety. If the Secretary of State cannot identify the circumstances in which that part of the Bill will be brought into operation and cannot tell us why he wishes the powers to be held by himself, even when he has powers under part I, he should take part II away and prepare himself, if and when the circumstances arise, to bring forward further legislation directly to address those definite circumstances. So long as the circumstances remain unknown and the Secretary of State's commitment remains unknown, part II remains a very bad section of a very bad Bill.

7 pm

Mr. Maxwell-Hyslop

When my right hon. Friend the Secretary of State responded to my hon. Friend the Member for Honiton (Sir P. Emery) he was definite in his commitment to accept the substance of amendment No. 39, which would do nothing, but he circumlocuted the crucial issue of whether he is prepared to accept the same exclusion for part II that he has written into part I, which is that local authorities that remain within their GRE limit should not come within its provisions.

Another question is whether the de minimis rule, which my right hon. Friend has imported into part I, should apply to part II. It is the rule that provides that rate capping will not apply to local authorities which spend less than £10 million a year. If it is right that it is in part I, it must also be right for it to appear in part II. My right hon. Friend has not advanced any argument to explain why it is right to have it in part I but not in part II.

There are many targets that are well below GRE. They are below that level because the local authorities concerned have a history of low expenditure. Therefore, it is bizarre and inappropriate that local authorities which have a history of low expenditure should be penalised by a low level of rate support grant, as they will be under the target system, and made to suffer rate capping potentially because they have been low spenders as opposed to high spenders. That is why I hoped that amendment No. 16, had it been reached, would be accepted by my right hon. Friend. I still hope to hear him say that the principles embodied in that amendment will be in the amendment that he will introduce in another place.

I shall not stick to the de minimis argument because that is an issue of convenience and not of principle, but on targets I must stick. I repeat that it is bizarre and inappropriate to apply rate capping because a local authority has a history of low expenditure rather than of high expenditure. As the targets are based solely on historic expenditure postures, my right hon. Friend has missed the point. He will have done so unless he accepts that there should be an exclusive filter in part II as in part I, and that as long as it is below GRE the authority will escape rate capping and target considerations.

I advise my right hon. Friend that many of his hon. Friends have become confused because they do not realise that "expenditure guidance", the words which appear in amendment No. 39, mean "target". I know that there is confusion because I have talked to many of my hon. Friends. Moreover, it is possible to read through the 1980 Act without realising that the two words mean "target". One does not discover that "expenditure guidance" means "target" until reading the 1982 Act and applying it to section 59 of the 1980 Act. That is why many hon. Members have not realised that amendment No. 39 does not meet the urgent need of equity. That is why we need to hear my right hon. Friend say that the filter which is embodied in amendment No. 16 will be introduced in another place.

It is possible that their Lordships, who show a commendable degree of independence in matters of this sort, will see the logic of embodying the filter in legislation and will do that themselves, even if the proposal is not contained in the ministerial brief. I hope that we shall not have to depend upon that.

Mr. Patrick Jenkin

I intervene because I sense that we are approaching the end of the debate. I have said that I hope that after a year or two's experience with part I we shall eventually be able to dispense with targets altogether. Secondly, I said that I had taken note of the amendment of my hon. Friend the Member for Honiton (Sir P. Emery) and that in seeking to frame an amendment to be tabled in another place I would take account of what he said.

Mr. Maxwell-Hyslop

I was not sure whether that meant that my right hon. Friend was giving an undertaking that the contents of the amendment would be embodied in the amendment that he intends to introduce in another place. So often in this place Ministers tell their hon. Friends on the Back Benches that they will take account of what has been said. However, when they come to deliver it is a baby of a different configuration, so much so that its parents are left in doubt about its paternity and motherhood.

There is the serious constitutional question whether another place is the right place to introduce that which my right hon. Friend has in mind. Clause 2(3) states: subject to annulment in pursuance of a resolution of the House of Commons. There is no reference to a resolution of either House of Parliament. I chose my words carefully in the amendment which will not be reached, No. 16, and took them from my right hon. Friend's drafting in part I. That is why it refers to only the House of Commons and not to both Houses of Parliament.

I advise my right hon. Friend that he has given even greater reason for accepting the proposition that I have advanced. If he is to get rid of targets anyway, why have targets pushed into the filter? Imperfect instrument as GRE is, it should be the relevant filter in this context. It is the expectation of my right hon. Friend's Back Benchers in large measure that that is the form that the amendment which will come back to the House from another place will take.

Mr. Peter Hordern (Horsham)

I do not agree with those who claim that it is unconstitutional to keep local authority expenditure in check. The truth is that some local authorities have consistently increased their expenditure far beyond what the country can afford. Although I have listened very carefully to my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and the hon. Member for Bootle (Mr. Roberts), and agree with them about the concept of the independence of local authorities, I take it that they also believe that, overall, the Government must have central control over the total volume of expenditure.

The late Anthony Crosland's party—his 1976 speech in which he said "the party is over" was mentioned by the hon. Member for Bootle—has never stopped for some local authorities, but other, low-spending authorities, including Essex and West and East Sussex, have never been at that party and do not know what a party is like.

Mr. Straw

rose—

Mr. Hordern

I shall not give way, as there is not enough time.

I, like many of my hon. Friends, am concerned about Part II, because there may be occasion for it, which is what the hon. Member for Blackburn believes, too. It is true that the volume of local authority expenditure since 1979 and 1983 has increased by about 9 per cent., which is rather more than the increase in Government expenditure as a whole.

Mr. Straw

rose—

Mr. Hordern

I really cannot give way to the hon. Gentleman, as I have only four minutes to speak in the debate.

Local authority spending has increased as against Government expenditure mainly because Government expenditure in areas such as housing has been greatly reduced. If it is right to criticise local authority expenditure increases of 9 per cent., it must be pointed out that National Health Service expenditure has increased much more in the same period. I believe that in many cases there is more scope for reduction in public expenditure by the Government than by local authorities.

More and more services will be transferred from Government to local authorities as time goes on, and that will make the problem more grievous. For example, there will be many more over-75s in the next 10 years or so and society must be responsible for that ageing population. And the government rightly wish to transfer many responsibilities to local authorities, but that will not be accomplished by the authorities without great difficulty.

I have noticed, as have Opposition Members and other Conservative Members, that public expenditure levels for local authorities over the next 10 years will be markedly lower than those forecast for the Government, so there will be considerable difficulties for local authorities in the next three to 10 years. I hope that it will not be necessary to introduce part II at any time. There will be great strains upon local authorities, which is why it is essential to have some objective assessment in the Bill that low-spending authorities know that they can meet.

It is intolerable that a general power should be used to support the subjective judgment of the Secretary of State of the day, who may say that a local authority, no matter how responsible it has been, should further reduce its expenditure. The low-spending authorities that are represented by many of my right hon. and hon. Friends who are taking part in the debate have already been cut far below the quick. Why, I am told that the lawns at West Sussex county hall are watered by the chairman of the policy and general purposes committee, and I should not be surprised at that. There is no scope for further reductions in authorities such as West or East Sussex.

I ask the Secretary of State to make certain that, when his amendments go to another place, they will be objective and that the criteria especially will show, and be based on the relationship between the expenditure of low-spending authorities and the GREA that has been put upon them. I ask my right hon. Friend to take no notice in this formula, of the targets that local authorities may have broken unwittingly in the past year or so, to keep up the standard of statutory services that the Government have imposed upon them.

Question put, That the amendment be made:—

The House divided: Ayes 202, Noes 304.

Division No. 210]	[7.14 pm
AYES
Alton, David	Bidwell, Sydney
Anderson, Donald	Blair, Anthony
Archer, Rt Hon Peter	Boothroyd, Miss Betty
Ashdown, Paddy	Boyes, Roland
Ashley, Rt Hon Jack	Bray, Dr Jeremy
Ashton, Joe	Brown, Gordon (D'f'mline E)
Atkinson, N. (Tottenham)	Brown, Hugh D. (Provan)
Bagier, Gordon A. T.	Brown, N. (N'c'tle-u-Tyne E)
Banks, Tony (Newham NW)	Brown, Ron (E'burgh, Leith)
Barnett, Guy	Bruce, Malcolm
Barron, Kevin	Buchan, Norman
Beaumont-Dark, Anthony	Callaghan, Jim (Heyw'd & M)
Beckett, Mrs Margaret	Campbell, Ian
Beith, A. J.	Campbell-Savours, Dale
Benn, Tony	Canavan, Dennis
Bennett, A. (Dent'n & Red'sh)	Carter-Jones, Lewis
Bermingham, Gerald	Cartwright, John

Clark, Dr David (S Shields)	Lofthouse, Geoffrey
Clarke, Thomas	McCartney, Hugh
Clay, Robert	McCusker, Harold
Cocks, Rt Hon M. (Bristol S.)	McGuire, Michael
Cohen, Harry	McKay, Allen (Penistone)
Coleman, Donald	McKelvey, William
Concannon, Rt Hon J. D.	Mackenzie, Rt Hon Gregor
Conlan, Bernard	McNamara, Kevin
Cook, Frank (Stockton North)	McTaggart, Robert
Corbett, Robin	McWilliam, John
Corbyn, Jeremy	Madden, Max
Cormack, Patrick	Marek, Dr John
Cowans, Harry	Marshall, David (Shettleston)
Cox, Thomas (Tooting)	Martin, Michael
Craigen, J. M.	Mason, Rt Hon Roy
Critchley, Julian	Maxton, John
Crowther, Stan	Maynard, Miss Joan
Cunliffe, Lawrence	Meacher, Michael
Cunningham, Dr John	Meadowcroft, Michael
Davies, Rt Hon Denzil (L'lli)	Meyer, Sir Anthony
Davies, Ronald (Caerphilly)	Michie, William
Davis, Terry (B'ham, H'ge H'l)	Mikardo, Ian
Deakins, Eric	Millan, Rt Hon Bruce
Dixon, Donald	Miller, Dr M. S. (E Kilbride)
Dobson, Frank	Mitchell, Austin (G't Grimsby)
Dubs, Alfred	Molyneaux, Rt Hon James
Dunwoody, Hon Mrs G.	Morris, Rt Hon J. (Aberavon)
Eadie, Alex	Morrison, Hon C. (Devizes)
Eastham, Ken	Nellist, David
Ellis, Raymond	Nicholson, J.
Evans, John (St. Helens N)	Norris, Steven
Fatchett, Derek	O'Brien, William
Faulds, Andrew	O'Neill, Martin
Field, Frank (Birkenhead)	Orme, Rt Hon Stanley
Fisher, Mark	Patchett, Terry
Flannery, Martin	Pavitt, Laurie
Foot, Rt Hon Michael	Pendry, Tom
Forrester, John	Penhaligon, David
Foster, Derek	Pike, Peter
Fraser, J. (Norwood)	Powell, Rt Hon J. E. (S Down)
Freeman, Roger	Powell, Raymond (Ogmore)
Freeson, Rt Hon Reginald	Prentice, Rt Hon Reg
Freud, Clement	Prescott, John
Garrett, W. E.	Randall, Stuart
George, Bruce	Rees, Rt Hon M. (Leeds S)
Gilmour, Rt Hon Sir Ian	Richardson, Ms Jo
Godman, Dr Norman	Rippon, Rt Hon Geoffrey
Gould, Bryan	Roberts, Allan (Bootle)
Hamilton, James (M'well N)	Roberts, Ernest (Hackney N)
Hardy, Peter	Robertson, George
Harman, Ms Harriet	Robinson, G. (Coventry NW)
Harrison, Rt Hon Walter	Ross, Ernest (Dundee W)
Hart, Rt Hon Dame Judith	Ross, Wm. (Londonderry)
Hattersley, Rt Hon Roy	Ryman,John
Haynes, Frank	Sedgemore, Brian
Healey, Rt Hon Denis	Sheerman, Barry
Heffer, Eric S.	Sheldon, Rt Hon R.
Hogg, N. (C'nauld & Kilsyth)	Shore, Rt Hon Peter
Holland, Stuart (Vauxhall)	Short, Ms Clare (Ladywood)
Home Robertson, John	Short, Mrs H.(W'hampt'n NE)
Howell, Rt Hon D. (S'heath)	Silkin, Rt Hon J.
Howells, Geraint	Skinner, Dennis
Hughes, Dr. Mark (Durham)	Smith, C.(Isl'ton S & F'bury)
Hughes, Robert (Aberdeen N)	Smith, Rt Hon J. (M'kl'ds E)
Hughes, Roy (Newport East)	Snape, Peter
Hughes, Sean (Knowsley S)	Soley, Clive
Hughes, Simon (Southwark)	Spearing, Nigel
John, Brynmor	Steel, Rt Hon David
Johnston, Russell	Strang, Gavin
Jones, Barry (Alyn & Deeside)	Straw, Jack
Kaufman, Rt Hon Gerald	Thomas, Dafydd (Merioneth)
Kennedy, Charles	Thomas, Dr R. (Carmarthen)
Kilroy-Silk, Robert	Thompson, J. (Wansbeck)
Kirkwood, Archibald	Thorne, Stan (Preston)
Knox, David	Tinn, James
Lambie, David	Torney, Tom
Lewis, Ron (Carlisle)	Wainwright, R.
Lewis, Terence (Worsley)	Wallace, James
Litherland, Robert	Wardell, Gareth (Gower)
Lloyd, Tony (Stretford)	Weetch, Ken

Welsh, Michael	Woodall, Alec
White, James	Young, David (Bolton SE)
Wigley, Dafydd
Williams, Rt Hon A.	Tellers for the Ayes:
Winnick, David	Mr. W. Benyon and Mr. David Lightbown.
Winterton, Nicholas

NOES
Adley, Robert	Emery, Sir Peter
Aitken, Jonathan	Evennett, David
Alexander, Richard	Eyre, Sir Reginald
Alison, Rt Hon Michael	Fallon, Michael
Amery, Rt Hon Julian	Farr, John
Ancram, Michael	Favell, Anthony
Arnold, Tom	Fenner, Mrs Peggy
Ashby, David	Finsberg, Sir Geoffrey
Aspinwall, Jack	Fletcher, Alexander
Atkins, Robert (South Ribble)	Fookes, Miss Janet
Atkinson, David (B'm'th E)	Forman, Nigel
Baker, Rt Hon K. (Mole Vall'y)	Forsyth, Michael (Stirling)
Baker, Nicholas (N Dorset)	Forth, Eric
Baldry, Anthony	Fowler, Rt Hon Norman
Banks, Robert (Harrogate)	Fox, Marcus
Batiste, Spencer	Fraser, Peter (Angus East)
Bellingham, Henry	Fry, Peter
Bendall, Vivian	Gale, Roger
Bennett, Sir Frederic (T'bay)	Galley, Roy
Berry, Sir Anthony	Gardiner, George (Reigate)
Best, Keith	Gardner, Sir Edward (Fylde)
Bevan, David Gilroy	Garel-Jones, Tristan
Biffen, Rt Hon John	Glyn, Dr Alan
Biggs-Davison, Sir John	Goodhart, Sir Philip
Blaker, Rt Hon Sir Peter	Goodlad, Alastair
Body, Richard	Gorst, John
Bonsor, Sir Nicholas	Gow, Ian
Bottomley, Peter	Gower, Sir Raymond
Boyson, Dr Rhodes	Grant, Sir Anthony
Braine, Sir Bernard	Greenway, Harry
Brandon-Bravo, Martin	Gregory, Conal
Bright, Graham	Griffiths, E. (B'y St Edm'ds)
Brinton, Tim	Griffiths, Peter (Portsm'th N)
Brittan, Rt Hon Leon	Grist, Ian
Brown, M. (Brigg & Cl'thpes)	Ground, Patrick
Browne, John	Grylls, Michael
Bryan, Sir Paul	Gummer, John Selwyn
Buck, Sir Antony	Hamilton, Hon A. (Epsom)
Budgen, Nick	Hamilton, Neil (Tatton)
Burt, Alistair	Hampson, Dr Keith
Butler, Hon Adam	Hannam, John
Butterfill, John	Harris, David
Carlisle, John (N Luton)	Harvey, Robert
Carlisle, Kenneth (Lincoln)	Hawkins, Sir Paul (SW N'folk)
Carttiss, Michael	Hawksley, Warren
Chalker, Mrs Lynda	Hayes, J.
Channon, Rt Hon Paul	Hayhoe, Barney
Chapman, Sydney	Hayward, Robert
Chope, Christopher	Heathcoat-Amory, David
Churchill, W. S.	Heddle, John
Clark, Dr Michael (Rochford)	Henderson, Barry
Clark, Sir W. (Croydon S)	Hickmet, Richard
Clegg, Sir Walter	Higgins, Rt Hon Terence L.
Cockeram, Eric	Hill, James
Colvin, Michael	Hind, Kenneth
Conway, Derek	Hirst, Michael
Coombs, Simon	Hogg, Hon Douglas (Gr'th'm)
Cope, John	Holland, Sir Philip (Gedling)
Corrie, John	Holt, Richard
Couchman, James	Hooson, Tom
Cranborne, Viscount	Hordern, Peter
Crouch, David	Howard, Michael
Currie, Mrs Edwina	Howarth, Gerald (Cannock)
Dickens, Geoffrey	Howell, Rt Hon D. (G'ldford)
Dorrell, Stephen	Howell, Ralph (N Norfolk)
Douglas-Hamilton, Lord J.	Hubbard-Miles, Peter
Dover, Den	Hunt, David (Wirral)
du Cann, Rt Hon Edward	Hunt, John (Ravensbourne)
Dunn, Robert	Hunter, Andrew
Durant, Tony	Hurd, Rt Hon Douglas
Edwards, Rt Hon N. (P'broke)	Irving, Charles
Eggar, Tim	Jackson, Robert

Jenkin, Rt Hon Patrick	Proctor, K. Harvey
Jessel, Toby	Rathbone, Tim
Johnson-Smith, Sir Geoffrey	Renton, Tim
Jones, Gwilym (Cardiff N)	Ridley, Rt Hon Nicholas
Jones, Robert (W Herts)	Ridsdale, Sir Julian
Jopling, Rt Hon Michael	Roberts, Wyn (Conwy)
Kellett-Bowman, Mrs Elaine	Robinson, Mark (N'port W)
Kershaw, Sir Anthony	Roe, Mrs Marion
King, Roger (B'ham N'field)	Rossi, Sir Hugh
King, Rt Hon Tom	Rost, Peter
Knight, Gregory (Derby N)	Rowe, Andrew
Knight, Mrs Jill (Edgbaston)	Rumbold, Mrs Angela
Knowles, Michael	Ryder, Richard
Lamont, Norman	Sackville, Hon Thomas
Lang, Ian	Sainsbury, Hon Timothy
Lawler, Geoffrey	Sayeed, Jonathan
Lawrence, Ivan	Shaw, Giles (Pudsey)
Lawson, Rt Hon Nigel	Shaw, Sir Michael (Scarb')
Leigh, Edward (Gainsbor'gh)	Shelton, William (Streatham)
Lennox-Boyd, Hon Mark	Shepherd, Colin (Hereford)
Lester, Jim	Shepherd, Richard (Aldridge)
Lilley, Peter	Silvester, Fred
Lloyd, Ian (Havant)	Sims, Roger
Lloyd, Peter, (Farehaw)	Skeet, T. H. H.
Lord, Michael	Smith, Sir Dudley (Warwick)
McCrindle, Robert	Smith, Tim (Beaconsfield)
McCurley, Mrs Anna	Soames, Hon Nicholas
MacGregor, John	Spencer, Derek
MacKay, Andrew (Berkshire)	Spicer, Jim (W Dorset)
MacKay,'John (Argyll & Bute)	Spicer, Michael (S Worcs)
Maclean, David John	Squire, Robin
McQuarrie, Albert	Stanbrook, Ivor
Major, John	Stanley, John
Malins, Humfrey	Steen, Anthony
Malone, Gerald	Stern, Michael
Marland, Paul	Stevens, Lewis (Nuneaton)
Marlow, Antony	Stevens, Martin (Fulham)
Maude, Hon Francis	Stewart, Allan (Eastwood)
Maxwell-Hyslop, Robin	Stewart, Ian (N Hertf'dshire)
Mellor, David	Stokes, John
Merchant, Piers	Stradling Thomas, J.
Miller, Hal (B'grove)	Sumberg, David
Mills, Iain (Meriden)	Tapsell, Peter
Mills, Sir Peter (West Devon)	Taylor, John (Solihull)
Miscampbell, Norman	Taylor, Teddy (S'end E)
Mitchell, David (NW Hants)	Tebbit, Rt Hon Norman
Moate, Roger	Temple-Morris, Peter
Monro, Sir Hector	Terlezki, Stefan
Montgomery, Fergus	Thatcher, Rt Hon Mrs M.
Moore, John	Thomas, Rt Hon Peter
Morris, M. (N'hampton, S)	Thompson, Donald (Calder V)
Morrison, Hon P. (Chester)	Thompson, Patrick (N'ich N)
Moynihan, Hon C.	Thornton, Malcolm
Mudd, David	Thurnham, Peter
Murphy, Christopher	Townend, John (Bridlington)
Neale, Gerrard	Townsend, Cyril D. (B'heath)
Needham, Richard	Tracey, Richard
Nelson, Anthony	Twinn, Dr Ian
Neubert, Michael	van Straubenzee, Sir W.
Newton, Tony	Vaughan, Sir Gerard
Nicholls, Patrick	Viggers, Peter
Onslow, Cranley	Wakeham, Rt Hon John
Oppenheim, Philip	Waldegrave, Hon William
Oppenheim, Rt Hon Mrs S.	Walden, George
Osborn, Sir John	Walker, Bill (T'side N)
Ottaway, Richard	Waller, Gary
Page, John (Harrow W)	Ward, John
Page, Richard (Herts SW)	Wardle, C. (Bexhill)
Parris, Matthew	Watson, John
Patten, John (Oxford)	Watts, John
Pattie, Geoffrey	Wells, Bowen (Hertford)
Pawsey, James	Wells, John (Maidstone)
Peacock, Mrs Elizabeth	Wheeler, John
Pink, R. Bonner	Whitfield, John
Pollock, Alexander	Whitney, Raymond
Porter, Barry	Wiggin, Jerry
Powell, William (Corby)	Wilkinson, John
Powley, John	Wolfson, Mark
Price, Sir David	Woodcock, Michael
Prior, Rt Hon James	Yeo, Tim

Young, Sir George (Acton)	Tellers for the Noes:
Younger, Rt Hon George	Mr. Carol Mather and Mr. Robert Boscawen.

Question accordingly negatived.

1. Clause 13
cc346-9
1. DUTY TO CONSULT INDUSTRIAL AND COMMERCIAL RATEPAYERS 1,916 words
2. Clause 15
cc349-56
1. MISCELLANEOUS AMENDMENTS AND REPEALS 3,912 words
3. Schedule 1
cc356-84
1. MISCELLANEOUS AMENDMENTS AND REPEALS 15,929 words, 1 division