REPORT ON PUBLIC EXPENDITURE

HC Deb 22 May 1984 vol 60 cc1047-64

'Within three months of the date on which Part I of this Act comes into force, the Secretary of State shall lay before Parliament a report on the financial consequences of abolishing the Greater London Council and the metropolitan county councils and transferring functions from those councils to any other body or bodies, specifying in particular what difference, if any, is likely to occur in public expenditure.'.—[Mr. Nellist.]

Brought up, and read the First time.

Mr. Dave Nellist (Coventry, South-East)

I beg to move, That the clause be read a Second time.

This is the most important of all new clauses. Since the introduction of the Bill to abolish the Greater London council, the metropolitan county council and next year's elections to those bodies, the Government have told us many stories about how much the measure will save. Last summer the Secretary of State said that it would save £120 million. Since then he has refused on many occasions to quantify the anticipated savings and to say which services would be cut to make them.

There is a distinct parallel between the Secretary of State's refusal to provide any factual information about the cuts—he would say savings—and the Secretary of State for Energy who has been unable to provide facts and figures about coal stocks and the ability of power stations to withstand the miners' strike. Trying to get a statement from the Secretary of State about how much the Bill will cost — or in his language, save — is like boxing a marshmallow.

I shall quote some of the Secretary of State's remarks to show why the clause must be inserted. At the Conservative party conference in October 1983, he said: I am a Tory, and I have been brought up as a Tory, and I believe that the burden of proof is upon the man who advocates change, and if he does not satisfy that burden of proof then change should not be made. The Government have not even attempted to prove the case for dismantling the GLC and MCCs. They have neither produced a shred of evidence nor a single fact to support the Secretary of State's proposals. His original claim was that the county councils were a wasteful, unnecessary tier of government, which should be abolished as quickly as possible. He claimed that abolition was the most carefully thought-out part of the Government's manifesto, and was sufficiently confident to predict annual savings of £120 million.

The Secretary of State's subsequent statements show that the Government's thinking on abolition has been grossly inadequate. In October 1983 he said: If we don't achieve substantial savings when this exercise is completed, I shall have failed. In November of the same year he claimed: I do consider that savings of upward of £100 million"— we are down to £100 million now— annually could be made, but that is no more than a broad estimate. Five days later he announced: I am beginning to recognise my wisdom in not plucking figures out of the air, because had I done so I might have underestimated the savings that could be achieved. He also said in November: Savings will depend entirely on final, detailed decisions of the successor authorities. One may wonder how the Secretary of State can reach that conclusion when I thought that the Bill's main purpose was the appointment of joint boards by the Secretary of State and his decision on the budgets under which they would operate.

With a complete shift of ground the Secretary of State declared in December 1983 that expenditure issues are not central to the case for abolition. That is a complete somersault or U-turn — hon. Members can pick the analogy that they want to use—and change of argument over two or three months. Abolition would cost more and would not save ratepayers money. It has been estimated that ratepayers would have to find up to £61 million more every year to pay for the same services.

It is necessary to insert into the Bill a mandatory requirement on the Government to prove the facts and figures of their case within three months of part I coming into force. During the past five months many hon. Members have tried through oral and written parliamentary questions to get the Government to explain the position. They have consistently refused to give that information. Some of the questions have been quoted today. I have attempted to challenge the Secretary of State about some management studies which purport to show what the savings would be were the metropolitan county councils be abolished. The most recent study was conducted by Price Waterhouse. It covered the metropolitan district councils of Birmingham, Dudley, Solihull, Trafford, Sefton and the Wirral. The first two of those seven local authorities have withdrawn from the study.

The Minister said that there had been an authoritative study of how much could be saved by the abolition of the councils. That study was based on five out of the 36 metropolitan district councils within the areas of only three of the six metropolitan county councils that will be affected.

What is more important, that supposedly authoritative document, which the House was supposed to believe proved the necessity of abolition to save money, was completed in four working days of collecting information. It was supposed to be a worthy in-depth study. It took only three weeks over Easter and it was produced two days before the May elections. That did not do the Secretary of State's party or its results in the west midlands elections much good. What savings does the Secretary of State believe that the Bill will achieve? We shall still need, fire, police, highway, transport and other services.

The west midlands has not had the attention that it deserves in this debate, and I shall therefore give an example of its consumer services. The west midlands is recognised as having the largest county council consumer services department. It is impossible to break up that department and show a saving to the west midlands' ratepayers while maintaining the service in the areas to which it is devolved.

It has been estimated by the chairman of the west midlands consumer services committee, through his officers, that it would cost an extra 15 per cent. on the annual £2.6 million bill to run the service if it were to be split up and returned to the district councils. It is an extremely important service that protects, for example—this should not belittle the quality of the service—toys, to ensure that kids are not hurt by the import, shoddy manufacture, or sale of toys in the west midlands. If that service were reduced youngsters might be maimed or injured. It should be maintained at its present level. Specialised people are needed to follow cases through. It is the same with other services in my county. They cannot be provided without extra cost. Without the provisions of the new clause it would be impossible for working people to get the facts and figures from the Government to prove their case.

8.45 am

Another local example is property. In the west midlands the county council owns property such as police houses and council buildings. I have been on the legal and property administration committee of the council for a few months. Although it is more than 10 years since the reorganisation of local government it is only in the last 12 months that we have got round to deciding who owns which bit of property and who should settle the different bills. In the last reorganisation the metropolitan district councils were still in existence; the officers still worked there and they were able to pass on the necessary information to the new officers in the county councils.

The opposite will happen when councils are abolished. The officials with experience will be dispersed to different jobs in other parts of the country. It will be much harder to sort out the transfer of property when councils are abolished. The provisions of the new clause would enable people to find out the cost involved in the transfer of property.

The Minister may be aware of the problems of staffing levels in county councils. Because of the uncertainty about job security which has been engendered by the attacks on Labour county councils, officers, including some senior officers, have taken alternative posts. Therefore, there are vacancies in the west midlands and other metropolitan county councils. If and when the break-up takes place, there will not be continuity of experience. If the Government force through the Bill, there will be gaps in the transfer of responsibility. Costs will escalate because of the inability to have continuity of service.

None of these points has been answered by the Government. They have not justified their reasons for pushing the Bill through. They cannot, because it is a political attack. It has nothing to do with money. It is an attack on Labour county councils which are carrying out policies supported by working people for the provision of cheap bus services, for example. It is not an attempt to save money for the ratepayers.

By cutting local authority grants the Government have actually forced up the rates and then have tried to lay the blame on the Labour councils. It is necessary to introduce the new clause to make mandatory the provision of a report three months after the enactment of the substantive Bill to disclose the cover-up and con that the Government are trying to carry through.

In regard to councils in west Yorkshire the transition from metropolitan county councils to district councils willmean that the provision of services will cost an extra £8 million. It is estimated that £2 million extra will be needed by district councils for incinerators to provide their own waste disposal facilities and another £2 million extra to sort out the incompatibility of the district councils' computer programming. It is estimated that severance pay to staff will cost between £12 million ad £22 million.

Travel disturbance arrangements and payments to offset extra travel that is undertaken by staff who have been dispersed following the break-up of a county council, which has taken place in Yorkshire, is estimated to cost another £5 million.

There is a lengthy list of extra costs and efforts have to be made at a regional level to meet them. We cannot get Ministers or the Secretary of State to come clean and admit what they think the savings will amount to. If the transitional costs in west Yorkshire are typical of those throughout the rest of the metropolitan counties, there will be a bill for an additional sum of between £110 million and £165 million instead of savings. In addition, there will be a new annual bill of £45 million. These figures do not include the extra bill that the GLC will produce because they apply only to the metropolitan county councils. I have already mentioned the extra cost of consumer services in the part of the west midlands that I represent. Emergency planning and civil defence are council functions and they include the need to plan for civil emergencies.

Mr. Corbyn

My hon. Friend's remarks about civil defence planning rather worry me. Does his county council have any idea what action may be taken over civil defence planning once the elections have been abolished?

Mr. Nellist

With great respect to my hon. Friend, I do not think that he has asked a relevant question. 1 do not believe that there is any such thing as civil defence against a nuclear war.

Mr. Corbyn

I am glad to hear it.

The Temporary Chairman

That issue is completely irrelevant to the new clause.

Mr. Nellist

I shall continue with the question of emergency planning, which is relevant. It is a service which is provided by 16 employees of the county council. According to statements made by the Secretary of State on one of the many occasions when he tried to con us in the west midlands, one or two district council chiefs and executives, prior to the May elections, had produced figures that showed £7 million or £8 million could be saved in the west midlands. The document from which he quoted stated that the emergency planning functions could be carried out on a district council basis by only eight to 10 individuals. I do not think that serious civil emergencies such as railway accidents, or gas explosions can be properly planned by halving the emergency work force.

Mr. Roger King (Birmingham, Northfield)

How can a train crash be planned?

Mr. Nellist

It is obvious that the hours of debate are telling on the hearing to some hon. Members, Mr. Hunt. I was talking about emergency planning in the event of train crashes. Train crashes are not planned, by defnition. They are accidents and they have to be planned for so that we might deal with the consequences.

Computer systems will be of interest in the west midlands. The West Midlands county council has a system that operates on a county basis. If the Bill were to be enacted and there were to be district divisions, the compatability of computer systems from district to district would place an additional burden on rent and ratepayers. Planning and land reclamation cannot be effectively carried out on a small scale, because it is by definition a regional responsibility. If there is any question of devolving those responsibilities back to the district councils, an additional area of cost will be involved.

I have tried to illustrate that attempts are being made by councillors and officers in the West Midlands county council, which are reflected by other councils throughout the country, to estimate the effect of the abolition of the councils and the cancellation of elections. Extra costs would be incurred by district councils. Despite repeated requests that have been made to the Secretary of State and his Ministers and notwithstanding the vague and unsubstantiated references to savings of £120 million, which were made initially a year ago and repeated at the Tory party conference in October, Ministers have not been prepared to spell out to working people what will be the net financial effects of the Bill's enactment. Therefore, it is essential that the new clause be inserted in the Bill so that, should the Bill be enacted, there will be a responsibility on the Government to provide the relevant facts and figures. Is it to be £120 million savings or £165 million extra costs? If up to 9,000 people are to be sacked on reorganisation, as has been mentioned by several Ministers, has account been taken of the £60 million-odd that will be paid out in dole, supplementary benefit, loss of tax and loss of national insurance?

If the Tory party and Ministers intend to take us down the road of confrontation with directly elected Labour authorities, and to force through the Bill, do Ministers not have the guts to come to the Dispatch Box and spell out facts and figures so that working people can judge whether it will cost them money or save them money? I believe that it will cost a great deal more money, and that may be the reason why the Secretary of State and his Ministers refuse to answer these questions.

Mr. Malcolm Bruce (Gordon)

I am glad to have the opportunity to support an important clause. As the hon. Member for Coventry, South-East (Mr. Nellist) said, there seem to be some differences of opinion among experts inside and outside Government circles about the Bill's likely financial implications. The Government must be prepared to spell them out in some detail. If there will be a saving, as the Government argue, without spelling out how that will be achieved and what the cost will be, the taxpayer must have some indication of the likely benefit in terms of a tax cut, or those who are in favour of spending money in a different way should offer a reasonable case for the more effective deployment of the resources that are saved as against the way in which they are currently being expended. The clause is particularly important. I hope that the Government will recognise that the Bill cannot be agreed to on the basis of a general idea that it will save money, without setting out in specific detail the areas in which likely savings are to be made.

It is fairly easy to recognise that that has implications throughout the United Kingdom. It is not simply a matter for the relevant authorities. I and my colleagues greatly regret that the Government maintain that we should be treated as one centralised unitary state, with Whitehall and the Treasury ultimately controlling everything, whether local authority or Government expenditure.

It is intriguing, when comparing local authority expenditure with Government expenditure, to observe that the Government imply that the abolition of the local authorities will by definition save money, even though many of the functions may be transferred partly to Government administration when the Government's record of controlling expenditure is far worse than that of most local authorities. The vast majority of taxpayers will not be inspired with a great deal of confidence to know that the Government will be in control of expenditure, because, so far, in spite of their five years in office, the Government have not yet succeeded in taking firm control of expenditure, and the local authorities have performed considerably better than the Government.

The analysis of the various functions carried out by these bodies and the transfer to other authorities leaves many unanswered questions on how the services will be taken up and how those involved in providing the services will be taken up. If, after the abolition of the local authorities, a great many people are made redundant, that will have a direct financial cost to the Government and the Treasury. We are entitled to know what the likely cost will be. The authorities inheriting responsibility for what is currently carried out by the GLC and by the metropolitan councils will inevitably have to incur costs and to take on additional staff. The Government have given no clear indication of what this will be or whether the economies of scale achieved by the creation of the metropolitan councils and the GLC will be lost when the operations are transferred downwards.

A Conservative Government originally introduced the metropolitan counties and the GLC. I recall, although I was not then in this House, that the Prime Minister of the day, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), argued that it would increase the efficiency of local government and save money. The net effect of setting up these authorities was a great increase in local government bureaucracy and cost. But the Government cannot simply say that because they cost money to set up, we should abolish them and thereby save money.

9 am

The Government are introducing the Bill because they have been unable to take democratic control of the authorities which the Conservatives themsleves created, and for that reason they have decided to abolish them. The Bill and its financial implications have caused widespread anxiety to all local authorities, for when the Government see authorities slipping out of their control, they seek legislation to abolish them so that they can take control centrally.

In my area, the Grampian regional council — the Scottish equivalent of a county council; not a metropolitan council but more a shire county council — is Conservative controlled. When the Tories lose control of that council, as they will in the next round of elections, the Secretary of State for Scotland, following the pattern of the Government, may seek to take action to abolish that local authority, as the Government do not like to see authorities thriving under the control of parties other than their own. The voters in my area would, therefore, like to know the financial implications of such an abolition and how the Government would set about working out the savings or costs that would result from it.

A range of figures has been quoted covering a band in excess of £300 million either way — a £150 million saving and an extra cost of £160 million—which, as the Government are quick to remind us on other occasions, is not an insignificant sum. Many of us feel that money has been wasted in local government spending and could have been spent more effectively in different ways.

The Government have not said whether we shall have to dig deeper into our pockets simply to support this constitutional and political outrage, or whether we shall have a benefit either in terms of what presumably would be the philosophical thrust of a Conservative Government, which is reduced taxation, or, for those of us who take a more pragmatic view of how best to allocate resources, whether it might give us the opportunity in areas outside the metropolitan counties to have some of the services that the Government have so far denied to us on the grounds of lack of money.

My understanding of the areas in which the GLC and the metropolitan councils operate suggests that the transfer of them, even if it results in a net saving once the reorganisation is completed, is likely in the short run to involve an increase in cost, at least when the transfer takes place. It is clear that the scheme has not been thoroughly thought through by the Government, particularly in terms of how the various functions will be performed.

The GLC has an overall regional planning function. Planning in general must be democratically accountable; if it is not, it is not planning but is part of a commissariat directive. It is difficult to see how such a function can be carried out by a multiplicity of bodies. The issue of transport is being dealt with separately, but I remain unconvinced that the reorganisation of London Transport is likely to save money, and from observations I have made and reports I have read, I suggest that it is likely to lead to a reduction in service and increased cost.

It is important when addressing themselves to the financial implications of this move that the Government take account of not just their area of responsibility —what local authorities and the Government raise—but the transfer of costs to the private sector or the private individual. It is all very well for the Government to say, "Look, Mr. Ratepayer or Mr. Taxpayer, we have saved you money because we have cut costs but, of course, we shall double the cost of your buses and the tube. We shall have to charge you for the arts and leisure and recreational facilities on a much higher scale. We may even have to charge you when the fire brigade turns out." In those circumstances, many people will see that that is not a saving but an increasing cost, at least in individual areas.

Even if the Government's measure produces an overall saving, it is highly likely that, within certain sectors, there will be cost increases and that individuals will take the cost on themselves. That is not the Government saving money but the Government passing the buck to the individual, which is what the Government have been doing during the five years they have been in office. For many people the savings that the Government claim to have achieved—as I have said, their record is not all that impressive—have often been simply a transfer of charges from what was originally provided by local authorities to individuals which means people on the lowest incomes are hardest hit. I should like the Government to examine the financial implications not only in simple terms but in terms of the transfer from Government to private responsibility, because that is an important area to be considered.

This is an interesting debate. Given that we have had a long-running debate over a wide range of issues, I must point out that the nitty-gritty and the justification for the measure have not been spelt out. We have had only vague statements that it might lead to some saving or improved efficiency. The real issue that the Government have wholly failed to grasp is that, having established these local authorities, the Government have created a kind of monster that they are unable to control by democratic means. The Government are using centralist, antidemocratic measures to abolish those authorities and to take control of the areas over which those authorities have political control, instead of changing the basis of financing the local authorities, which is what the Bill should be seeking to do.

If the Government had tackled their pre-1979 election promise to reform rates, that measure particularly would have enabled us to take proper control of the local authorities without abolishing them. As has been said by other hon. Members, if the Government had tackled the issue of democratic elections, they would not have found themselves in the position in which most, if not all of those authorities have a one-party, Labour-controlled administration. In nearly every, if not every, case the Labour party was elected with overall control but on a minority vote. The majority voted against the Labour party.

Mr. Michie

Slip back into that 78 record.

Mr. Bruce

It is an important record. The Government sometimes pretend that they are interested in democracy but they are abolishing our civil liberties, decimating our constitution and attacking freedoms and divisions of responsibility. The Government have completely ducked the issue and have refused to take the opportunity to make local government more democratic. The Government have instead resorted to centralised dictatorial measures that they have not, even yet, been able to demonstrate or justify the financial criteria which, I understand, are the reasons they have brought forward the Bill. That is a pretence. The Government are not really interested in the savings that will accrue. They have not been able to demonstrate that there will be savings. The Government are interested in ensuring that they will take political control over authorities by a non-democratic measure.

Mr. Richard Wainwright (Colne Valley)

Has my hon. Friend observed that Pravda and Izvestia are having a field day telling the Russian people how the British Prime Minister is destroying democratic elections and abolishing all the major non-parliamentary bodies that used to be elected, which happen to be in the hands of the Government's political opponents? Does not my hon. Friend think that that is extremely damaging to this country's reputation abroad?

Mr. Bruce

The interesting thing about that is that it puts a new complexion on the Russian perception of the lion Lady. Now her iron is being directed against the British people rather than against the external enemy.

I shall confine myself to the financial implications of the measure. I think that it is legitimate to say that the Government have used the argument that the measure will bring about a saving without demonstrating how that saving will be made, or what it will be. Therefore, it is right to tell people that, given that the Government have not made that justification, they are open to the accusation that this is not a financial measure—it is not brought forward in the interests of the ratepayer and the taxpayer, but it is a political measure in the interests of the Conservative party.

The Government's interpretation is short-sighted. It is already rebounding against the interests of the Conservative party, as the recent elections showed, and will do so increasingly in future years. The fact remains that the Government have an obligation to demonstrate that the measure will produce some financial benefits. They are a long way short of that. If the Bill is enacted within three months it will be shown how the taxpayer and ratepayer, as well as individuals in the community, are affected. The transfer of charges to the ratepayer, the taxpayer and the private individual will not be regarded by those on a low income as a saving. It will be an extra expense for them. The Conservative Government were elected on a minority vote, but they had considerable support from the lower income groups. The Government will attack the very people who misguidedly elected them to office.

The Government should tell us what the effects of the measure will be on employment in the areas directly affected. Unemployment throughout the country is unprecedentedly high; the situation is getting worse. Later today we might—we might not—discuss the real jobs crisis at Bathgate. If the measure produces a saving, it will provide resources that could save the Bathgate plant and the community in Bathgate. Government policy has not only conspicuously failed to do that, but has contributed to the problems. Not many hon. Members accept the Government's periodic claim that there is an economic recovery, when we are faced almost weekly, certainly monthly, with such catastrophes. The evidence of a recovery is extremely superficial.

Against that background of high unemployment, for the Government to pursue a measure that is fundamentally political, that they have not demonstrated will produce financial benefits, that is likely to add to the unemployment burden, and, as the hon. Member for Coventry, South-East (Mr. Nellist) said, will increase the cost to the Exchequer of unemployment and social security is to contribute not to a saving but to additional cost to individuals and the public purse.

Therefore, we have every reason to press for the inclusion of the new clause and for recognition by the Government that they cannot honestly or honourably put forward such a measure, the prime justification for which is that it is likely to lead to savings, without spelling out how those savings will be made and addressing themselves to the more fundamental problem of how one makes a democratic society work when one is not prepared to have a democratic election system. How does one make the funding and financing of local government work in a way that allows local people to make local decisions? Local people have a great deal more knowledge and understanding of their affairs than any Government or civil servant. How can this apply when there is not a fair rating system or an effective local government financing system to enable local authorities to make their own decisions? The Government have failed to take this on board, and have embarked on a course that they will live to regret. They will reap the political whirlwind, and they have also created powers that a Government with even less liking for democracy than this Government could use—

Mr. Nellist

It is hard to imagine a Government with less liking for democracy than this one.

9.15 am

Mr. Bruce

It is perhaps hard to imagine. It is conceivable that there might be a Left-wing Labour Government.

Mr. Nellist

That would be more democratic than this one.

Mr. Cyril Smith (Rochdale)

In the city of Manchester, every opposition Liberal councillor, all Conservatives and even every moderate Labour councillor has been removed from the policy committee by the Left-wing Labour group.

The First Deputy Chairman of Ways and Means (Mr. Ernest Armstrong)

Order. I remind the hon. Gentleman that the new clause is on the report on financial consequences.

Mr. Bruce

I see the point, but it is reasonable to point out that the Government have justified the Bill on financial grounds, although they have yet to spell those out. However, they have not taken on the more fundamental point of reforming the democratic system.

It is unlikely that a Left-wing Labour Government could take power, because they do not have the support of the country. However, the electoral system does strange things, and if that happened the shire counties could be abolished because they are under Conservative control. We need a rather more sensible democratic and thought-through method of running local government than the piecemeal creation of new authorities that we had 15 years ago. That created a great deal of unnecessary extra bureaucracy and cost when it was created by a Conservative Government. The Government are changing the system not because that will save money, but because they failed to take political control.

The Committee should support the new clause because it will ensure that before implementing the Act, if it becomes one, the Government will spell out in considerable detail what changes will mean to the ratepayer, the taxpayer, the user of services and the people employed by the authority. The Government should be able to say what the Bill will achieve in terms of tax benefits, if that is the way in which they wish to go, or, if they are unable to pass on the benefit in taxes, what will be the benefit in a transfer to alternative services.

Many Labour Members — who are not here now —would, in spite of the Government's policies—

Mr. Bendall

I have not seen the hon. Member here all night.

Mr. Bruce

Hon. Members may vie as to who out-slept the others, but the reality is that the Government have not spelt out the savings that will accrue.

This new clause will give the Government the opportunity to demonstrate clearly that there will be savings and where the benefits will occur. Only then will they be justified in going on with a measure for which the only justification they have put forward is that it will provide financial benefit.

Until the Government have carried out a detailed analysis of the implications of the changes, and until they can prove to the House of Commons, the country, the voters and those living in areas both affected and not directly affected they should implement the measure, they should not do so. It is a test of good faith that the financial argument is the only justification. If they accept the new clause, it will be proof to the Committee and the country that they have no qualms that there will be savings. They should not effect the legislation until that proof has been demonstrated.

Mr. Michie

I hope that the Committee will support new clause 4 — mainly because it is a test of the Government's ability to understand the implications of the Bill and whether they have the capacity to provide that financial statement within the three months provided in new clause 4. I suspect that they cannot do that.

I suspect that many parts of the Bill have not been thought out at all. The Government know that they cannot prove the savings within the three-months period. That is one reason why they will not accept the new clause.

The Government do not appear to understand that the county councils and the GLC, which were set up many years ago, have worked successfully in many cases. What happens to reclamation schemes, recreation schemes, country parks and other matters such as slag heaps that are presently being processed? What will happen in the interim period? Who will pay the cost once the Bill has taken shape? How much will it cost? No one seems to know that. It is the simplest thing in the world to say that the counties are useless — it is another thing to put something better in their place. Areas of south Yorkshire, where the county council has done a magnificent job on reclamation schemes, country parks, land now derelict because of industrial exploitation in years gone by, mines no longer in use and slag heaps that no longer need to be there.

A great deal of work has been done in that area, a great deal more is being processed, and there is more to come. Yet I do not suppose that the Government have given any heed to that, because such a service does not impress Conservatives, although it impresses those who live in a bad environment due to exploitation of industry. I challenge the Government to accept the new clause, because they might then prove that they have worked out all the implications and have done all their sums.

Most district councils do not administer their own staff pension schemes — it is all part of the county council system. All that must be worked out, and it is complicated. It will cost money. Have the Government thought of that? I doubt it very much. Have they discussed it and worked it out in any credible form?

The hon. Member for Rochdale (Mr. Smith) made his democratic statement and then left the Committee. That is a pity, because I intend to take up his point. Democracy is when someone is voted into power and then carries out the mandate. I notice that 15 local authorities that have no overall majority end up voting with the Tories. If the Government think that they know what they are doing, they should accept new clause 4 and prove that they have done absolutely accurate costings.

Mr. Corbyn

It is difficult to imagine how this sordid Bill could be amended or improved. However, if new clause 4 were accepted, the Government would at least have to come clean about some of their extravagant claims about saving money.

Mr. Ashdown

If the Bill is so sordid, why is the hon. Gentleman's Front Bench not prepared to vote against it?

Mr. Corbyn

The hon. Gentleman is trying to sidetrack me. He knows perfectly well that the opposition to the Bill, outside Parliament as well as inside, has been organised and led by the Labour party. He also knows that the purpose of the Bill is to destroy Labour-controlled local authorities.

I shall not be diverted from my remarks on the new clause because Government hon. Members are not prepared to answer questions about the cost of abolition. They make extravagant claims that the Bill is designed to save money but they do not say where those savings will be made. All the studies that have been made show the opposite to be the case.

It is significant that the only independent study—-the Coopers and Lybrand report—was not commissioned by the Government. It was commissioned by the local authorities themselves. It is also significant that, despite all that, Ministers still refuse to make public the level of opposition to the Bill or the amount of expert evidence raised against it. They refuse to consider the arguments.

We could discuss at great length the question of the publicity surrounding the Ball and its merits or demerits. That would be quite appropriate. However, I shall say only that a local authority is an elected authority and it is bound in honour to those who elected it to try to preserve the services that it was elected to provide. If the Government try to end that provision, what else should the local authorities be expected to do?

Not long ago, the Government, who have the temerity to lecture local authorities on political propaganda, set up a special department in the Ministry of Defence to rubbish the Campaign for Nuclear Disarmament and its leaders.

Mr. Peter Bruinvels (Leicester, East)

I should be grateful if the hon. Gentleman could tell us why, in so many cases, the district auditor has been called in to investigate gross extravagance and misappropriation of funds, especially throughout the Greater London area.

Mr. Corbyn

Anyone can call in the district auditor. I have served in a local authority for nine years. The district auditor was called in on many occasions, but on no occasion was anything found to be wrong. That is very often the case. [Interruption.] There have been many examples of dubious dealings in local authorities. No local authority has been more closely examined by auditors and lawyers, by independent so-called experts and by Bromley borough council, than the GLC. What has been found to be wrong? Nothing.

The First Deputy Chairman

We have already dealt with the auditing on a previous clause. We must stick to the clause that is before the Committee.

Mr. Corbyn

Thank you, Mr. Armstrong. It is easy to be sidetracked in this place. I must admit that hon. Members try it on. Your job must be very difficult.

I want to mention the financial consequences of abolition. Savings can be made only by the privatisation of services and the consequent cutting of wages or by massive redundancies. That is what lies behind the Bill and the powers it gives the Secretary of State. New clause 4 simply asks the Secretary of State, if he is so confident that his Bill will produce savings, why he is so afraid to say what they will be. The Government oppose new clause 4 because they do not know the answer and have a great deal to hide. They know only that, in the open-ended interim period, the Secretary of State will have unprecedented powers over local government to allow privatisation, sackings and the destruction of services.

This is a bad and dangerous Bill and the only way in which to improve it marginally is to accept new clause 4.

9.30 am

Sir George Young

I understand the reasons for new clause 4 and the Committee's legitimate interest in the financial consequences of our proposals for abolition. As my right hon. Friend the Secretary of State has made clear several times, demands for detailed estimates are premature as much depends on the many decisions that successor bodies will take throughout 1985 and 1986.

The hon. Member for Gordon (Mr. Bruce) will find much of the information for which he asked in the speech that my right hon. Friend made on 9 May at columns 922–23 when he was pressed on savings and at column 978 when he was winding up the debate. I shall do what I can to shed some light on why we are confident that there will be savings and why we are sure that there will not be a dramatic explosion in spending and staff numbers. The aim is to remove an entire tier of local government and to disperse its services to authorities that already exist, acting independently or in partnership. The operational overheads of the upper-tier authorities will disappear, as will the duplication between them and lower-tier authorities. The lower-tier councils will examine critically the efficiency of the services that they inherit and I have no doubt that savings will be made.

The large expenditure and manpower budgets of the joint boards will be subject to limits set by the Government for the first three years of their existence. The Government will therefore be able—and intend—to exert downward pressure on manpower and expenditure in those areas. In view of those pointers to significant savings, the question is why has there been no detailed breakdown of the savings. Their precise extent will depend on the decisions that district and borough councils make. Nobody sitting in Whitehall can tell them how to organise and run local services. That applies especially to services in which there will now be divided responsibility and in regard to which districts and boroughs will be grafting a new function to their existing operations.

To make detailed estimates, the districts and boroughs need information about how the upper-tier authorities run services. Such information is not available because the upper-tier authorities are withholding it. That will change when the paving Bill becomes law because the authorities that face abolition will be obliged to provide information. That does not mean that no estimates can be made. In some areas the districts and boroughs have begun to advance preliminary figures for the savings that they could make. A recent study by Price Waterhouse showed savings of £20 million in just three metropolitan counties. That will probably mean £35 million across the six metropolitan counties.

Mr. Nellist

rose—

Sir George Young

I listened with great care to what the hon. Gentleman said and suggest that he does the same. It is clear that the figures are understated because no account is taken of sales of property and overhead savings. Indeed, those figures could be doubled when the closer scrutiny of services by the lower-tier authority is taken into account. These figures apply to the metropolitan counties alone, and do not include—

Mr. Corbyn

rose—

Sir George Young

I shall give way when I have finished this passage of my speech.

Those savings do not include the Greater London area. Studies by four London boroughs have identified savings of £35 million for management rationalisation and elimination of duplication, and it was estimated by them that total savings in London, including policy changes, could come to about £200 million in 1983–84. When one considers that Merseyside county council has increased its spending from £110 million in 1978–79 to £251 million in 1983–84, that the GLC is busily recruiting an extra 1,500 staff, and that the seven upper-tier councils were responsible for half the overspending by the whole of local government, it must be accepted that it would be extraordinary if abolition did not produce very substantial savings.

Several Hon. Members

rose—

Sir George Young

I give way to the hon. Member for Islington, North (Mr. Corbyn).

Mr. Corbyn

I did not want to interrupt the Minister when he was giving the Committee figures, but I was puzzled by two things. First, what does he mean by downward pressure on manpower? Secondly, in the rather curious estimates that he has just given us, does he include the cost of redundancy payments as a result of the job losses clearly envisaged in the interim period, or are they to be spread over several years?

Sir George Young

The transitional costs, including redundancy payments, are of course legitimate costs to be set against the savings. I concede that straight away, and it must be put on the other side of the equation. The hon. Gentleman asked about the downward pressure on jobs, and I can only refer him to the answer given by the Parliamentary Under-Secretary of State, my hon. Friend the Member for Bristol, West (Mr. Waldegrave), to my hon. Friend the Member for Broxtowe (Mr. Lester) on 20 December. I cannot add to that.

Mr. Michie

rose—

Mr. Nellist

rose—

Sir George Young

I should like to make a little more progress before hon. Members intervene.

Until the boroughs and districts have access to the detailed information about existing GLC and metropolitan services, and until the planning cycle leading up to 1986–87 begins, it will be impossible to make a comprehensive assessment of the financial consequences of abolition. Although some matters lie within the control of central Government, it is the local decisions that matter. My right hon. Friend the Secretary of State will be able to do no more than report to the House such information as comes to him about those local decisions. But he gave a firm undertaking on Second Reading that he would keep Parliament fully informed on the costs and savings from this change. In particular the financial and explanatory memorandum on the main abolition Bill will state the expected effects on public expenditure.

I repeat that assurance to the Committee now. There is no purpose in placing a clause in the Bill to produce an unnecessary report before the useful information is likely to be available. The time to debate this is during the proceedings on the main Bill, and by that time I hope that information will have been made available to the boroughs and the districts, and that further indications will be forthcoming of the likely plans of those councils.

Against that background, I invite the Committee to reject the new clause.

Mr. Nellist

rose—

Mr. Bruce

I listened carefully to the Minister. He gives the impression that it is all a little bit "ify". If I heard him aright, he said that he had no doubt that savings would be made. He referred us to large chunks of Hansard, which I unfortunately do not happen to have handy, but the substance of our argument, that the Government have not spelt out in detail any justification for the Bill, remains. The Committee should force the inclusion of this new clause, because otherwise we are left simply with the Government's assurance.

Mr. Michie

rose—

Mr. Nellist

rose—

The First Deputy Chairman

Order. We are in Committee and hon. Members can speak again. However, as the hon. Member for Coventry, South-East (Mr. Nellist) moved the new clause, I shall call him last so that he can give us his reasons.

Mr. Michie

The Minister made the usual points about finance and the rest, but the interesting point was the doctrinaire aspect of the Government's argument. They know what they want to do but they are not sure how to do it or what the implications and costs will be. With regard to joint boards and fixed budgets, how much consideration has been given to the present expenditure of the GLC and the metropolitan councils? Will the budget be fixed at the county council level of expenditure or will it be fixed at the county council level of expenditure or will it be fixed arbitrarily so that county councils with contractual arrangements with private or public bodies will have to break agreements and promises? Can the Minister answer that?

Mr. Nellist

In moving the new clause I quoted the view of the Secretary of State for the Environment at the Conservative party conference that the burden of proof is on the person advocating change. The Minister's reply contained nothing to convince anyone inside or outside the Committee of the need for this change. Like his right hon. Friend the Secretary of State, the Minister persists in citing a report on five of the 30-odd district councils involved which took Price Waterhouse four working days to produce. The Minister cites that as authoritative evidence of the savings to be made by abolition of the county councils. At the same time, he tells the Committee and working people outside that we have to wait months and months until this, that and the other legislation is passed before he can accurately report the savings to be made in the transitional period. One or other of those arguments cannot be right. One could think of a word to describe the Government's case.

Mr. Cohen

Bogus.

Mr. Nellist

That will do. The Minister cannot argue it both ways. Either Price Waterhouse can produce the information in four days or it will take months to obtain it.

I repeat, does the Minister stand by the original suggestion by the Secretary of State that £120 million would be "saved"? Does that imply that 9,000 county council jobs are to be axed? If so, the £7,000 per person per year in dole, supplementary benefit and lost tax and national insurance immediately adds a further £63 million to the redundancy costs.

The Minister said that it would be premature to make any prediction as we must await future decisions of future bodies. If that is so, how can he assert that the exercise is designed to save money? If there is currently duplication between county councils and district councils, which I do not believe, will he tell us where the duplication is in he west midlands fire service, the police service highways, transport or consumer services? They are all separate functions, now run on a regional basis by the county council and there is no duplication. If those bodies are split into six of seven components, it will cost extra money because more people will need to be employed to maintain the services.

The provisions will not save money in the west midlands, provide extra jobs for the 100,000 men who have been on the dole for more than a year, save money on rates or help one third of the families who live on or below the poverty line.

The clause must be inserted to expose the Government's cover-up. On the one hand they claim without proof that the measure will save ratepayers £120 million, and on the other they will not admit that the net cost could be £165 million. The Government are unable, or unwilling, to explain that gap of £285 million.

Some hon. Members do not believe that the Government know the answer, but I believe that the Minister has done his sums, and knows that the net cost is so high that it is better to con people and pass the Bill before letting the cat out of the bag some time in the future. If he told us now of the huge cost that will be inflicted on working people, many more people would oppose the measure. That is why it is so important to insert the new clause into the Bill.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 35, Noes 192.

Division No. 327]	[9.45 am
AYES
Alton, David	Owen, Rt Hon Dr David
Ashdown, Paddy	Pavitt, Laurie
Ashton, Joe	Randall, Stuart
Barron, Kevin	Rooker, J. W.
Beith, A. J.	Sedgemore, Brian
Bruce, Malcolm	Skinner, Dennis
Campbell-Savours, Dale	Thomas, Dr R. (Carmarthen)
Cohen, Harry	Thorne, Stan (Preston)
Corbyn, Jeremy	Torney, Tom
Craigen, J. M.	Wainwright, R.
Freud, Clement	Wardell, Gareth (Gower)
Howells, Geraint	Wigley, Dafydd
Hughes, Simon (Southwark)	Woodall, Alec
Kirkwood, Archibald	Wrigglesworth, Ian
Lofthouse, Geoffrey	Young, David (Bolton SE)
Marek, Dr John
Maxton, John	Tellers for the Ayes:
Michie, William	Mr. Michael Meadowcroft and
Mitchell, Austin (G't Grimsby)	Mr. John Cartwright.
Nellist, David

NOES
Adley, Robert	Bottomley, Mrs Virginia
Alexander, Richard	Bowden, A. (Brighton K'to'n)
Amess, David	Braine, Sir Bernard
Arnold, Tom	Brandon-Bravo, Martin
Atkins, Rt Hon Sir H.	Bright, Graham
Batiste, Spencer	Brinton, Tim
Bellingham, Henry	Brooke, Hon Peter
Bendall, Vivian	Brown, M. (Brigg & Cl'thpes)
Bennett, Sir Frederic (T'bay)	Bruinvels, Peter
Berry, Sir Anthony	Butterfill, John
Best, Keith	Carlisle, John (N Luton)
Biffen, Rt Hon John	Carlisle, Kenneth (Lincoln)
Biggs-Davison, Sir John	Cash, William
Bottomley, Peter	Chope, Christopher

Clark, Hon A. (Plym'th S'n)	Maclean, David John
Clark, Dr Michael (Rochford)	Maginnis, Ken
Clark, Sir W. (Croydon S)	Malone, Gerald
Clarke, Rt Hon K. (Rushcliffe)	Marland, Paul
Coombs, Simon	Mather, Carol
Cope, John	Maude, Hon Francis
Corrie, John	Mawhinney, Dr Brian
Couchman, James	Maxwell-Hyslop, Robin
Currie, Mrs Edwina	Mayhew, Sir Patrick
Dorrell, Stephen	Miller, Hal (B'grove)
Douglas-Hamilton, Lord J.	Mitchell, David (NW Hants)
du Cann, Rt Hon Edward	Monro, Sir Hector
Edwards, Rt Hon N. (P'broke)	Moore, John
Fairbairn, Nicholas	Morris, M. (N'hampton, S)
Farr, John	Morrison, Hon P. (Chester)
Favell, Anthony	Moynihan, Hon C.
Fenner, Mrs Peggy	Needham, Richard
Forman, Nigel	Nelson, Anthony
Forsyth, Michael (Stirling)	Neubert, Michael
Franks, Cecil	Nicholls, Patrick
Fraser, Peter (Angus East)	Norris, Steven
Freeman, Roger	Ottaway, Richard
Gale, Roger	Page, John (Harrow W)
Galley, Roy	Page, Richard (Herts SW)
Garel-Jones, Tristan	Parris, Matthew
Glyn, Dr Alan	Pawsey, James
Goodhart, Sir Philip	Percival, Rt Hon Sir Ian
Goodlad, Alastair	Porter, Barry
Gorst, John	Powell, William (Corby)
Gow, Ian	Powley, John
Greenway, Harry	Price, Sir David
Gregory, Conal	Proctor, K. Harvey
Griffiths, Peter (Portsm'th N)	Raffan, Keith
Grist, Ian	Raison, Rt Hon Timothy
Gummer, John Selwyn	Rees, Rt Hon Peter (Dover)
Hamilton, Hon A. (Epsom)	Renton, Tim
Hamilton, Neil (Tatton)	Ridley, Rt Hon Nicholas
Hanley, Jeremy	Robinson, Mark (N'port W)
Hawkins, C. (High Peak)	Roe, Mrs Marion
Hawkins, Sir Paul (SW N'folk)	Rowe, Andrew
Hawksley, Warren	Rumbold, Mrs Angela
Hayes, J.	Ryder, Richard
Hayhoe, Barney	Sackville, Hon Thomas
Heathcoat-Amory, David	Sainsbury, Hon Timothy
Henderson, Barry	Sayeed, Jonathan
Hind, Kenneth	Shepherd, Colin (Hereford)
Hirst, Michael	Smith, Tim (Beaconsfield)
Holland, Sir Philip (Gedling)	Soames, Hon Nicholas
Holt, Richard	Speller, Tony
Hooson, Tom	Spencer, Derek
Howarth, Gerald (Cannock)	Squire, Robin
Hubbard-Miles, Peter	Stanley, John
Hunt, David (Wirral)	Stern, Michael
Hunter, Andrew	Stevens, Lewis (Nuneaton)
Jenkin, Rt Hon Patrick	Stevens, Martin (Fulham)
Jessel, Toby	Stewart, Ian (N Hertf'dshire)
Jones, Gwilym (Cardiff N)	Sumberg, David
Jones, Robert (W Herts)	Taylor, John (Solihull)
Key, Robert	Taylor, Teddy (S'end E)
King, Roger (B'ham N'field)	Tebbit, Rt Hon Norman
King, Rt Hon Tom	Temple-Morris, Peter
Knight, Gregory (Derby N)	Terlezki, Stefan
Knight, Mrs Jill (Edgbaston)	Thatcher, Rt Hon Mrs M.
Knowles, Michael	Thompson, Donald (Calder V)
Lamont, Norman	Thompson, Patrick (N'ich N)
Lang, Ian	Thornton, Malcolm
Latham, Michael	Townend, John (Bridlington)
Lawler, Geoffrey	Tracey, Richard
Lawrence, Ivan	Twinn, Dr Ian
Lawson, Rt Hon Nigel	Viggers, Peter
Leigh, Edward (Gainsbor'gh)	Wakeham, Rt Hon John
Lennox-Boyd, Hon Mark	Waldegrave, Hon William
Lightbown, David	Walden, George
Lilley, Peter	Waller, Gary
Lloyd, Peter, (Fareham)	Ward, John
Lord, Michael	Wardle, C. (Bexhill)
Luce, Richard	Watson, John
McCurley, Mrs Anna	Watts, John
MacGregor, John	Wheeler, John
MacKay, Andrew (Berkshire)	Whitfield, John

Wiggin, Jerry
Wood, Timothy	Tellers for the Noes:
Yeo, Tim	Mr. John Major and
Young, Sir George (Acton)	Mr. Douglas Hogg.

Question accordingly negatived.