HC Deb 04 April 1985 vol 76 cc1406-14 2.21 pm
Mr. Jeremy Corbyn (Islington, North)

It is unfortunate, to put it mildly, that the House should have to be debating the issue of rate capping on the day on which it rises for Easter. The depths to which relationships between central and local government have fallen over the last six years are unprecedented. They have fallen, quite simply, because of the way in which the Government have sought continuously, year after year, to force local authorities to make cuts in their services and make staff redundant, compelling them to pass on the cuts in Government expenditure to local welfare services. Indeed, the Government have forced them to question the democratic basis on which they were first elected.

I will give a simple example of this. Six years ago — and indeed in 1982 — the local authority in the area I represent, Islington, was able to elect its local council on a very clear manifesto which the council was quite able to carry out. Now, because of successive losses of grant from central Government and successive attacks on that local authority by central Government, the position is that if the grant were restored to the level it was in 1979 the ratepayers of Islington would this year be facing a very large rate reduction. Instead, they are faced with the dreadful choice of making cuts in their services and having losses of jobs or standing firm against the Government and trying to get some money back to maintain local services in Islington.

We now have a position in which a large number of local authorities have not set a rate for the financial year which has just begun. These include Camden, Greenwich, Hackney, Haringey, Islington, Lambeth, Lewisham, Southwark and Sheffield. It is no accident that those boroughs figure very high on the list provided by the Department of the Environment of the poorest communities in this country. Indeed, Hackney is Britain's poorest borough bar none.

There are also three authorities that have not set a rate this year because of the amount of money that has been taken away from them by central Government policy. They are Liverpool, Tower Hamlets and Newham. For those authorities upon which the Government have imposed rate capping, the cuts this year total £452 million. The Government want those authorities to make cuts in their services.

Those councils are being told to cut 12.3 per cent. of their budgets as between last year and this year. They have all considered the position very carefully. However, they have been placed in an impossible position. They wish to maintain their services, to keep faith with the people who elected them and to stick to the manifestos that they put before the people in 1982, but because of Government policy their wishes are being frustrated. The Government are trying to take away their opportunity to maintain services and to fulfil their manifesto commitments. Consequently, those authorities have not set a rate. Instead, they have asked central Government to return the grant that has been taken away from them in successive years since 1979. In London as a whole, the loss of grant to local authorities since 1979 amounts to more than £3 billion. More than £500 for every person living in London has been taken away through loss of grant, cuts in services or increased rates to compensate for the loss of grant.

I shall outline briefly the situation facing my borough, Islington. The loss of grant this year, and the Government's decision affecting the council's budget this year, mean that the Government are saying that Islington's services can exist this year on £86–9 million. But the figure that the council gives, which is a minimal figure that does not go any way towards meeting many of the needs of the poorest people in the borough, is £94 million. Thus, there is a difference of 8.2 per cent.

If Conservative Members were councillors in Islington, Hackney or any of the other rate-capped areas, what would they do? Would they sit in the council chamber and calmly destroy those jobs, services and communities, or would they say, "No, our job is to speak up for the people of this borough and to obtain the resources that we need and deserve from central Government in order to do something about the appalling poverty, much of which is created by the Government's other policies."?

It has been calculated that if the borough council which I represent wished to carry out the Government's policies, 750 jobs would go this year. Those job losses would include those working on meals on wheels, those working as home helps and street sweepers, as well as those working in libraries. Indeed, every council department would be affected in some way by those job losses, and everyone in the borough would be affected by the loss of those services.

Where is the logic in sacking a home help, a meals on wheels worker or a street sweeper so that people can walk through filthy streets or see elderly people living alone, prisoners in their own homes because of the lack of social services? The same sort of logic is applied by the Government in every other area.

The borough of Hackney is just across the border from us. On any criteria, it is Britain's poorest borough. The loss of 12.9 per cent. of its budget this year is appalling even to contemplate. In Lambeth, 2,000 jobs at least would be lost if rate capping were carried out. In Southwark, 1,500 jobs would go. There would be carnage throughout London, Sheffield and the other areas affected if rate capping were carried out.

I am sponsored by a public service trade union, the National Union of Public Employees. Members of my union work largely for health authorities and local authorities. They work in all the difficult jobs at the sharp end. They deliver meals on wheels, sweep the streets, and collect dustbins. They do some of the most unpleasant, least glamorous but most important local government jobs. In the rate-capped authorities all those members' jobs are under threat. They ask what the logic can be of getting rid of their jobs, destroying their livelihoods and their hopes for the future when we all know that the work needs to be one, and when they are being threatened with privatisation and the loss of jobs to private enterprise companies. The sole motive of such companies in coming into those areas is not to help the poorest people but to make the fastest buck.

We have now come to the position where large numbers or local authorities have so far refused to set a rate for the forthcoming financial year. They have done so because they realise that, first, it is impossible for them to meet the cuts on which the Government are insisting, and secondly that, implicit in the Government's policy towards local government, is an attack on democracy itself. This has wider implications. That attack goes back to 1979, when the Government started asking for cuts in local government spending. Then they went on to telling, then they introduced the concept of a penalty clause, and then the concept of what the totals of expenditure of any one authority should be. Finally, in 1985–86, the Government are announcing what level of spending there has to be in selected local authorities.

If local authorities accept rate-capping limits, they are mortgaging the future, because next year the limits will be tighter, and the year after that even more so. It is not difficult for the Secretary of State for the Environment to come to the House, propose a change in the order and use the payroll vote to get it through. Rate capping can then suddenly affect not just a limited number of authorities in England, and all authorities in Scotland. It can quickly be spread to every local authority.

It is important for people to realise what the Government are doing in attacking democracy and taking finance away from inner city local authorities. People should also recognise that the implications of this run very deep. There is enormous support for the stance being taken by rate-capped authorities. I have never seen such large numbers of people demonstrating outside town halls as I have in the past few weeks, not in opposition to those local authorities but in support of them. I have probably been to more demonstrations than most people and I have never seen such support for local authorities — normally, people are critical of them. There is a turn-round in feeling and opinion, and the Government will rue the day that they introduced rate capping because of what it has done to the local authorities that are trying to provide services.

Yesterday, we saw an even more sinister movement. A judgment was made against the London borough of Hackney, in which the judge announced that there is a certain date by which the council must comply and set a rate. Thus, that judge has announced that he will invalidate the decision of two council meetings—two meetings of elected councillors carrying out a manifesto, who made a decision with the massive support of the people of that borough.

Mr. Brian Sedgemore (Hackney, South and Shoreditch)

Will my hon. Friend accept that the judge was decidedly uneasy about making that judgment, and made it clear that he did not like the idea of the Government putting the law courts in this invidious position because it is not a matter for the courts?

Mr. Corbyn

It is true that many people do not like the way in which the Government are putting them in an invidious position through their policies, when the Government do not have the guts to stand up and say what they mean and what they want doing about the crisis in local government.

Rate capping means the loss of money, and grants, and of control by locally elected councillors. It also means that, in the long run, the principle of the relationship between central and local government being one of partnership is thrown away, possibly for ever, but at least for as long as the present Secretary of State for the Environment and Government are in office. Instead of that partnership, there will be a dictatorial Government.

Why has the Minister refused so far to meet the leaders of the rate-capped authorities that would not set a rate? Secondly, why is he apparently refusing to meet the TUC, at its request, for a discussion about the crisis facing local government? When does he propose to meet the TUC, and when does he propose to make a statement to the House on this matter?

The issues of local government run far and wide. There are implications for every local authority in what is happening. The headless chicken atmosphere which surrounded the Government last weekend when they were running scared before the Scottish ratepayers will be repeated soon in England and Wales unless the Government are prepared to understand what is happening in the inner city areas and to mend their ways.

Yesterday the Secretary of State announced that he intended to claw back a further £123 million, mainly from county local authorities. That is a disgraceful decision. Fortunately the people living in the county areas will have an opportunity next month to vote in elections. They will vote solidly against central Government policies. They will vote against the anti-democratic nature and thrust of central Government in their relations with local government.

The Government will rue the day that they introduced the rates legislation. They will rue the day that they listed the rate-capped authorities and tried to take control of local government. Their policies will hit them back — slap in the face.

2.36 pm
Mr. Chris Smith (Islington, South and Finsbury)

I am grateful to my hon. Friend the Member for Islington, North (Mr. Corbyn) for allowing me to intervene before the Minister replies to the debate. My hon. Friend and I have worked closely together with the London borough of Islington in defence of jobs and services in our area. I am pleased and proud to stand here today to support the actions of Islington council in defence of the people of the borough.

Last year when the Rates Bill was making its way through the House and when, night after night, we debated these matters in Committee, we warned the Government about the consequences of their actions. We are now beginning to see the fruits of those actions.

The way in which the Government have responded in the last few weeks has been particularly disgraceful. Because of the withdrawal of rate support grant, the operation of penalties, the rate limits imposed upon local authorities and because of concern for the people, authorities unable to set a rate have approached the Government through the Association of Metropolitan Authorities and the London Boroughs Association. The Government have refused to meet them for discussions. That is not a reasonable response. It displays a vindictiveness towards the authorities and the people that we have come to expect from this Government.

The same Government refused, in a similar vindictive manner, to meet the executive of the National Union of Mineworkers when it offered discussions without preconditions. The Government are now displaying the same vindictive and arrogant attitude towards certain authorities.

I have discussed the rate- capping issue with many of my constituents in the past few weeks. On behalf of my constituents and of the borough which represents them, I ask the Government to consider seriously whether, after all, they are prepared to sit down and have reasonable and responsible discussions. If they are not prepared to do that, they will stand condemned for the chaos and vindictiveness they are imposing on the people in the inner city areas.

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

The hon. Members for Islington, North (Mr. Corbyn) and for Islington, South and Finsbury (Mr. Smith) are well known for their opposition to the policy of rate limitation. A good deal of what we have heard today we have heard before. The hon. Member for Islington, North said that it was a pity that we were debating this matter on the last day of the Session. His hon. Friend put him right on that because we debated this matter throughout the larger part of last year. We have certainly had prolonged sessions in Committee and susequently.

Islington's budget for 1984–85 was more than £86 million. That represents an increase of more than 24 per cent. on the amount it spent in 1983–84. In that year, Islington exceeded its expenditure target by only 0.5 per cent. and incurred a mere £60,000 holdback of block grant. In 1984–85, by increasing its spending — without any regard to the consequences — by more than 24 per cent., it is exceeding its target by 22 per cent. and has incurred very significant holdback of £17.5 million. Indeed, it has forfeited all its grant and the rates have increased by 29.6 per cent. If it had spent at target, the rates could have fallen by almost the same amount.

The hon. Member for Islington, North spoke of the new announcement by the Secretary of State about grants for counties. That is a good line for the Opposition in the run-up to the county elections. I am astonished that John Carvel, one of the few local authority correspondents who actually understands local government finance, should, for the first time in his history, behave rather like what he would describe as someone from a less distinguished and more tabloid newspaper.

There is nothing surprising about the close-ending of grant. It happens every year and depends on whether there is an overspend — it usually reflects the overspend or underspend in large authorities. Every county treasurer will have been expecting that announcement and will have taken it into account in his budget. I do not blame John Carvel because I suspect that he did not write the headline, as though it was a great news story.

Islington ratepayers have seen the local rate increase from 59p in 1982–83 to 122.74p in 1984–85, an increase of 108 per cent. Moreover, in the past two and a half years Islington has increased its manpower by more than 9 per cent.

Against that background, the rate limit which the House approved for Islington is eminently reasonable. It is 112.07p. That represents a reduction of 8.7 per cent. on the 1984–85 poundage. It is intended to enable the council to spend this year at the same level in cash terms as its 1984–85 budget. I can see no possible cause for complaint. Indeed, Islington councillors also apparently have no cause for complaint. If they were dissatisfied with the proposed rate limit which the Secretary of State announced on 11 December they had the opportunity to make representations and seek agreement to a higher limit. They did make a point about their estimated penny rate product for 1985–86, and the rate limit takes account of that point. But they have made no representations to us of the devastating cuts they now allege.

Indeed, I am not surprised that we have not heard any official talk of devastating cuts from Islington, because the scope for sensible pruning there is so great. That is what I am told by the journalists of Time Out, not a Government publication, which carried an interesting little piece last month. I shall just read it to the House. It stated: In these times of financial cutbacks and economic hardship, it is astonishing to discover Islington Council squandering £1.6 million of rate-payers' money tarting up its offices in the town hall. Not only were they perfectly adequate to begin with, but the work is being carried out using the most expensive wood on the market—American oak. Brand new office partitions are being put in, all covered in beautiful and costly hessian."— [Interruption.] I know that hon. Members do not like to hear things that do not fit in with their preconceptions, but it might do them some good to listen. The article continued: And rows of perfectly serviceable, custom made oak lockers have been smashed up and ripped out to make way for made-to-measure replacement. Admittedly, part of this hideous extravagance includes the cost of facilities being put in for the disabled.

Mr. Chris Smith


Mr. Waldegrave

The hon. Gentleman must wait until I have finished the quotation from a magazine which, I have no doubt, if it had said something that suited the hon. Gentleman, he would have quoted in the House with the utmost approval.

The article continued: Which is splendid news for any disabled person working in, or visiting the town hall in future, provided he or she doesn't suffer severe damage negotiating Islington's neglected streets while getting there. If this is the kind of thing rate-capping is supposed to prevent, no wonder the local authorities on the hit list don't like it.

Mr. Chris Smith

I am surprised at the Minister using that quotation, because it was produced by his right hon. Friend the Minister for Local Government at a dinner held by the Islington chamber of commerce but three weeks ago. There is a wholly inaccurate representation in the article about the replacement of the heating system at Islington town hall and a wholly inaccurate figure and description of the work involved. His right hon. Friend was put right on that matter by the leader of Islington council. I am surprised that there has been no liaison between the Minister and his right hon. Friend.

Mr. Waldegrave

The contradiction of the story was not convincing. We are told by Opposition Members that there is no waste anywhere in Islington council, that it is, extraordinarily, a perfect council and that nothing could be done better by any other authority. Opposition Members argue that Time Out was well off the mark, as are Ministers, journalists and all others who criticise Islington council on any occasion.

Mr. Corbyn


Mr. Waldegrave

I will not give way. The hon. Gentleman had an opportunity to address the House.

Islington and the other rate-limited authorities should have responded to rate capping by reducing that sort of waste. Instead, they have been demanding the return of the block grant which, they say, we have "stolen" from them. That argument is spurious, and they know it. The Labour party started to cut the grant in 1975–76. There is nothing sacrosanct about the 61 per cent. grant rate that we inherited.

We do not consider these councils entitled to put their municipal fingers in the taxpayers' pockets to fund their spending sprees. If they had spent in line with their targets, rate increases would have been modest. The example of other responsible authorities show what can be done. Rate increases by councils such as Islington are due overwhelmingly to the spending decisions of those councils, in full knowledge of the consequences for their grants and for the ratepayers.

Let us consider what has been happening. We had something called "Democracy Day," when all of these councils were going to demonstrate their opposition to the Government in what they said would be "an impressive show of unity." Unfortunately, that unity did not work —as usual in the Labour party — and south Yorkshire, ILEA and Merseyside took the opportunity of "Democracy Day" to fix precepts at or below the maximum limit that we had set. They were joined by Basildon.

What happened three days later? Reference has been made to a headless chicken. If one wanted a scene that was reminiscent of a number of headless chickens running about, it would have been the setting of the GLC rate, a scene which hardly enhanced the relatively low reputation of London's Labour leaders. The GLC decided to set its precept nearly 3p below the limit that we had set.

The decisions of those authorities came as no surprise to us. But they must have come as a bit of a shock to their ratepayers, who had been pounded with propaganda telling them that rate capping would decimate jobs and services. Indeed, many of those ratepayers must be asking why so much of their money was spent giving them totally misleading information about the effects of our policies.

The remaining authorities passed motions that no rate would be set. But as some of their friends in the upper tier authorities were quick to point out, they knew that they could postpone making a rate without immediate legal consequences. Indeed, the resolutions that they passed were carefully worded, all with expensive legal advice, to avoid legal consequences.

Last week, many of the authorities met again to discuss their rates. This time common sense broke out in Leicester and in Thamesdown, where legal rates were set. The remaining nine authorities — only half of the 18 in the original show of unity — again passed carefully worded resolutions not to make a rate. A good example was the resolution passed by Hackney council, which resolved to defer a rate-making decision while re-affirming its commitment to set a legal and practical rate in due course. These councils have tried to justify their decisions to defer making rates by arguing that they were about to start negotiating with the Government — the usual story. First, they were going to have collective discussions with us. But my right hon. Friend made it clear in his reply to my hon. Friend the Member for Skipton and Rippon (Mr. Watson) on 14 March that there would be no negotiations on that basis.

Then they claimed that discussions were about to start through the AMA and ALA, even though my right hon. Friend wrote to Mr. Layden and Mrs. Hodge in terms which made it clear that the time for discussion of the Rates Act, the rate limits he had set and the rate support grant settlement for 1985–86 had passed.

The truth, as we have made abundantly clear, is that there will be no negotiations. The time for negotiation has passed, and the councils' anxiety to talk to us is in marked contrast to their reluctance to do so when they had the opportunity. Moreover, even if there were still time for those councils to make approaches, the demands that they are making would hardly form the basis of a realistic agenda.

They have been asking us to withdraw the Rates Act and to re-write the rate support grant settlement so that we could pay them substantial sums of money. They have asked for all their so-called "lost grant" back. They have deliberately made demands which they know to be unreasonable in an effort to make us appear inflexible and intransigent. If there was any doubt about that, the leaked "Blunkett report" made it clear that that was the objective.

Mr. Sedgemore

Is the hon. Gentleman really saying that there will be no negotiations, or is he saying that their might be negotiations if the terms are changed? Is he saying, before Britain's poorest borough goes back to court in a week's time, that the Government are adamantly refusing to negotiate with Hackney borough council?

Mr. Waldegrave

I make it absolutely clear that there will be no negotiations. If the council argues in court, on the advice of its lawyers, that it is waiting to set a rate because the negotiations are in train, that would not be true.

Referring to the prospect of non-existent negotiations on an unrealistic agenda as the reason for not making a rate is a very dangerous game to play. These councils know that, if they persist in their totally unjustified posturing, the consequences could be severe. If councillors are responsible for a loss to the council that is judged to be due to their own wilful misconduct, they can be surcharged; and if the loss amounts to more than £2,000, they will automatically be disqualified from holding office as councillors. If they are bankrupted, they would be precluded from standing for Parliament. For some of these people, that may be a telling consideration.

One hopes that councillors will be equally, if not more, concerned about the consequences for the areas that they are supposed to serve. Council employees will -Probably be the first to suffer. They will not be paid. Some of the more extreme shop stewards may be prepared to put up with that, but I am not sure that the same will be true of their members. Anyway, why should they go without pay in order to bolster the political aspirations of these militants? The councils' clients will begin to feel the effects. Of course, those who need the services most, the very people whom these councils claim to be protecting, would suffer first and suffer most.

It is the duty of all these councils to make a legal rate without further delay. It was helpful of the hon. Member for Islington, North to give me the opportunity to put that point clearly on the record. That is the view of Mr. Justice Woolf, who yesterday ruled that there were "no reasonable grounds" for Hackney's decision to defer setting a rate. It seems to be the view also of the hon. Gentleman's party, which decided yesterday, by a two to one majority, that it would not support councils that refused to set rates. Perhaps the hon. Gentleman backed another loser in this matter.

Let me end by referring to a letter sent, at ratepayers' expense, to the unfortunate ratepayers of Southwark. The letter advises the member to continue paying rates at this year's level. The council has told its ratepayers that it is "negotiating with the Government", which, as I have explained, is totally untrue. The council has not told its ratepayers that last year's borough rate is 25 per cent., or almost 37p in the pound, higher than the limit that we have set the council. I say to the ratepayers of Southwark, "You have no obligation whatsoever to pay any rate until a rate has been set legally for the current year." Last year's rate cannot be a legal rate in Southwark, and this year's rate will be considerably lower.

I am grateful to the hon. Member for Islington, North for giving me the opportunity to put some of these matters clearly on the record. I have every hope and every confidence that these councils will shortly set legal rates because they, like the others, recognise the position in which they find themselves.