HC Deb 02 December 1985 vol 88 cc19-24 3.31 pm
Mr. David Alton (Liverpool, Mossley Hill)

(by private notice) asked the Secretary of State for the Environment what discussions he has had with Liverpool city council or its advisers about the financial arrangements made by the city council for the remainder of the current financial year.

The Secretary of State for the Environment (Mr. Kenneth Baker)

I have consistently refused to have any discussions with Liverpool city council. My officials have informed the city council and the commercial organisations concerned that deferred purchase arrangements undertaken by local authorities do not require Government approval and that such arrangements carry no Government guarantee.

Mr. Alton

Can the Secretary of State confirm that the payment of nearly £30 million in interest on the loan will, when added to Liverpool's existing debt of £700 million, not only mortgage Liverpool up to the hilt but give it the dubious distinction of becoming the district council with the biggest council debt in Britain? What assurances are being given by the council to Phillips and Drew about balancing the city council's books next year, especially in view of the comments of Mr. Tony Mulhearn, the president of the unlamented and late district Labour party, that the Militants in Liverpool intend to plunge the city into chaos again next year?

Will the right hon. Gentleman also confirm that that interest is at a higher rate than that offered by the Public Works Loan Board? What questions has he asked about the source of that funding, which comes via Swiss clearing banks, which are notoriously the providers of some of the dirtiest money in the world? Does the right hon. Gentleman agree that as serious questions remain unanswered about rate support grant and housing investment programmes, he should now meet a delegation of leaders from all the parties in Liverpool?

Mr. Baker

I have no standing in the relationship between Liverpool city council and its financial advisers. The council agreed this year's budget only last Friday, let alone settling next year's budget, but again that is a matter for Liverpool city council. The people of Liverpool have been bought a breathing space at great future cost, which will start coming through in 1987–88. It is the old Socialist solution—borrow, borrow, borrow now; pay, pay, pay later.

Mr. Malcolm Thornton (Crosby)

Is my right hon. Friend aware that many people, not just in Liverpool, but throughout Merseyside, view with considerable suspicion the fudged agreement that Liverpool city council has been able to come up with and see it merely as a postponement of the inevitability of the bankruptcy of Liverpool?

Mr. Baker

My hon. Friend is right to be concerned. This is a postponement. The city council refused to treat seriously most of the Stonefrost report's recommendations. As I have already made clear, this is only postponing the day of reckoning for Liverpool.

Mr. Eric S. Helfer (Liverpool, Walton)

Is it not clear that the money that Liverpool city council has been forced to borrow from Swiss banks should have come from Government sources, and that the reason for the crisis in Liverpool is the Government's policy? Over a period of time the Government have deliberately refused to meet the city council to discuss the matter and have tried to bankrupt the city for political gain. Is the right hon. Gentleman aware that if the Liberal party's proposals had been accepted last Friday Liverpool would have been back to square one and would have run out of money?—[HON. MEMBERS: "Nonsense."] Hon. Members may say "Nonsense", but if they and the creeps in the Liberal party—

Mr. Speaker

Order. I hope that the hon. Gentleman will rephrase that remark.

Mr. Hafer

If the hon. Gentleman and the honourable creeps in the Liberal party—

Mr. Speaker

Order. That is better, but not good enough.

Mr. Hafer

If I am allowed to say "crawlers", Mr. Speaker, I shall say so. They are responsible for what has happened.

May I also draw the right hon. Gentleman's attention to an interesting article in today's edition of The Guardian, by Geoff Andrews? It illustrates how Liverpool is at last beginning to deal with its housing problems. Would it not be better for the Government and other right hon. and hon. Members to concentrate on supporting Liverpool city council, instead of attacking it?

Mr. Baker

The hon. Gentleman seeks to lay blame other than where it should truly lie. He seeks to blame the Liberals, whether they are creeping or crawling. He seeks to blame the Government, although they were the subject of a campaign of direct blackmail. The councillors of the city of Liverpool must be responsible for putting their own house in order. They have conducted a sustained campaign of blackmail against the Government. No effort has been spared in this campaign to hit the employees, to crush the voluntary sector and to endanger the welfare of the people of Liverpool. Everything has to be sacrificed to promote the ambition and to flatter the vanity of a few councillors.

Mr. Fred Silvester (Manchester, Withington)

Is not one of the outstanding features of this settlement the fact that the people of Liverpool will have to carry a future burden for present advantage? Will my right hon. Friend draw attention to other councils which are stacking up future difficulties for exactly the same reason?

Mr. Baker

My hon. Friend is prescient, and he is correct to be worried about what I believe is implied in his question—the tactics that might be used by the city of Manchester. If councils get up to dubious financial tricks, they will solve nothing. They are not facing the responsibility of running their cities efficiently, fairly and properly. They cannot shuffle off that responsibility.

Mr. Frank Field (Birkenhead)

Does the Secretary of State accept that Liverpool faces massively serious problems over and above the grotesque activities of the Militant Tendency? Is he aware that job losses in the area since his party came to power have been double the national average? As a budget settlement has now been reached, what new action do the Government intend to take to help Liverpool andthe surrounding area?

Mr. Baker

The rate support grant system recognises the inner city deprivation that faces Liverpool. Of all metropolitan districts, the city of Liverpool has the second highest grant-related expenditure assessment. The Government recognise that problem. They have provided the city of Liverpool with £30 million over and above its grant entitlement for the Merseyside task force and for city projects, some of which, as the hon. Gentleman knows, have been undertaken in his constituency. In addition, I provide an extra £20 million a year for the docklands development corporation. For the area of Merseyside, which is broader than the city of Liverpool, Government agencies and Departments provide about £1 billion a year, of which £400 million is spent in the city of Liverpool.

Mr. John Heddle (Mid-Staffordshire)

Is my right hon. Friend aware that his steadfastness in not becoming involved in the internal Labour party political squabble is much welcomed? Will he confirm that the only way— [Interruption.] in which the city of Liverpool will attract real wealth and jobs is by—

Mr. David Winnick (Walsall, North)

Rachmanite.

Mr. Speaker

Order. The hon. Gentleman must not say that.

Mr. Winnick

It is true, Mr. Speaker.

Mr. Speaker

Order.

Mr. Heddle

Does my right hon. Friend agree that the only way in which the city of Liverpool will attract real jobs, wealth and prosperity is if the city council runs its affairs on truly democratic and accountable lines?

Mr. Baker

I agree entirely with my hon. Friend. If I had not stood fast in this matter but had shown that I was prepared to negotiate or give way, it would have been a very bad day for local government in our country. Every council would have known that it could use such revolutionary tactics, the purpose of which was to create chaos in Liverpool and suffering for its people.

Mr. Ken Eastham (Manchester, Blackley)

As the Minister referred to Manchester, may I remind him that Manchester runs a very successful municipal airport—probably the most successful in the country—which contributes to the rates of the city? How, therefore, can the Minister justify taking that airport away from the city of Manchester?

Mr. Baker

I think that that question goes a little wide, and it was dealt with in the abolition debate.

Mr. Richard Ryder (Mid-Norfolk)

Is my right hon. Friend aware that thousands of my constituents, who have seen billions of pounds of public money poured into Liverpool, will be relieved at the Government's robust approach to the issue?

Mr. Baker

I agree with my hon. Friend. If the Government had decided in any way to give in to Liverpool, there would have been repercussive effects upon the whole of local government finance. Many councils made it clear that they did not want me in any way to accommodate Liverpool's demands, and many of those councils are under Labour control.

Mr. John Cartwright (Woolwich)

Is the Minister aware that it is not only Manchester that seems intent on following the Liverpool example? Are not a number of London boroughs now well down the Liverpool road? When they run out of money, will they, too, conclude one of these curious deals with the gnomes of Zurich? If so, will that not drive a coach and horses through the Government's much professed claim about controlling local government spending?

Mr. Baker

In the past, such deals have usually been entered into by local authorities for relatively small sums for bridging finance. As has been made clear today by several hon. Members, that is a very imperfect—and I think fundamentally wrong—approach to local government finance, because it postpones the day of reckoning and means that the costs will be very much higher when they begin to come through—which I believe will be within two years for Liverpool.

Mr. John Watts (Slough)

Can my right hon. Friend confirm that, even at the supposed height of the financial crisis, Liverpool city council was able to scratch together sufficient money to pay the bailiffs who were about to repossess Councillor Hatton's official car? Does my right hon. Friend not find that a strange priority for the city council?

Mr. Baker

I now find little strange in the decisions of Councillor Hatton, but I agree that that was one of the more bizarre events of the past few days.

I understand that Councillor Hatton was, at one time, intending to appear in a Christmas pantomime. He does not have to wait until Christmas—he has been running a pantomime for the past year, but has had to withdraw because even the front end of the horse objected.

Mr. D. N. Campbell-Savours (Workington)

Is the Secretary of State aware that since 1979 this Government have given to the better-off almost £12,000 million through capital transfer tax, capital gains tax and other concessions? Is he further aware that the argument in Liverpool is about £25 million—a small sum compared with £12,000 million? Had the Government forked out that money earlier this year, rather than giving massive tax concessions to the better off in society, there would have been no problems in Liverpool and no deficit budget strategy. Indeed, the problems of the city would be en route for solution.

Mr. Baker

The question is not just one of £25 million. It was a deliberate and sustained attempt to undermine the whole of the local government finance system— [Interruption.] —and that system was approved by the House of Commons. It is not unreasonable to expect local authorities to implement and approve arrangements agreed by this House.

Mr. Campbell-Savours

The right hon. Gentleman should get his priorities right.

Mr. Baker

I would have said that that was getting my priorities right.

Mr. Derek Spencer (Leicester, South)

If there are maggots in the body politic of Liverpool, there is warble fly in the body politic of Leicester. Will my right hon. Friend ensure that those two groups of pests do not get together and sting the long-suffering ratepayer in Leicester?

Mr. Baker

My hon. and learned Friend's knowledge of the insect world is greater than mine, but I have no doubt that, not in all but in several councils in our towns and cities, very Hard Left Left-wing councillors are being adopted. I only hope that people will have seen what happens when the militants get in control, as in Liverpool, and that they will not seek to drive their cities and towns down that road.

Dr. John Cunningham (Copeland)

Now that the city council in Liverpool has balanced its budget, will the Secretary of State agree to meet the leader of the city council so that the future problems of the city, which are far from resolved, may be discussed? Will he, in particular, agree to review the historically low target for expenditure, which is the root cause of the city's financial problems, as was highlighted by the Stonefrost report?

Does the Secretary of State recall his announcement of 20 November on housing investment cuts—cuts for the sixth successive year—and does he recognise that such cuts can only make a very serious situation in the city of Liverpool even worse? Will he refrain from misleading the House and the country by suggesting that the Government are concentrating their resources on the inner cities, when, for example, since 1979 Liverpool has lost almost £400 million in rate support grant and gained just under £80 million in urban programme, which is a net loss to the city's income of £320 million? It is untrue to suggest, as the right hon. Gentleman is suggesting, that somehow the Government have been bringing resources to the inner cities, when consistently they have been taking them away.

In view of the report of the Archbishop of Canterbury—[Interruption.] We understand why Conservative Members do not like even the Church condemning what the Government are doing in the inner cities. In view of the archbishop's report—which is just the latest in a long line of damning indictments of the Government's

inner city policy—will the right hon. Gentleman reconsider the impact of the cuts on Britain's inner cities, and change policy?

Mr. Baker

The answer to the hon. Gentleman's point on housing is that one of the most distressing aspects of the whole Liverpool saga of the last year has been the way in which Liverpool city council has conducted a vendetta against the housing co-operative movement in Liverpool, a movement which we have strongly supported—[Interruption]—with resources. We shall be providing resources for the development in Eldon street.

The hon. Gentleman asked whether I would meet the leader of Liverpool city council—[HON. MEMBERS: "Which leader?"] They have an elected leader, who, I believe, is rather busy on Mr. Hatton's closed circuit television. I have always said that I should be willing to meet a delegation of members from Liverpool city council when they behave reasonably and legally, which is the position that I have with all other councils in the land.

The hon. Member went on to ask about providing resources for Liverpool. Some of the grant has been lost as a result of Liverpool city council refusing to run its services efficiently. Indeed, its services are about 30 per cent. more inefficiently run than those of the average metropolitan district.

The hon. Gentleman will recall that the Bishop of Liverpool and the Archbishop of Liverpool wrote an article in The Times in which they deplored the confrontation, which has to a great extent been manufactured by the Militant leadership of the city council. The bishops pointed to Militant's intransigence and unwillingness to engage in serious dialogue. I am glad to say that that is a matter on which I find myself at one with the Church.