Local Government (Rates)

HC Deb 06 February 1985 vol 72 cc975-1026 5.52 pm

Mr. Andrew F. Bennett (Denton and Reddish)

On a point of order, Mr. Deputy Speaker. As the Chairman of the Select Committee on Statutory Instruments, the Committee asked me to express its concern at the unusual speed with which the order has been brought forward for debate today. I believe that it was laid in the House only last Wednesday, which has placed the Scrutiny Committee in considerable difficulties.

Under Standing Order No. 104(9) we are obliged to draw any instrument to the special attention of the House. If we want to do that we must afford the Government Department involved the opportunity first to furnish us with a written memorandum and, if necessary, to give oral evidence. You will appreciate that as the Government laid the order only on Wednesday, it is extremely difficult for us to scrutinise it, ask for witnesses, and oral or written evidence. I appreciate that under the Standing Orders of the House the Government are not required to ensure that an instrument has been to the Scrutiny Committee before it is brought to the House, but the custom and practice have always been to attempt to do that unless there is an extreme reason of urgency why they cannot give the Scrutiny Committee reasonable time to carry out its functions.

Can you, Mr. Deputy Speaker, or Mr. Speaker, look into the matter to see whether it was urgent, what attempts the Government made to ensure that the Scrutiny Committee had the opportunity to hear witnesses and to take written statements if it wanted, and why it was necessary to introduce it in such a way as to break the traditional convention that the Scrutiny Committee is given adequate time to consider an order? That is especially important in view of the controversial nature of much that is contained in the order.

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

Further to that point of order, Mr. Deputy Speaker. I may be able to help the hon. Gentleman. I wish to preface my remarks by saying that the whole House appreciates the work done by the hon. Gentleman, as Chairman of the Joint Committee on Statutory Instruments, and those who serve with him. The House is indebted to them.

I am aware that some members of the Committee expressed concern about the timing of the debate after the meeting of the Joint Committee. The arrangement of business is a matter for agreement through the usual channels and subject to correction. I am not aware that the Opposition expressed concern about this issue. However, it is not unusual for important business to follow swiftly after Joint Committee consideration. I assure the hon. Gentleman that had the Joint Committee raised an important query about the validity of the draft order, business would have been rearranged. However, in this case the Committee had no doubts. Although the timing may be unusual, I do not think that it is in any way improper and, therefore, I think that the business may proceed.

Mr. Andrew F. Bennett

Further to that point of order, Mr. Deputy Speaker. It seemed unfortunate for the Secretary of State to imply that because I happen to be a member of the Opposition, I am a party to the business of the House regarding this matter. I raised the point as the Chairman of the Select Committee on behalf of all the members of that Committee. It must be the duty of the Whips on both sides of the House to ensure that traditional procedures are observed as far as possible.

Mr. Deputy Speaker (Sir Paul Dean)

I cannot help the hon. Gentleman very much on that. He has had the opportunity to put his case, it has been heard by the House, and there has been a further point of order from the Secretary of State. Both he and the right hon. Gentleman have dealt with the point. Their remarks were addressed more to the usual channels than to the Chair. The hon. Gentleman will realise that it is not possible for the Chair to assist him in this matter. However, he has had an opportunity to put his point on the record, and I am sure that it has been heard on both sides of the House.

Mr. Alan Williams (Swansea, West)

Further to that point of order, Mr. Deputy Speaker. My hon. Friend the Member for Denton and Reddish (Mr. Bennett) makes a valid point. He is not party to any agreement that is reached through official channels. Regardless of the fact that we cannot alter the position today, it would be appropriate that if in future there is a departure from normal conventions in relation to timing, at least the Chairman of the Select Committee on Statutory Instruments should be informed and given an opportunity to consult his colleagues on whether they wish to make representations to the leaderships of both sides of the House. Will that be considered in future?

Mr. Deputy Speaker

I hope that the exchange has assisted the House. This is not a matter over which the Chair has any definitive authority.

5.58 pm

Mr. Patrick Jenkin

I beg to move, That the draft Rate Limitation (Prescribed Maximum) (Precepts) Order 1985, which was laid before this House on 30th January, be approved. The order is the first of two that will come before the House under section 4 of the Rates Act 1984. It is a stage in the rate-capping process, and the House is asked to approve the maximum rate or precept limits for each of the authorities selected for rate capping. This order covers the four precepting authorities, and my present intention is to table the order covering the rating authorities that have not agreed their limits in a few days. I certainly take note of the point you made, Mr. Deputy Speaker, about the question of timing.

The House knows that the Government's case is that the purpose of rate capping is to protect ratepayers from the impact of high rates caused by high spending. All the authorities designated last July have budgeted this year to spend both more than 4 per cent. above their targets and more than 20 per cent. above their GREs. The order covers the Greater London council, the Inner London education authority, the Merseyside county council and the South Yorkshire county council. I shall say a word about each in turn.

The GLC has doubled its spending in three years. It has more than doubled its precept since the Socialists took control of county hall in 1981. It spends as if there were no tomorrow, and I suppose that for the GLC, there is no tomorrow. Its £10 million advertising campaign has become a national scandal. This year, it is recruiting 1,700 extra staff, and last week GLC councillors — I quote from The Standard of 1 February—were deluged with 125 separate spending plans together as thick as five telephone directories. Most had been delivered to their homes (at more expense no doubt) only the night before. Others were actually trundled in while the meeting was going on. Small wonder, writes The Standard, that even a Labour councillor complained that he had not had time even to look at the proposals and could not vote for them. In the face of that evidence, how can the GLC argue that the precept limit in the order is impossible?

The Inner London education authority is unique, not only in its constitution but in its unrivalled extravagance as an education authority. During the past three years, its school population has fallen by 10 per cent., but its spending has increased by almost a third to more than £900 million. Compared with other authorities, ILEA now spends per pupil 29 per cent. more than Manchester, 31 per cent. more than Sheffield and 54 per cent. more than Bradford. Those familiar with Bradford will know that it has a large immigrant population.

Mr. Frank Dobson (Holborn and St. Pancras)

Will the Secretary of State turn his mind to the Z scores of deprivation produced by his Department, which show that those who live in the Inner London education authority area are far more deprived than the populations of any other cities? Will he also confirm that Her Majesty's inspectors of schools have never substantially criticised the organisation, operation or standards of ILEA? Indeed, when a special survey of the authority was carried out by Her Majesty's inspectorate of schools, it endorsed the progress being made by that authority.

Mr. Jenkin

If the hon. Gentleman catches your eye later, Mr. Deputy Speaker, he will be able to make those points. The fact is that ILEA's spending per pupil is extravagant compared with other inner-city areas that have high incidence of deprivation, large ethnic minority populations and many children whose mother tongue is not English.

I remind the hon. Gentleman that until ILEA was stopped by the court, it was spending no less than £750,000 on a blatant political advertising campaign. I wonder whether my hon. Friends who represent London constituencies noticed a recent advertisement in The Guardian for a personal assistant to the leader of ILEA? That person must have Political sensitivity and a supportive understanding of the objectives of the majority party (Labour). What will be the cost of this person's salary to be paid by inner London ratepayers? The answer is £17,598 a year.

Since 1978–79, Merseyside county council has increased its spending—

Mr. Guy Barnett (Greenwich)

rose—

Mr. Jenkin

I shall not give way. This is a short debate, and the hon. Gentleman may have an opportunity to catch your eye later, Mr. Deputy Speaker.

Merseyside county council has increased its spending by almost 150 per cent. since 1978–79. That is faster than any of the five Merseyside district councils, including Liverpool. It is the worst spending record of any of the six metropolitan counties. Its annual transport deficit is no less than £82 million, and during the past three years, Merseyside's precept has increased by more than 50 per cent. Yet Merseyside has decided to help to fund Liverpool's first novelist in residence. The council has just given a £1,500 grant to the makers of a record album attacking the police. The council gave its staff the day off with pay to strike against abolition—the strike did more to generate support for abolition than anything else the council had done.

South Yorkshire council has increased its spending since 1978–79 by 132 per cent., which is more than any of the four district councils in its area. Recently, it gave £100,000 to the miners. It has decided to put nuclear-free-zone signs on 21 primary routes through the county at a cost of £100 per sign. It subsidises public transport to the tune of no less than £73.5 million a year. Buses cost the passenger transport executive £1.92 per passenger mile, but the passengers pay less than a quarter of that sum. The hapless ratepayers must pay the difference.

Those are the councils which claim to be starved of money for their essentials, yet the examples that I have quoted show them to be wildly extravagant. Why should the hundreds of responsible councils suffer for the extravagance of the few? Many councils, Labour as well as Conservative, budget to stay within the guidelines, and those four should do the same.

Before I discuss the individual precept limits, I should remind the House of the stages in the process that have already happened. On 24 July last year, I listed the 18 authorities to be capped and announced their maximum expenditure levels. Under the Rates Act they could appeal against those expenditure limits and ask that they be increased. As the House knows, the Labour party's national executive committe decided on a policy which it described as "non-compliance". As a result, not one Labour-controlled authority availed itself of the appeal procedure. I extended the time and gave the clearest sign, both inside and outside the House, that the professed reasons for not appealing were misconceived. But still not one authority appealed—

Mr. Jack Straw (Blackburn)

Including Portsmouth.

Mr. Jenkin

Portsmouth is now prepared to accept the rate limit that has been set and will budget within it.

Dr. John Cunningham (Copeland)

In view of what the Secretary of State said about redetermination, and especially his reference to Portsmouth, perhaps I could remind the House of what the Conservative leader of Portsmouth city council, Mr. Ian Gibson, said about applications for redetermination in the Municipal Journal of 3 August last year: The thing about redetermination is that it could come with strings attached that my council could not possibly accept. "My council" is a Conservative council. That is the reality of redetermination.

Mr. Jenkin

The truth is that Portsmouth city council quickly came to the conclusion that it did not need to apply for redetermination. Councillor Gibson assured me the other day that the council will make a budget fully in line with, and conceivably below, the rate limit that has been set.

On 11 December, I announced the rate support grant settlement and, basing myself on those expenditure levels, I announced the rate and precept limits to the House. Again, the Rates Act provides a right of appeal. Any authority that wishes to challenge its limit can come in and argue for a higher limit. None of the four precepting authorities named in the order has done so.

However, in recent months non-compliance has taken a curious form. Substantial quantities of paper arrived on the desks of my officials, through various routes, setting out, often in considerable detail, many of the facts and figures that those authorities wished me to consider in reaching decisions on their rate limits. Indeed, the information flowed in so thick and fast that when I met a deputation on Monday from 17 rate-capped and nine other Labour-controlled authorities, the pile of information on the table in front of me stood over six inches high. If that is non-compliance, so be it. Around that table were sitting some of the real non-compliers, who had put in no information because they had followed the national executive committee's instruction. I gained the impression that they felt a little let down by what their colleagues had done.

That brings me to the individual precept limits set out in the schedule to the order. The GLC's precept limit of 36.52p is what I proposed on 11 December. It corresponds to a spend of about £785 million, assuming a modest drawdown of balances. Compared with the GLC's proposed budget of more than £860 million, the result of passing the order will be that next year's GLC precept will be about 7p less than it would otherwise have been. Of course, if we add the London Regional Transport levy, the amount that ratepayers will pay will be higher than this year' s precept—[HON. MEMBERS: "Ah!"] It is no good hon. Members saying "Ah". Everyone knows that this year the GLC manipulated its precept downwards by drawing over £200 million from balances while increasing its spending by over £100 million. Because of this manipulation, there would have had to be a big increase in the joint precept of the GLC and ILEA anyway next year. Without rate capping, the fact remains—it cannot be seriously challenged — that from next April, Londoners would have had to pay 7p more in the pound than will be the case.

Mr. Tony Banks (Newham, North-West)

The right hon. Gentleman referred to "modest reserves". What reserves has he calculated that the GLC has to draw on? Why, after three requests from the GLC for him to give the information on how he arrives at that reserve, has he still refused to reply?

Mr. Jenkin

The hon. Gentleman knows that, under the Act, I am entitled, if I do not have all the detailed figures, to make assumptions. There would have been no need for me to make any assumptions if all the authorities had followed the procedures laid down in the Act and provided the information for which they were asked. It has been open to them to have discussions with me and my officials about expenditure levels and rate limits. I have dealt as even-handedly as I can between authorities in calculating limits, but in setting those limits I have to take account of the individual circumstances and the differences between authorities.

I have made assumptions only where information has not been provided or is not available about authorities' individual circumstances. I have sought to compare reserves with statistical average levels for the class of authorities and have also allowed for possibly inadequate reserves in 1985–86 in those cases where local authorities have made substantial use of funds this year, 1984–85, so depleting their reserves. I point out to the hon. Member for Newham, North-West (Mr. Banks) that the councils not giving us information could have worked both ways. By not using the statutory procedures, the authorities, and the GLC is one, may have concealed contingencies built into their budgets.

Mr. Tony Banks

The GLC has not.

Mr. Jenkin

The hon. Gentleman may say that, but it may have shortfalls in spending. I know that the GLC has been trying to get rid of money as fast as it can, but this could happen. I have had to make assumptions, and those assumptions may well have been in favour of the authority. The effect will be to make the limits more generous than they appear. The percentage cuts of which the authorities are making much are unreal because they include large allowances for planned growth.

The ILEA precept is a different story. In December, I proposed a precept limit of 74.19p. The limit of the order is now 3.06p higher, at 77.25p. The reason for the increase is straightforward. ILEA has been helpful in supplying information. Part of this consisted of a breakdown of its reserves. It appeared that part of those reserves—those contained in its building and renewals fund — represented money from the sale of capital assets. By law, such money is not available for use to support revenue spending.

Now that I have the detailed figures, I have made an allowance for this factor and I have made a number of other adjustments in the light of ILEA's information. Accordingly, ILEA's precept has been raised to 77.25p. This still represents a reduction of nearly 3p compared with this year's ILEA precept of 80p. Only a few moments ago, I received a further letter from the chairman of ILEA, and this is being considered.

The 3.06p uplift does not allow ILEA to spend any more money. It is still based on an expenditure level of £900 million. What has changed is how much of that spending can be financed from precept and how much from reserves. I hope that if any of the rate-capped authorities believe that the same consideration might apply to them, they will note that it was information given to us from ILEA that led to a modest easing of the precept limit. In the absence of rate capping, ILEA was proposing to spend not £900 million but £957 million. This would have required a precept not of 77.25p but of 83.1p.

Let us take the GLC and ILEA precepts together, and apply that to a typical, two-storey terraced house in Tower Hamlets, with a rateable value of £211—quite a humble house. The ratepayers of that house will next year save £32 from what they would otherwise have had to pay. Without rate capping, they would have had to pay £32 more, on the budgets that both the GLC and ILEA say that they would have introduced without rate capping.

I shall give another example, of a small corner shop in Lambeth, with a rateable value of £350. There, next year the ratepayer will pay no less than £52 less than he would have paid without rate capping. When further savings are added because of rate capping in some boroughs, I think that ratepayers will see quite clearly that rate capping is at last coming to their rescue.

Mr. Chris Smith (Islington, South and Finsbury)

In that case, will the right hon. Gentleman tell the House what the ratepayers with children in Inner London will say when they have to pay more for school meals and when school facilities and the quality of education go clown as a result of this decision?

Mr. Jenkin

They will think much the same as the parents in any other area who have been paying higher prices for school meals for years. The level of payment for school meals in ILEA, given all the available concessions, has become a scandal. It is possible for ILEA to do something about that, but that is up to it. I am merely setting the upper limit, and it will have to decide how it will live with the limit.

There is a different story on Merseyside. Here, the precept limit of 82.86p, though no change from what I proposed in December, represents a 27 per cent. increase on this year's precept. There is a clear reason for that. This year, Merseyside is planning to draw down special funds so that its precept is much less than would be necessary to support its spending this year if it had to be financed by ratepayers. The information that I then had suggested that the council would not be able to do this again next year. Even a reduced level of spending would have to be financed almost wholly from the precept. Therefore, in any event, the precept will have to be higher. Again, after carefully considering the further information that Merseyside county council gave me—non-compliance again—I decided to confirm the limit that I originally proposed.

Mr. Robert N. Wareing (Liverpool, West Derby)

It may seem to the right hon. Gentleman that he is benefiting Merseyside by allowing it to increase its rate precept to 82.5p in the pound, which is a 27 per cent. increase on last year. The right hon. Gentleman is presumably trying to protect ratepayers against increases. Is he interested in value for money? By asking Merseyside council to reduce its budget by £23 million, which is 10 per cent. of the budget, he is asking the ratepayers to pay 27 per cent. more for 10 per cent. less.

Mr. Jenkin

Both sides will get a great deal more value for money from what the council spends. The hon. Gentleman is anticipating my next point.

Compared with a £249 million budget, which Merseyside says that it would have introduced in the absence of rate capping, this precept, although a 27 per cent. increase on last year, is 50p in the pound less that it would otherwise have been. That is what Merseysiders would have had to pay if there had not been rate capping.

I can take an example from the constituency of the hon. Member for Bootle (Mr. Roberts), of a typical semidetached house in Bootle with a rateable value of £250. There will be a saving for the owner of that house of about £125 compared with what he would have had to pay in the absence of rate capping. I ask the House to contrast what will happen to that ratepayer in Bootle with what will happen to a similar ratepayer in Liverpool, whose rates will not be capped. I think that the ratepayers in Bootle may well consider themselves to be mighty lucky.

Mr. John Powley (Norwich, South)

I am interested in what my right hon. Friend is saying about how much the domestic ratepayer will save, but will he bear in mind that a large proportion of rates is paid by commercial and industrial ratepayers, who get no relief according to their ability to pay? It is that sector as much as any other that needs relief from the high-spending authorities.

Mr. Jenkin

That is why I quoted the corner shop in Lambeth as an example of a saving of £1 a week.

Finally, there is south Yorkshire. In December I proposed 81.32p, a reduction on this year's precept of just over 2 per cent. South Yorkshire sent me a certain amount of information, but I concluded that it was not such as to lead me to change my proposal. South Yorkshire was proposing to spend £206 million next year. Thanks to rate capping, south Yorkshire's precept will be about 35p in the pound below what it would have been, saving the ratepayer in a typical three-bedroomed semi in Barnsley or Sheffield about £63. That is on a rateable value of £180.

Those are the precept limits for the four precepting authorities. If the House approves the order they will have over a month in which to decide on their budgets and declare their precepts which, to be legal, must not be higher than the figures in the order.

Mr. Barnett

Will the right hon. Gentleman explain upon what basis the limit of a precept has been fixed in each case?

Mr. Jenkin

The Act obliges me to take account of the spending level, the amount of the rate support grant and the availability of reserves. I was given a great many figures by these authorities, but I still had to make assumptions, and I explained to the hon. Member for Newham, North-West (Mr. Banks) the basis upon which they were made.

Mr. Barnett

Will the right hon. Gentleman publish the calculations in each case?

Mr. Jenkin

The Act requires me to make assumptions. I have said that if an authority asked for an alternative level, I should be prepared at that point to discuss the assumptions with the authority, but as none has done so I was entitled to make the assumptions that I did.

Dr. Cunningham

Will the right hon. Gentleman give way?

Mr. Jenkin

Perhaps the hon. Gentleman will allow me to finish what I have to say on this point. In answer to the hon. Member for Newham, North-West I said that one of the factors that we had in mind was what would be the appropriate average level of reserves for authorities in that class. The Inner London education authority and the Greater London council are each in a class of their own. Therefore we had to make assumptions on the best information available. If an authority wished to challenge those assumptions, it should have made an alternative proposal which could have been discussed.

Dr. Cunningham

How can the right hon. Gentleman ask the House to approve this order with its so crucial consequences for four elected authorities while at the same time he denies to the House the fundamental information upon which he has made his calculations? Is not the House of Commons entitled to know the assumptions that have been made?

Mr. Jenkin

The Act is quite clear. It entitles me to make assumptions. And the procedure is quite clear. I have made it clear on many occasions, both individually to the authorities and in public, that if any of these four authorities had come forward with another proposal it could have sat down with me and my officials and gone through the figures. As it was, not one of them chose to do so. Therefore these levels are before the House.

Predictably, the capped authorities prophesy all sorts of doom and disaster. Yes, they will have to make savings, as others have done already. Nevertheless, having considered the matter with some care, and bearing in mind the GLC's grossly inflated budgets, the very modest level of savings being sought from ILEA and the huge subsidies to transport in south Merseyside and Yorkshire, I am in no doubt, and the House should be in no doubt, that all four authorities can budget to spend sensibly on services while remaining within the limits in the order.

All four authorities were represented in the deputation which came to see me on Monday. Let me tell the House what that deputation asked for. Although this House had voted on 15 January to accept the rate support grant settlement for next year, as set out in the report, the deputation asked in effect that I should cast it aside; that I should abandon targets and hold back; that I should make some huge but unspecified increase in the amount of rate support grant; that I should abandon the Rates Act which was passed by the House last year; and that, apparently in return for all this, the 26 authorities represented round the table would be good enough to join me in some commission of inquiry. They said nothing about cutting out growth or about trimming their spending. Indeed, the figures they tabled at the meeting assumed continuing growth in spending.

I doubt whether the House was therefore surprised to read in Tuesday's press that I had been unable to accede to those requests. But of course it is worse. I do not suppose that there was a single person in that room in 2 Marsham street on Monday who thought that those proposals were seriously intended. On the contrary—

Mr. Tony Banks

Why not?

Mr. Jenkin

I shall answer the question "Why not?" Every one of those council leaders was there for quite different reasons, which had been spelt out with admirable clarity in a two-page report that had been presented to them three weeks earlier by Councillor David Blunkett of Sheffield, the leader of the deputation. It has come to be known as the Blunkett report.

Mr. Peter Bruinvels (Leicester, East)

rose—

Mr. Jenkin

Perhaps my hon. Friend will allow me to deal with this point. They wanted to be able to say that when I laid this order before the House today I would be unable to claim that the capped authorities simply refused to meet me at all or that they were unwilling to put their case collectively. They also wanted to ensure that at the councils' budget meetings in March elected members cannot be accused of failing to challenge the Secretary of State face to face in this way prior to considering the kind of tactics, potentially illegal or otherwise, being considered by the councils concerned". The Opposition might be interested to hear that the Blunkett report went on to say that it was their aim to prevent the break-up of groups arguing about whether or not we should meet Jenkin. Finally, it was their aim to dislocate the Department of the Environment's parliamentary timetable.

Rarely can a deputation have been launched with such shoddy and transparent humbug. Rate capping will not only curb the spending of the most extravagant over-spenders. It will protect the ratepayers in those areas. And as I said in our rate support grant debate last month, it will allow me to set fairer targets for the much larger number of prudent, low-spending councils which for too long have had to suffer for the extravagance of the few.

For all these reasons I ask the House to approve this draft order.

6.27 pm

Dr. John Cunningham (Copeland)

The House is asked today to approve an order through which the Conservative Government will impose a maximum rate on four democratically elected local authorities. We are being asked to take an unprecedented step to impose further central control over the lives of more than 9.5 million people in Merseyside, south Yorkshire and London.

In spite of repeated assurances since taking office in 1979, Tory Ministers are now face to face with the reality of the abysmal mess that they have created in local government during the last six years. In 1980, the present Secretary of State for Defence promised that the Government would not fix the level of an authority's rates. He said: Those decisions remain with the authority." — [Official Report, 5 February 1980; Vol. 978, c. 251.] The present Secretary of State for Employment made a similar promise. When he was Minister for Local Government and Environmental Services he said: It is not suggested that it"— the needs assessment— prescribes a specific level to which an authority ought to spend … I want to make it quite clear that that was not the purpose. We are seeking to find the fairest way to distribute public money to local authorities … " — [Official Report, Standing Committee D, 1 April 1980; c. 941.] The right hon. Gentleman also said: My Department will not be in the business of saying how much each authority should spend, where it should or should not make cuts or on what it should spend money. … Local authorities are autonomous … but the ultimate decision on rating and on the volume of expenditure of local authorities is a matter for the councillors themselves." — [Official Report, Standing Committee D, 27 March 1980; c. 840–41.] That is the sort of promise that the House has been given by Conservative Ministers since they came to office. Now all of that is being swept aside by the Secretary of State's proposals.

As policy failures have embarrassingly mounted, the Government have simply ploughed deeper into the rights of local councils — [Interruption.] Does the hon. Member for Wirral, South (Mr. Porter) wish to intervene or does he just want to waffle on from a sedentary position? As policy failures have embarrassingly mounted, the Government have ploughed deeper into the rights of local councils, casting aside promises in the way that I have described, ignoring all evidence, defying good administrative experience and refusing to learn the lessons — and that from a Government who are allegedly committed to freedom, choice, accountability and the better use of public money.

Market forces are apparently no longer in vogue, at least in the Secretary of State's Department. Massive intervention on a widening scale is the reality. Whitehall-imposed decisions are his practice. The second-guessing of every council in Britain by civil servants is the norm, and chaos is the result. Even The Economist was recently moved to describe the Government's approach to local council finance as "lunatic." Need we say more?

Tory Ministers have legislated themselves and local government into a legal quagmire and they know it. As councillor Roger Parker Jervis, the Tory leader of Buckinghamshire, said, councils have been "legislated into a corner" by this Government. The truth is that the Conservative party no longer has any clear philosophy of local government or well-based body of coherent thought about its role or contribution in a plural democratic society. It has no consistent principles in its approach and no thoughts about a stable, productive relationship between the centre, national Government, and local government. Indeed, in stumbling into the real crisis that exists, successive Ministers have displayed contempt and imcompetence towards local administration on a quite staggering scale.

I say quite bluntly that the order has no place in the House of Commons. The House is not equipped or competent to fix the rate of any local authority in Britain, let alone that of four altogether, in one brief debate. In our view, Government have no right to these powers either, and are similarly and singularly unfit to use them with any proper understanding of the consequences. The budget of Merseyside county council is £180 million, of south Yorkshire £172 million, of ILEA over £900 million and of the GLC over £900 million. Yet Parliament is asked to discuss, understand and approve in three hours the consequences of reducing those budgets by more than £200 million. It is a preposterous proposition and the House is singularly unfit to decide upon it.

Of course the request is absurd. We do not have the information. We do not even have all the information that the Secretary of State possesses. As he has just made clear, he refuses even to be candid with the House about the assumptions that he is making. In reality, we are being asked to rubber-stamp an imposed control, regardless of the consequences for the education of children in London, for bus services in south Yorkshire, for police and fire services in the metropolitan counties and for the quality of public services for millions of people.

The Rates Act is an enabling Act, and a general powers measure that allows Tory Ministers to bypass the ballot box and to decide in Whitehall on the quality and level of services provided in the towns, cities and counties of Britain. The order makes the accountability of elected council members to their communities an irrelevance. It destroys the relationship, based upon universal suffrage, through which voters have always been able to hold their elected councillors to account. Nothing positive or worthwhile will emerge from the application of these powers which, judging by today's detailed story on the front page of The Guardian, are about to be extended to the total control of local councils' own money from their own capital receipts.

Mr. Patrick Jenkin

At Question Time the hon. Gentleman will have heard my hon. Friend the Under-Secretary of State deny absolutely and categorically the suggestion embodied in the two headlines involved in the story in The Guardian. There is no foundation for it at all. No such proposal is on the table. As the hon. Gentleman knows, we are discussing with the local authority associations, as I promised, what changes will be necessary in the capital control system in order to reconcile their legitimate aims with the Treasury's legitimate aim of keeping control over public expenditure. I hope that the hon. Gentleman will not pursue that point.

Dr. Cunningham

I heard the Under-Secretary of State and I have listened carefully to what the Secretary of State has said. They have both denied the headline, but they have not denied the detail of the story at all. They have admitted that the matter is under consideration, and that causes me considerable concern. On the subject of promises, I shall tell the right hon. Gentleman what one of his Cabinet colleagues, the Secretary of State for Employment, said. I quote from the Local Government Chronicle. The right hon. Gentleman was talking about local government finance and said: It will certainly not involve central Government telling local government what to spend … nor will it mean cash limits with a statutory ceiling on rate increases. The reality is that we have had all these promises before, and they are simply hollow. Moreover, they have been cynically cast aside by, among others, the Secretary of State.

Mr. Martin M. Brandon-Bravo (Nottingham, South)

The hon. Gentleman used the phrase, "their own capital receipts." Is it not true that many of those capital receipts were originally subsidised from central funds, sometimes by as much as 65 per cent.? How does that make them the local authorities' own capital receipts?

Dr. Cunningham

The hon. Gentleman should read the words of his right hon. Friend the Secretary of State for the Environment who, in making his statement in December, and in the emergency debate the following day, was at least moved to concede that it is the councils' own money. If on nothing else, I agree with the Secretary of State on that point.

The Government are forcing local councils to be lenders and, on an increasing scale, using councils' own money to buttress the political aims and objectives of Government policy. That is another grotesque abuse of power, and one that will be totally destructive of local accountability. Just as the water industry is to be used as a tax collector for central Government, regardless of that industry's economies, and as with the gas and electricity industries, local government's financial control and freedom over its own money is to be removed. In pursuit of a manifestly failed economic policy, which is leading this country deeper into unemployment and despair, this Government choose scapegoats on all sides. Local government is a favourite target, but not one credible economic argument has been, or can be, advanced in favour of total control of councils' expenditure generated from their own resources.

The right hon. Gentleman made a number of claims about reductions in rates. As usual, he had nothing to say about the fact that it is widely recognised that the real reason why rates have increased by 141 per cent. since 1979 is because of Conservative policies, in particular the systematic reduction of rate support grant.

He also had nothing to say about the impact of the order on the quality and availability of services to the almost 10 million people who will be affected by it. He chose singularly to ignore the fact, in speaking of the authorities, that, despite his criticism of them, their local communities had voted for Labour administrations, and in some cases had consistently done so. The right hon. Gentleman is asking the House to bypass the political decisions of those communities.

Rates have gone up dramatically as a result of Government policy. All local authority associations say so and the Audit Commission says so in its report. Tory councillors say it, as do national newspapers such as the Financial Times, The Guardian and The Times. Only the right hon. Gentleman, his ministerial colleagues and a few trusty Back Bench supporters try to deny it.

Mr. Peter Bruinvels

Will the hon. Gentleman agree that there are only low turn-outs in the areas about which he has been talking? Only a small number of people pay rates, the number of votes cast in those areas is not high and consequently the voting numbers are not representative of the local communities. The hon. Gentleman cannot say, therefore, that the voting figures reveal the kind of services and spending that he is advocating. People want a reduction in rates and a reduction in services as well.

Dr. Cunningham

I remind the hon. Gentleman that in our democracy we have a universal franchise; everyone is entitled to a vote. More households in Britain pay rates than pay taxes. I assume that the logic of the hon. Gentleman's argument is that if people do not pay they should not vote, a concept which we fundamentally reject and which has no place in a democratic society.

Neither the Act nor the order will enable the Government to give any significant or meaningful help to Tory councils, which Ministers have persistently promised to do, and the right hon. Gentleman made that promise again today. The recent rate support grant report laid bare the hollowness of that promise. Nor will the Act mean any significant advantages for industry and commerce, as the Department's consultants recently reported.

After its leak to The Guardian, I was sent a copy of a report commissioned by the Department entitled "The Effect of Rates on the Location of Employment". It cost £50,000 of the taxpayers' money to produce; its 100 pages cost £500 a page. It concludes that there is no foundation for the Government's argument that rates have caused the loss of jobs. Three years ago my hon. Friend the Member for Blackburn (Mr. Straw) produced a paper on the subject. It covered three pages, as against the 100 pages of this document, and my hon. Friend's paper was presented to the right hon. Gentleman free of charge. It gave him the information that is now given at a cost of £50,000.

Mr. Richard Holt (Langbaurgh)

I have had a communication from the south Tees business community. They, not the accountants or the hon. Member for Blackburn (Mr. Straw), create jobs and wealth, and I will send a copy to the hon. Member for Copeland (Dr. Cunningham). It shows that, as a direct result of this year's imposition of rates in Cleveland, the business community estimates the loss of a further 8,000 jobs in that area.

Dr. Cunningham

Surveys done in the past—many were done at the time of the passage of the Rates Act—concluded that rates formed a small percentage of business costs. I have not seen any evidence, from the Government or the Tory party, to contradict that information.

Mr. Holt

rose—

Dr. Cunningham

I will not give way. I must move on.

The Secretary of State also ignored his powers in section 5 of the Act to set an interim limit while the negotiations to which he referred took place. Why did he do that? He announced his intention on 11 December 1984, with the deadline of 15 January 1985, a hopeless timetable, given the two-week holiday period in between.

To add confusion and to cloak his intentions, the Secretary of State has persistently refused to tell the councils or Parliament what assumptions he has made about councils' finances in fixing their rates. What is being hidden? The right hon. Gentleman's political bias as well as his inconsistency are being disguised, and I again challenge him to explain why the House of Commons, in being asked to approve this order, and the councils affected, are being denied this crucial information.

I shall give way to the right hon. Gentleman if he will give an explanation. Of course he cannot, and he will not, because he is afraid that the House will understand why he has made the assumptions that we believe he has. He is afraid to put his fairness, or lack of it, to the test.

I learn today, most disturbingly, from the Labour leader of Haringey borough council, Councillor George Meehan, that Conservative councillors in the borough have told him that they have been told of the assumptions made by the right hon. Gentleman in respect of Haringey borough council. That can only be described as contemptible, especially since, as everyone knows, the Labour party is in control of and responsible for the affairs of that borough. It is yet another way in which the right hon. Gentleman is seeking to bypass the democratic wishes of the people of the borough.

Mr. Patrick Jenkin

Either Councillor Meehan or the hon. Gentleman has misunderstood the position. I have said nothing to the Conservative members of Haringey which would justify the hon. Gentleman's statement. What I have said—what I said the hon. Member for Newham, North-West (Mr. Banks)—is that one of the factors which we have had in mind is to compare the reserves of an authority with the average level of reserves of authorities of that class, and that would seem a reasonable exercise.

Many of the authorities have told us their reserves and have given us many of the figures that go to make up the reserves. Where they have not, we have had to make assumptions. It would have been perfectly proper for Councillor Meehan or anybody else to have come to us and said, "We think that this is too tight. It can only be raised. The Act does not allow us to reduce the rate limit, only to raise it." Anybody could have come and discussed that issue with my officials and the whole thing could have been gone into. They chose not to do that. I am entitled to say, therefore, that the limit is acceptable to them.

Dr. Cunningham

If this is all so innocent, why will not the right hon. Gentleman publish the assumptions? There has been no convincing answer. We have received correspondence about the matter, it has been raised on the Floor of the House and repeated requests have been made, but the right hon. Gentleman has given no explanation which is satisfactory to the House and the councils concerned. As to what I have said about George Meehan—he is not only a political colleague but a friend—I specifically had the assertion checked before I raised the matter in the House. Councillor Meehan authorised me to say what I am saying. I do not say this lightly, without authority or frivolously. The action to which I referred cannot contribute to the happy or speedy resolution of these difficulties.

Mr. Jenkin

The hon. Gentleman has made his point. There is no truth in any suggestion that I have made available details of the assumptions. It would have been improper for officials to have had meetings of that sort with minority members of the council. I hope that the hon. Gentleman will withdraw any suggestion that my officials have behaved improperly.

Dr. Cunningham

The argument about the application of these rate limits rests not just on the right hon. Gentleman's assumptions but on the use of grant-related expenditure as one of the two crucial tests before authorities are designated under the Act. Grant-related expenditure assessments have been rejected as an objective test by all local authority associations. None of them, including associations under Conservative political control, accepts that test. Yet ministerial decisions are based on dubious calculations and outdated information. In a report published in 1984 entitled "The Impact on Local Authorities' Economy, Efficiency and Effectiveness of the Block Grant Distribution System" the Audit Commission said: The existence of so many unresolved questions after four years experience of operating the Block Grant system also casts doubt upon the use of GREs for any purpose other than grant distribution. And it is evident that complexity has not, so far, produced a general perception of equity. The report went on: Unfortunately, the information used to calculate both the needs for local authority services and the availability of local resources is open to serious question. That is the independent and considered view of the Audit Commission about one of the two principal tests on which the Secretary of State has based his decision to impose this order on the four authorities.

The order will place huge strains on the budgets of the authorities affected. There will be expenditure cuts for Merseyside of more than £44 million, for south Yorkshire of almost £28 million, for the Greater London council of almost £75 million and for the Inner London education authority of £57 million. I have received a copy of the letter sent to the Secretary of State today by the leader of ILEA, Frances Morrell, who leaves him in no doubt that there are serious questions to be asked about even the right hon. Gentleman's new limit for that authority and the limit's impact on the quality and scope of education in London.

All these cuts are made on the basis of the decision of the Secretary of State which, in turn, rests on a shambles of incoherent and failing Government policies. The arguments for the order are false and racked with contradictions. The performance of Ministers in dealing with local council policy is incompetent, dishonest and deplorable. The House should reject the Government's case.

6.54 pm

Sir John Osborn (Sheffield, Hallam)

I assure the hon. Member for Copeland (Dr. Cunningham) that rates are driving businesses out of Sheffield and have been a perpetual cause of increasing unemployment. If the hon. Gentleman thinks differently, I assure him that many industrial leaders deplore the fact that I, as the only Conservative Member of Parliament in the region, have not been able to stop this drain and to persuade my hon. Friends to do something about it before today.

Dr. Cunningham

Given the hon. Gentleman's long experience in the industry, he must know, as I know from my association with the industry, that the devastation of the steel industry as a result of the Government's policies has been the principal factor that has driven business from Sheffield.

Sir John Osborn

I shall now revert to the debate. If the hon. Gentleman would like me to talk about steel, I shall. I am afraid that if I do, not many hon. Members would have much chance of dealing with the subject of the debate. I shall therefore refrain from talking about steel.

The order arises from the Rates Act 1984. The order is, in fact, the Act put into practice, and that is happening none too soon for householders and those who run industries, commerce and businesses in the city and south Yorkshire. Today's debate covers familiar ground.

Ms. Harriet Harman (Peckham)

Will the hon. Gentleman give way?

Sir John Osborn

The hon. Lady should bear in mind the fact that if I am interrupted, I shall spend between 15 and 20 minutes on my feet and may prevent other hon. Members from speaking. I give way.

Ms. Harman

On the point about commercial rates, is it not the case that the link between unemployment rising and rates has not been proven? Does the hon. Gentleman not recognise that in low rate areas the rents on those commercial properties increase and, therefore, at the end of the day the amount spent on rents or rates is about the same. The money going into rates is at least ploughed back into the local community for services and jobs. When the money goes in increased business rents, it goes goodness knows where and therefore is not ploughed back in. Does the hon. Gentleman not accept that his argument about unemployment and rates is totally spurious?

Sir John Osborn

The hon. Lady should let me continue with my speech.

As the hon. Member for Copeland knows, the last Labour Government were concerned about the level of spending in south Yorkshire and Sheffield before 1979. I attended many meetings involving local councillors who were worried about what would happen under a Labour Secretary of State for the Environment. Since 1979, this Government have tried hard to control the increase in local authority expenditure grants. The targets and penalties have been designed to encourage moderation, and many authorities have co-operated.

We are dealing with those authorities that have resisted. For those few authorities encouragement has had to become compulsion. Those councils, and south Yorkshire especially, have only themselves to blame. They have tried to portray my right hon. Friend the Secretary of State in an uncompromising light by saying that they have not had sufficient time to make their case. The hon. Member for Copeland made that point. What rubbish! The high-spending councils have had too long to make their case. They have been making their case since 1979. The Government have a clear mandate to control the level of public spending. Local authority expenditure is about £33 billion, or a quarter of all public spending. Local authorities employ roughly one tenth of the total work force. It is daft to think that local authority spending is exempt. The hon. Member for Copeland, councillors and others think that their mandate has been invalidated by the control from Government that the order provides. Those arguments are based on the claims of local democracy.

There we move to the heart of the matter which was mentioned by my hon. Friend the Member for Leicester, East (Mr. Bruinvels)—the link between the ballot box and the rating system has worn thin. Of every £1 spent by local councils on local services, less than 25p in the £1 is provided by householders. Slightly more than 25p comes from businesses and other non-domestic ratepayers and about half comes from taxpayers. That means that, in a city such as Sheffield, one out of every two households, or roughly one in four of those entitled to vote, pay full rates. Those who pay do not vote while those who vote do not pay. That is taxation without representations. What sort of a mandate is that?

Mr. Peter Bruinvels

It is not a mandate.

Sir John Osborn

Quite right, it is not a mandate. In previous debates I have said that I should prefer some form of rate reform, but consensus on that has not been possible. Something must be done now, and I therefore welcome the present measure.

In the Daily Telegraph last week Anthony Lejeune said: The weakest point in the moral armour of modern democracy is that citizens can vote money for themselves out of the pockets of other citizens and are encouraged by politicians to do so. The most notorious current example is the unscrupulous use of the rating system by Left-wing local authorities. At last something is being done to limit the damage that they cause.

Sheffield has suffered harshly in recent years at the hands of the city council and the South Yorkshire county council. Domestic rates in Sheffield have risen by 245 per cent. My right hon. Friend the Secretary of State for the Environment said that rates have risen by 132 per cent. in Yorkshire over the past six years. District and county councils have recklessly, deliberately and profligately ignored every request to limit their spending. Commerce and industry must welcome the introduction of rate-capping. They have seen the disastrous effects at first hand, and a survey by Sheffield chamber of commerce shows that 48 per cent. of the firms that cut their work force during the previous two years laid part of the blame on rates.

Sheffield has a tradition of heavy industry, and the rate burden is exceptionally heavy. The result is viciously circular. As businesses close, residents leave to avoid the high rates, and the declining rate base hits those left behind even harder.

It is no good pretending that those are not the effects of high rates. They are, and it would be an irresponsible Government who did nothing about it. Predictably, authorities designated to have their rates limited have produced scare stories of how that will decimate local services, and I referred to education earlier this afternoon. What an admission of poor management. South Yorkshire has been set a limit that requires the council to absorb the cost of inflation in next year's budget. Many a company in south Yorkshire and elsewhere would have been happy with such moderate cutting proposals during the recent recession, and I speak with some personal experience of the matter.

South Yorkshire will still be left to spend large sums of money—£178 million. In south Yorkshire the local authorities have spending targets which I calculate amount to £660 million for 1985–86. That is over £500 per head of population. That is solely local authority spending. It is rubbish to claim that such sums will result in the destruction of services and the neglect of statutory duties. If my right hon. Friends the Secretary of State or the Minister for Local Government disagree with my figures, I hope that they will put the record straight. Last year, south Yorkshire county council spent over £90 million subsidising transport and recouped a bare £20 million in income as the Secretary of State said.

Is it unrealistic to suggest that there is room for improvement there? Spending on transport revenue support in south Yorkshire amounts to more than £45 per head. That is almost double the average for metropolitan counties. The total cost per head for the provision of all services is about £158 while the class average is £20 per head less. Even after rate capping the council will have plenty to spend.

As is widely acknowledged, the rating system is far from perfect and a review of all local authorities, finance is welcome. Today's measures are regrettably necessary. They will make the system a great deal less imperfect.

The Labour-controlled Sheffield city council and South Yorkshire county council have briefed Members of Parliament of all parties about their position. When Socialist councillors have been present at those meetings — the House must bear in mind that I am the only Conservative Member of Parliament at these meetings—they have interpreted the briefings as advocating that public expenditure, in itself, must be good.

As my right hon. Friend the Secretary of State has said, local authorities have spent money on nuclear-free zones and funds to striking miners. How can we be sure that they have gone to the families rather than to the pickets? They have financed CND conferences, and an anti-apartheid headquarters. They have politically appointed staff in town and county halls. These matters also involve Sheffield district council because it is a collecting agency.

My right hon. Friend's statement about an inquiry on abuse must be welcome. The reference to industry and commerce not backing the Government must relate to the rate support grant. I have a copy of a letter sent to my right hon. Friend from the Sheffield chamber of commerce. South Yorkshire and Sheffield have special problems related mainly to regional development. The level of GRE needed to cover a population that is aging because the young are moving out is a problem, but industry and commerce must work closely with county hall and the town hall. It is part of the process of living with local government as they find it. They must eliminate retribution if possible but above all they must attempt to make bad local government for industry and commerce better.

The Sheffield chamber of commerce—I have been a member of the council for some 30 years—does not want a militant confrontation involving county hall, town hall and the Government. That is why I should back it in seeking any negotiations with councillors.

Since the April tragedy at county hall in Barnsley many of the councillors, including the chairman of the police committee, George Moores, have been sponsored or closely connected with mining and the mining communities and objectivity has been lacking during the miners' dispute. They must surely have learnt that violence begets violence. The tragedy of the coal strike illustrates that.

I hope that moderation and common sense will prevail in relations between Government and local government. I appeal to South Yorkshire county councillors and the district councillors to act sensibly and work with the Government rather than to continue to show defiance that they have shown for the past 10 years.

My right hon. Friend referred to the Blunkett letter. I have seen press releases suggesting that as leader of the Sheffield city council he may think differently from what I have hoped. I hope that the permanent officials and the councillors will accept the guidelines laid down by my right hon. Friend. I know that Conservative councillors on the county and district councils in south Yorkshire, including their leaders, County Councillor Irvine Patnick and Sheffield councillor David Heslop gave my right hon. Friends their full backing. They have advised me that, if anything, the measures come too late; they cannot come too soon. My right hon. Friend has the support of Conservatives in the area I represent.

7.9 pm

Mr. Eric S. Heifer (Liverpool, Walton)

When I hear Ministers speak from the Conservative Front Bench it increasingly reminds me of when I first became a city councillor in Liverpool, and was put on the children"s committee. At that time, the council was run by the Conservative party, and the lady who became our chairperson was opposed to central heating in the children's homes on the grounds that it was not good for them. Also, we decided to get some bicycles for the children, and we actually got that through. Then the lady said, "But don't forget that they must be second hand."

That is the penny-pinching, miserable attitude that the Conservatives have towards local government, but at least at that time we had the opportunity of determining how much we spent. We had the opportunity of explaining to the general public at the election what had happened and why they should get rid of Conservatives and put Labour people on the council. The local people took the decision. They had the right to decide. However, with this Government that right is, slowly but surely, stage by stage, being taken away from the people. We have the rate-capping procedures as well as the forthcoming abolition of all the metropolitan authorities, only because they are Labour authorities doing a good job for the people they represent.

The Secretary of State made great play of the extravagant overspending by the Merseyside county authority. He said that one of the dreadful things that it was doing was supporting what was called the "resident author" and giving money for a record against the police. He hinted that a certain amount of money had gone to support the miners. With regard to the police, one person who was constantly opposed to what the police were doing on Merseyside was Sir Kenneth Thompson, the old Conservative leader of the council. I read more letters in the local papers complaining about the authoritarian development of the police written by Sir Kenneth Thompson, than I have ever seen from any Labour man in my life. That was interesting. Even if a few bob is going towards a record, it could not possibly be in the same category as the opposition to what was happening in the police from Sir Kenneth Thompson.

The amount of money that might go into those peripheral things is very small. They are the things that Ministers pick out, use and exaggerate. No doubt there were Tories on the Nottingham city council who, many years ago, opposed a grant for Torvill and Dean, yet because of that grant they become gold medallists in ice skating. Time after time we can give examples of such grants having been tremendously helpful to individuals and the nation, but Conservative Members would never understand that.

I should like to mention some of the problems that have arisen, for example on rate support grant. I have a table showing the changes in rate support grant for the Merseyside council over the past decade. In 1975–76, the Government grant was 66.5 per cent., and the ratepayers' contribution was 33.5 per cent.; in 1980–81 the Government grant was 61 per cent. and the ratepayers' contribution 39 per cent.; in 1984–85, the Government grant was 51.9 per cent. and the ratepayers' contribution 48.1 per cent.; and in 1985–86 the Government grant is 48.7 per cent. and the ratepayers' contribution 51.3 per cent. That is the truth about what is happening. When the Government talk about rates going up, they do not explain that they have gone up because the Government grant—the rate support grant—has gone down. Therefore, the local authorities have been faced with the prospect of cutting their services or giving the people a decent service and having to put the rates up. Then they are called extravagant overspenders. These are the wicked people—

Mr. Peter Bruinvels

Will the hon. Gentleman give way?

Mr. Heifer

I shall not give way. I shall speak for only 10 minutes because many hon. Members want to participate—

Mr. Bruinvels

But the hon. Member for Liverpool, Riverside (Mr. Parry) has gone to sleep.

Mr. Heifer

Even if my hon. Friend has gone to sleep, his contribution to the debate will be much greater than the hon. Gentleman's.

I should like to bring out what is really happening and the effect of the Government's proposals on Merseyside. I understand that the maximum precept that the county can raise is £219 million. The council's estimate for maintaining existing services is £242 million. Therefore, there is a gap of £23 million. The county council believes that the Government have got the figures wrong. I shall not argue at length because these are technical arguments, and hon. Friends who are members of the county council can argue that case better then I can. However, on the basis of the present situation, with the Government's decision and the £23 million gap, it is important to understand what would happen to vital and important services on Merseyside.

First, the county authority would need to reduce the amount available for the police by £5 million. In real terms, because of the financial relationship with the Department of the Environment, that amount would be £10 million. That could mean at least 700 to 800 policemen and women not receiving any payment. In the area crime is rising, drug usage is on the increase. A recent survey that we quoted in the House last week shows that policing in poorer areas is worse than it is in better-off areas, and the poor are getting a raw deal from the police service on Merseyside. The police are overstretched. More foot patrols are needed. It is absolutely absurd that the concil should be faced with that position.

Expenditure on the fire services would have to be reduced by £2.5 million. Expenditure on road maintenance would go down by £4 million. Anyone who goes around Merseyside now knows that the roads have deteriorated terribly over the past few years. They are getting worse because even now the money is not there as it should be. There would be a reduction of £1 million in expenditure on waste disposal.

The Secretary of State spoke at length about the passenger transport subsidy There would be a reduction in that of £8 million.

Mr. Barry Porter (Wirral, South)

So there should be.

Mr. Heffer

The hon. Gentleman, who represents Bebbington in Merseyside, is actually saying that the people of Merseyside should pay much higher fares than at present. He is saying, "Put the burden on the shoulders of those who can least afford it because they are the people who use the public transport." For my part, I believe that it is important that the ordinary people be given the opportunity of using public transport at a reasonable cost.

It is estimated that if the £23 million reduction were achieved it could lead to about 3,000 redundancies among the personnel of Merseyside council, and that is in an area with one of the highest levels of unemployment in Britain.

I do not know whether Conservative Members ever go beyond Watford. One or two may, but those who do not should go to areas such as Merseyside. I can tell the House why we do not have the problem of a Tory Member of Parliament. Unfortunately, Sheffield still does, but Liverpool does not. We have a semi-Tory in the hon. Member for Liverpool, Mossley Hill (Mr. Alton), who is not present at the moment, but we have no Tories because Liverpool has suffered under the Tory party over the years and it is fed up with them.

Mr. Peter Bruinvels

rose—

Mr. Heffer

I shall not give way and I have explained why.

The Secretary of State is right to say that the Merseyside council can increase the precept by 27 per cent. Nobody argues with that. But if it does, I am told by the county authorities that it would lose about £29 million from Government sources. That would mean a cut of £23 million for services over the period. It is in a catch 22 situation.

I hope that all hon. Members, including Conservative Members, who are concerned about local democracy and about stopping the trend towards increasingly centralised government, will come with us into the Lobby tonight and support my right hon. Friends on the Front Bench.

7.21 pm

Mr. John Cartwright (Woolwich)

The alliance Members will be voting against the order tonight, not because we necessarily endorse the spending levels or priorities of the authorities named in the order, but because we are opposed to the principle of rate capping. We argue now, as we argued during the progress of the Rates Bill, that it is inappropriate for Parliament to set the rate or precept of an elected local authority. That is the job of the elected councillors. If Members of Parliament take unto themselves the responsibility for fixing rates, there is no point in continuing to have elected local councillors in our town and county halls.

Nor do I accept that civilisation as we know it will be threatened if some local authorities spend more than the Government believe to be appropriate. Some local authorities have always spent more than the average and some have come to grief with their electors at the subsequent election. The level of rate that is charged by a local authority to its ratepayers is a matter between itself and the local ratepayers. If they do not like it, they will react through the ballot box in the traditional way.

It may well be that some Conservative Members will say that the current system of local government finance is not sufficiently accountable. There is some strength in that argument, but the response should be to make the system more accountable rather than to create some big brother in Westminster and Whitehall to lean over the shoulders of councillors and to second-guess their decisions.

Nor is it true, as was argued during the passage of the Rates Bill, that capping the high-spending authorities will automatically release resources for the traditional low-spending counties and other authorities which have stuck to the Government guidelines. If one doubted that, one has only to consider those cries of pain and bewilderment from representatives of the shire counties during the recent debate on the rate support grant. That underlines the fact that the low spenders in the shires continue to be held to low spending, despite the introduction of rate capping.

The second ground on which we shall oppose the order is that there are doubts about the basis of the precept limits in the order. For example, the original maximum precept allowed for ILEA in December 1984 was 74.19p and £44 million was to be taken from the ILEA reserves. The order raises the maximum precept to 77.25p and only £9 million is to be taken from reserves. The Secretary of State was good enough in his introduction to explain some of the reasons for that alteration, but we still do not have any disclosure of the assumptions surrounding the £9 million to be taken from the ILEA reserves. The same is true in relation to the GLC where £71 million is assumed to be available in its reserves for current spending. Again, there is no supporting evidence for that decision.

It is not good enough for the Secretary of State to tell the House that that sort of issue is between himself as Secretary of State and the councils concerned. The House is being asked to approve the maximum precepts in the order. We are being asked to make a judgment. I cannot understand how we can be expected to make a judgment without the available evidence being given to us of the sort of assumptions which the Secretary of State has made in relation to those reserves. We are being offered a straight take-it-or-leave-it decision. We are being asked to rubber-stamp the figures in the order. That brings the House into disrepute and it bears out the predictions and forecasts that some of us made in Committee on the Rates Bill.

Against that background, it is sad and regrettable that the designated authorities have not strenuously and vigorously argued their needs to the Secretary of State. I am not suggesting that they should have sought formal redetermination. I understand the risks that are involved in that course. But they should have taken the opportunity to argue their case with the Secretary of State and to demonstrate the flaws in the figures which he has put forward. That is a matter of regret because they have let down the people that they represent in not taking that opportunity.

One of the sad things about the whole business is the sense in which both sides — Ministers and local councillors—seem to be more concerned with scoring points off each other and legally wrong-footing each other than about the future of the services which are under discussion. It is a case not just of extracting the maximum political gain but of safeguarding services which are vital to a great many people that we represent.

Mr. David Alton (Liverpool, Mossley Hill)

Does my hon. Friend agree that cities such as Liverpool are being turned into "Confrontation Streets" with the longest-running soap operas and farces in local government? People are being used as pawns in a power game that is being played out over their heads. That means that in the long term ratepayers will be disadvantaged. It is sad that the hon. Member for Liverpool, Walton (Mr. Heffer) is not present to hear that point.

Mr. Cartwright

It would be unwise to involve myself too far in the internal politics of Liverpool. They are obviously dangerous politics and certainly bitter. I shall only say that the threat to refuse to levy a precept on the part of the authorities concerned is a threat to gamble with other people's jobs and services. That is a dangerous thing to do. If the gamble fails, many people will be without a job and will not have the vital services on which they depend. The money at some point or other will simply run out if no precept is levied.

One of the most worrying aspects about the way in which the rate-capping operation is being conducted is the fact that all rate-capped authorities will face the damaging impact of sudden cuts. For example, ILEA is being asked to cut about £66 million off its budget. If that cut were phased over a period, it might be possible so to organise it that damage to top priority services was limited. Instead, cuts will have to be made suddenly, in a hurry, and there will be no opportunity to look across the various spending areas and to try to protect the high priority services. When cuts have to be made in a hurry, they fall on whatever can be cut at speed, irrespective of priority. An education authority is likely to make cuts in books and equipment, not to fill staff vacancies wherever they occur, and to cut discretionary student awards.

Mr. Patrick Jenkin

The hon. Gentleman claims that those are the results of the way in which rate capping is being run. Does he not agree that ILEA has known its expenditure limits since last July? If it had taken a realistic view of the outcome of the ensuing process, it could perfectly well have made its dispositions months before it had to draw up a budget. We are not asking for a substantial cut in its present level of spending. The difficulties described by the hon. Gentleman are to be laid fairly and squarely at the door of the present majority party on ILEA.

Mr. Cartwright

The authorities concerned should certainly have argued their case with the Government. I would certainly take issue with those authorities which, far from trying to take account of reality, have simply planned to jack up their expenditure higher still. That will make the impact even greater, the cuts will have to be even sharper and the brakes will have to be slammed on at the last minute. I believe, however, that suddenly imposed cuts are inefficient, wasteful and harmful to the services.

There is another risk of chaos and of a dangerous impact on the services. It will arise if the precepting authorities accept the maximum precept, and levy a precept on that basis, but are then unable or unwilling to face the necessity for the consequent spending cuts. Some authorities simply will not face that necessity. Others may not be able to do so, because of the political realities of the council chamber. There will then be a risk that spending commitments will not be reduced to meet the resources available. At some point during the year the money will run out and there will be chaos. The Secretary of State has not yet faced that risk. I am interested to hear how he believes that those who are dependent on local authority services can be protected against it.

A question mark now hangs over the edifice of local government finance erected in the past four years—the complex bureaucratic business of grant-related expenditure, targets, penalties, holdback, clawback and, finally, rate capping. As the Audit Commission pointed out, the complex paraphernalia does not save money. Indeed, there is evidence that it wastes money. The Cambridge university report makes it clear that the Government's aim of reducing rates does not have the impact on employment that they have claimed. The complex operations—the bureaucratic spider's web of controls on democratic local authorities—are not delivering the goods. The sooner we get rid of this complex, ramshackle and wasteful system, the better for local government.

7.34 pm

Mr. Barry Porter (Wirral, South)

I am delighted to follow the reasonable gentleman from the Social Democratic party, the hon. Member for Woolwich (Mr. Cartwright). The order shows that, unfortunately, reasonable people do not necessarily exist in all the local authorities. I am sorry that the hon. Member for Liverpool, Walton (Mr. Heffer) has vacated his place after making a gesture by attending part of the debate. I have the advantage of having been here at the beginning, having listened to most of it and having remained awake for most of it, despite occasional temptations to the contrary.

The purpose of the debate depresses me. Such a discussion should be taking place in the town halls of Liverpool, Sheffield, Manchester, London and elsewhere. I have always advocated the existence of autonomous local authorities, rightly and proudly independent of whatever party happens to occupy Westminster. Unfortunately, that desire has not yet come to fruition. When I hear the hon. Member for Walton talking about local democracy, I wonder whether he approves of the mandate system in Liverpool whereby Labour councillors are told to vote in a certain way regardless of the arguments. That is not democracy. If the right hon. Gentleman had stayed to listen to the debate he might have been able to clarify his view on the question whether such a practice is democratic.

Under the present method of local government finance the taxpayer, via central Government, has become the major contributor to the expenditure of local authorities. There is an unarguable case for saying, therefore, that central Government should have a not inconsiderable voice in deciding how much local authorities can spend. In happier days I was the chairman of a local authority committee with considerable spending power. Central Government's voice— as it happens, it was a Labour Government — was exercised by persuasion and suggestion, and in the end common sense prevailed. Ultimately, the local authority accepted the right and indeed the duty of Government to deal with the interests of their overall economic strategy — in which local authority spending plays such a large part—and of the taxpayer. It never entered my mind to question the right and duty of central Government. Over the past few years, the accepted practice has been challenged. That has happened—I hate to say this—not so much for financial as for political reasons. The Act behind the order has become a disagreeable necessity. No Conservative—certainly no Conservative with a local authority background — would have wished that to happen. However, the measures have become clearly necessary and they have my support. No Government of any colour would welcome such a turn of events, but all Governments have a clear duty to ensure that their calculation of a proper total of local authority spending is adhered to.

The authorities with which we are dealing have chosen, first, to ignore their clear constitutional relationship with central Government and, secondly, to spend ratepayers' and taxpayers' money with the gay abandon of the financial alcoholic. None could be worse than the peculiar Socialists who control in their own fairyland the finances of the soon-to-depart, wholly unlamented, Merseyside county council.

The pronouncements of the Merseyside county council are less overtly dramatic than those of the GLC and the London boroughs who continue to astonish the nation. However, they are no less dangerous for that. The principal reason for the high level of spending by the Merseyside county council, which some Opposition Members consider to be a matter for great pride, is the revenue support for bus and rail services. There is an argument for subsidising those activities, but in 1984–85 the council spent £44 per head of population on support for buses and trains, over and above what it paid for free travel for pensioners. Expenditure on those services was 80 per cent. above the average of the metropolitan counties. The council has adopted a policy of taxing the ratepayers, many of whom — including many of my own constituents — are not at all well off, in order to subsidise the users of public transport, who may or may not be well off, and also to provide plenty of jobs for members of the Transport and General Workers Union. In that year, the council also spent £80,000 on propaganda which will, it hopes, prevent its abolition.

Those of us who live on Merseyside have seen the extravagant posters that show the fire service going down a plughole invented by the Government, the police going down a plughole invented by the Government, everything going down a plughole invented by the Government. It is utter nonsense.

Mr. Wareing

There are 50,000 unemployed.

Mr. Porter

That is not the point. I have mentioned the subsidies given to transport and I listened to the figures that the hon. Member for Walton gave. Even he must realise that there can be counter-balancing operations within a legal precept for Merseyside county council which would enable services to be provided at a reasonable cost without local people noticing that there had been any change. I am inspired by the people of Merseyside who treat the publicity campaign of the council with a proper and studied indifference.

Mr. Alton

Does the hon. Gentleman agree that perhaps most disreputable of all is the implication that has been given to pensioners on Merseyside that, as a result of abolition of that council, they will lose their bus passes? Does he agree that that has caused considerable distress and disquiet?

Mr. Porter

I am obliged to the hon. Gentleman for that reminder. That is fairly typical of the publicity being promoted by the hon. Member for Walton and his friends. It is utterly untrue. Such issues will be a matter for the district councils to deal with when they succeed the county council. Whatever the rights and wrongs of the activities of the county council, how can it be right to spend nearly £1 million on such publicity material? The money should be spent on things that are of much more use to the people whom the council purports to represent.

People who live in the Merseyside county council area will welcome the order, as will Wirral district council. We would also welcome a decision from the Government about the methods of finance for local authorities to make those that spend accountable to local opinion and voting power. I heartily support the order and I hope that it will be only an interim step in progress towards a new and highly desirable local democratic system. In the meantime, I am happy to support the Government putting some form of straitjacket around the politically and financially mentally disturbed who, at present, are a burden on my constituents.

7.42 pm

Mr. Bill Michie (Sheffield, Heeley)

I have listened to the whole of the debate and to the exchanges on the statement that preceded it. I am worried that, because of the three-hour limit on the debate, some of my right hon. and hon. Friends will not have an opportunity to put the case for their areas.

I should like to dissociate myself from what the hon. Member for Sheffield, Hallam (Sir J. Osborn) said. He makes his own minority speech and often gets the facts wrong because he is still not aware of what is happening in areas such as Sheffield and south Yorkshire. Unlike me, he has never been on the city council. I have been a member for 15 years and remain one. However, I admit that he has experience of the steel industry, as he was a manager for many years. That company was running down long before the rates issue was thought of.

South Yorkshire county council and Sheffield city council have suffered drastically because of the reduction in grants and because of penalties in the past few years. Such reductions affect everything and even run contrary to many of the projects which the Government have encouraged. Sheffield city council is one of the 23 programme areas and we have six partnership authorities where deprivation is considered to be especially severe. All those authorities get annual allocations of money from the Department of the Environment to fund schemes that have an impact on conditions in their inner areas. The House is probably aware that 75 per cent. of the allocation is met by the Government and the remaining 25 per cent. must be picked up by the local authorities.

The problem is that, because grant has not increased in the past few years, the council is penalised on the 25 per cent. that it must pay. If Sheffield had taken more of the grant from the Government, it would be outside the trap. It is being penalised only because it has used less grant. The same is true of south Yorkshire. It is a pity that the hon. Member for Hallam is not here as he is a member of the chamber of commerce in Sheffield and I should like to quote a letter that it wrote. It said: It is a matter of continuing concern that expenditure both on the Urban Programme itself and on 'time expired' projects are subject to Block Grant penalties. This appears to us inconsistent with the Government's objectives in promoting the Urban Programme, and we shall again be making representation to the Government to try to have this anomaly ended. That is not the comment of a rabid Left-wing organisation, but it recognises the discrepancies.

For the county council, the block grant system, complete with expenditure targets and grant penalties, was introduced in 1981–82. In each year since then, the council's block grant entitlement has been cut. The proportion of the council's spending which is supported by the Government has fallen from 58.8 per cent. in 1980–81—the year when the new system was introduced—to 48.7 per cent. in 1985–86. That represents a reduction of £56 million in the council grant and means an extra 13p on the rate precept for 1985–86. That burden must be carried by the ratepayers, the very people whom the Government claim to be helping.

Opposition Members are proud of and will defend the services provided by local authority work forces. Too much is said about local authorities featherbedding their staff. I have much experience in these matters and believe that the work force does a tremendous job under enormous strain. We defend their right to give their best. We will defend the right of plumbers and joiners to get on with the job instead of having to look over their shoulders to see whether their job will be there at the end of the year. We will defend social workers who should be looking to their clients rather than looking over their shoulders to see whether an old folks' home that they are trying to get somebody in is about to be closed. Teachers should be concentrating on their classes and not worrying about whether expenditure is being cut so much that they must buy their own chalk and their pupils' parents must buy books — one of the recommendations of the hon. Member for Hallam. He said that in five or 10 years' time parents and kids will have to pay for their own books, such is his affection for the bad old days. He got his comeuppance from his supporters in Hallam on that.

I must correct my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) who said that bus fares were subsidised to help poor people. In south Yorkshire, poor and rich people use the bus service and defend the council's policy of subsidising it. They do not regard the council as extravagant but as providing a service that is worth maintaining. It protects the environment and the value of land that can be used for other developments. It is nonsense to suggest that the rich are subsidising the poor. The subsidy is enjoyed and supported by all. It is value for money.

I should like to conclude by quoting not a political party but John Banham, the head of the Audit Commission for local authorities in England and Wales. He said that Sheffield was one of the best-run authorities in the country in terms of providing value for money. He continued: There is no question that there is a great deal that other cities have to learn from this place. He felt so strongly about this point that at a press conference—not behind doors or in any attempt to hide it—he said: … poor distribution of rate support grant meant that industrial northern cities like Sheffield were not getting the contribution from central government that they needed. The argument is not about whether there should be efficiency drives in local government. I just wish that we had one in central government—that would be a turn-up for the book. We are arguing about the rights of duly elected local authorities to run their cities in the way in which their citizens want them to be run. We are arguing that unless they are given that right, and unless a proper assessment is made of their real needs—that has never been forthcoming from the Government — there will always be problems, the ratepayers will suffer and those in need will suffer even more.

7.50 pm

Mr. Guy Barnett (Greenwich)

In opening the debate, the Secretary of State claimed that the order that he was placing before the House was designed to protect the ratepayer. I do not propose to dilate on that for long. It is arguable that that is his main responsibility, particularly when central Government expenditure under this Government is very much open to criticism. Perhaps he should look at his own housekeeping rather than interfere in the housekeeping of local authorities that are also directly elected. If he considers that it is his responsibility to protect the ratepayer, as he clearly does, he has another responsibility that he must take on board and which he never admitted in his speech.

I wish to speak on behalf of the Inner London education authority. In that connection, the Secretary of State never mentioned the responsibility that he must take on board, if he believes that it is his responsibility to protect the ratepayer, to safeguard the education of the children of London. That responsibility he has not admitted in the House.

It is important for the House to recognise, as did my hon. Friend the Member for Copeland (Dr. Cunningham), the severe damage that the Government have done to the relationship between local and central Government. It is interesting to record that at the Conservative party local government conference in 1979 the Prime Minister said: Good Government rests on a partnership between Whitehall and Town Hall. I agree with her. I believe that that is something for which the last Labour Government were attempting to make provision. We worked hard to this end in the Department of the Environment, and I am proud of the relationship that existed between local and central Government. One reason for its success was that in those days the system of multiple regression analysis admitted in the way in which the grant was determined that local government had an authority as well as central Government.

Relationships between local and central Government will always be difficult or in need of careful co-operation, as the Prime Minister remarked in her speech in 1979. It will be difficult, for two reasons. The first is that local and central Government are both directly elected. The second—and this is the important point—is that they both have an authority. Central Government have a general responsibility for the economic policy of the country, but local authorities are responsible for running services.

The only body in inner London that has a responsibility for running education is the Inner London education authority. It is charged by law to do that job and to determine the education needs of London.

My impression in listening to the Secretary of State and to some of the remarks that emanate from the Department of Education and Science is that they do not know or understand the problems with which ILEA has to cope. The grant-related expenditure system that the Government have invented to decide how much local authorities should be allowed to spend does not take account of the factors in inner London which, by any standard, must greatly increase the cost of running education in inner London.

For example, there are no fewer than 147 mother tongues in inner London. That can be described both as a problem for ILEA—and it is a considerable one—and as a great opportunity. If the children in London with their many different backgrounds and languages are educated in their mother tongue and in English, in years to come this might grant to London an enormous advantage. It could be an international city with a considerable proportion of its citizens genuinely billingual. No account is taken of this in the Government's assessment of expenditure.

No account is taken of the fact that London has many old school buildings. Half of London's secondary schools are old buildings which are expensive to heat and to maintain. There are also higher land and building costs of one kind and another. The population density in inner London is another factor that is ignored in the grant-related expenditure assessment. In addition, there are many children in inner London whose parents are on supplementary benefit. Those examples demonstrate the extra costs that are borne by ILEA.

Unless the Government understand the factors that contribute to the relatively high budget that is necessary in inner London, they will be capable of doing serious damage to education in inner London.

There is a good deal of evidence of the cumulative effect of multiple deprivation. Bearing in mind—and this is based on the figures of the Department of the Environment—that seven out of the 10 most deprived local authorities in the country are in inner London, one realises the serious problems faced by ILEA. In some recent research, an examination of the children in schools as opposed to the population of all age groups demonstrated the high measure of deprivation. A single-purpose authority like ILEA is therefore coping with probably greater problems than even it may recognise.

These factors must be taken into account. The Government are going down a dangerous road. If they attempt to impose a rate cap or precept cap on ILEA, they could do immense damage to education in inner London because of their relative measure of ignorance of the extent of the problems with which ILEA has to cope.

Mr. Dobson

Would my hon. Friend agree that it is somewhat ironic, following the publication of the Hargreaves report, which was sponsored by ILEA and commended by the Secretary of State for Education and Science, that the Secretary of State for the Environment should now be making sure that ILEA will not have the resources to implement the report to improve standards in secondary schools in inner London?

Mr. Barnett

I agree with my hon. Friend. I welcome the Secretary of State's reaction to that report. It is one of many examples, including Her Majesty's inspector's report, showing the high regard in which ILEA is held by officials in the Department of Education and Science, although it is charged with extravagance and every possible sin by the Department of the Environment.

For those reasons, I believe that the Government's proposal today is dangerous and irresponsible. I deeply regret the steps being taken and the collapse in relationships between central and local government that has characterised the Government's period of office.

7.59 pm

Mr. Richard Holt (Langbaurgh)

I agree very much with the hon. Member for Greenwich (Mr. Barnett) about the change in relationships between central and local government. When I was first elected a councillor in the London borough of Brent 22 years ago I could make an appointment with the town clerk and see him within two or three days if he was free. Every member of the council, irrespective of political persuasion, sought to carry out his duties with a dignity that no longer exists. In those circumstances, it is inevitable that there has been a breakdown in relationships, and it is very much a political breakdown. The Labour party is pleased that it has succeeded and that the relationships that previously existed have broken down. I speak from more than 20 years' experience in many local authorities, having served on a London borough council for 10 years, led a district authority in the south and later served on a shire authority. I now represent an area in the north-east with Labour-controlled county and district authorities. I can thus see very clearly the differences in attitude and in the way in which local government is conducted.

In the north of England rates are comparatively higher than in the south, with the result that job opportunities are far greater in the home counties than in the north-east. The Opposition have argued that there is no correlation between rates and jobs, but the Teesside Small Business Club—

Mr. Deputy Speaker (Mr. Harold Walker)

Order. I hope that the hon. Gentleman will not tempt the House to go beyond the terms of the order, which relates to the Merseyside and South Yorkshire metropolitan councils, the Greater London council and the Inner London education authority. A large number of hon. Members from those areas wish to speak on matters covered by the order.

Mr. Holt

I am fully aware of that, Mr. Deputy Speaker. My charge against the Government is that the order does not go far enough. The Cleveland business community wants to know why Cleveland has not been rate-capped and included in the order. [HON. MEMBERS: "Wait till next year."] By next year the Conservatives will have taken control of Cleveland. Only this week they put forward a very sensible amendment to the budget ro reduce the rate increase from £2.10 to £1.80. That kind of change—

Mr. Dobson

On a point of order, Mr. Deputy Speaker. Surely the hon. Gentleman is out of order in discussing rates in Cleveland and inviting rate capping for that authority. That is in no way germane to the matters under discussion. Numerous Opposition Members have left the Chamber because they see little prospect of getting into the debate.

Mr. Deputy Speaker

It is ingenious of the hon. Member for Langbaurgh (Mr. Holt) to try to argue that his authority should have been included in the order, but if that argument were accepted we should finish up discussing a very large number of authorities. I hope that hon. Members will confine their comments to matters covered by the order — the Merseyside and South Yorkshire metropolitan councils, the GLC and ILEA.

Mr. Holt

I accept that, as yet, there is nothing in the order about Cleveland, but the general tenor of the debate so far has concerned the relationship of central Government and local government per se. It therefore seems not unreasonable to draw upon practical examples from Cleveland—

Mr. Deputy Speaker

With respect to the hon. Gentleman, those matters were fully discussed when we considered the Rates Bill of 1984. The hon. Gentleman's comments would have been most appropriate then, but I very much doubt whether they fit into the subject of today's debate.

Mr. Holt

With great respect, Mr. Deputy Speaker, the report in The Guardian to which the Opposition have referred was not confined to the four local authorities covered by the order.

Mr. Deputy Speaker

The House is not discussing any newspaper report. It is discussing a statutory instrument — the draft Rate Limitation (Prescribed Maximum) (Precepts) Order 1985. I hope that the hon. Gentleman will address himself to that or resume his seat.

Mr. Holt

With great respect, Mr. Deputy Speaker, Mr. Speaker himself was here when the Opposition raised the subject of the relationship between jobs and rates and the report that appeared in The Guardian. I wish to counter the argument advanced before you, Mr. Deputy Speaker, took the Chair. The business community in Cleveland would have liked rate capping to apply in that area so that the imminent loss of jobs could be avoided. It would be wholly irresponsible of me not to speak on behalf of the Cleveland business community while the order is still before the House in case I manage to persuade my right hon. Friend the Minister for Local Government to consider rate-capping Cleveland. The House will be interested to hear of the situations that have arisen in that Socialist Utopia, but before going off on that I wish to show that the result of this year's rate increases in my county—

Mr. Straw

On a point of order, Mr. Deputy Speaker. I know that you wish the debate to range as widely as possible and you have been generous to my hon. Friends, but it is surely out of order to speak about the rates in Cleveland.

Mr. Deputy Speaker

I do not want the debate to range as widely as possible. I want it to be about the order before the House. I hope that the hon. Member for Langbaurgh will either address himself to the order or resume his seat and allow an hon. Member who intends to follow the rules of procedure to take part in the debate.

Mr. Holt

The Labour party is obviously frightened to hear what I have to say. I will talk about Brent instead. I hope that I shall not be ruled out of order if I talk about a local authority within the London area. May I have your ruling on that, Mr. Deputy Speaker.

Mr. Deputy Speaker

The hon. Gentleman has not yet given me anything on which to rule. I assume that if he discusses Brent in the context of the order his comments will be in order, but I shall have to wait and hear what he has to say.

Mr. Holt

Thank you, Mr. Deputy Speaker. Brent is very much affected by GLC actions. As a result of the change to Conservative control this year, Brent will not have a rate increase on top of the GLC precept—

Mr. Dobson

On a point of order, Mr. Deputy Speaker. The rates levied by the Brent authority, whether Tory, Labour or Bob's your uncle, are not the subject of the order before us today.

Mr. Deputy Speaker

The hon. Member for Holborn and St. Pancras (Mr. Dobson) is right. I hope that the hon. Member for Langbaurgh (Mr. Holt) will address himself to the order or give way and enable another hon. Member to speak.

Mr. Michie

Further to that point of order, Mr. Deputy Speaker. To help the situation, should we not be kind and give the hon. Gentleman two minutes because he has obviously brought the wrong speech?

Mr. Holt

The ratepayers of Brent, whether they are precepted by the local authority or the GLC, will have to pay the rates. The sum that they will have to pay is less because they are now in a Conservative-controlled borough. The order, which rate-caps the GLC, will assist them, and businesses in the Brent area will be infinitely better off than under the previous authority. That change of political control is without any diminution of services although, I admit, there may be no contribution to the London Lesbian Line or the Women's Police Bus Cooperative. I regret that when the Labour and Liberal parties in Brent got together they produced a poster for a dance, which shows two men dancing together. Perhaps that is what the Labour and Liberal parties want to do with each other.

The order is the first step along what I hope will be a long line of sensible measures introduced by the Government, which will follow the example set in this order, which provides for four local authorities to be rate capped, and rightly so. I look forward to the day when I can speak properly about the fact that Cleveland authority should be rate-capped. However, I shall be denied that pleasure because it will go Conservative in May and as a result will not be rate-capped.

8.11 pm

Mr. Robert N. Wareing (Liverpool, West Derby)

The attack now being made on many metropolitan counties, including Merseyside county council, is not based on rational criteria. The Secretary of State's argument that ratepayers on Merseyside need protection is a new one for Secretaries of State for the Environment in this Government. The real reason why ratepayers in Merseyside have suffered during the past few years is because since 1981 the rate support grant to Merseyside county council has been reduced by £74 million. But the council has lost much more than that, because the Government introduced their mystical GRE assessment, which was condemned by the Audit Commission, which the Government appointed. The Government have made targets of a purely hypothetical kind, which have been set by civil servants in Marsham street, whose knowledge of the northern parts of our country, especially of Merseyside, must be extremely slight—about as minute as the Prime Minister's and the Chancellor of the Exchequer's knowledge of modern economics.

The result of those mythical assessments and hypothetical targets has been penalties to the tune of £76 million being imposed on Merseyside county council since 1981. Under successive Secretaries of State for the Environment since 1981 total grant loss has been £150 million — almost the average total annual budget of Merseyside. Incidentally, 1981 was the year when Labour became the majority party on the county council.

The Secretary of State said that Merseyside county council was spending heavily. Following the Toxteth riots in Liverpool in 1981, one of his predecessors, the present Secretary of State for Defence, addressed the Conservative party conference at Blackpool and pointed out that the problems that gave rise to the riots could be dealt with only by increased public expenditure. That is precisely what Merseyside county council has attempted to do. It has injected millions of pounds into the area to create jobs, and to save and generate small business enterprises.

As a Merseyside county councillor I do not apologise for spending more than £40 million in the years since the Labour party came to office to generate 8,000 new jobs in the local economy. I do not apologise for a penny that was spent in the take-up campaign to ensure that more money was injected into the economy by telling people what their social security rights were. I do not apologise for the campaign being conducted for better pay for the low paid. We should campaign for more money to be injected into the economy. The cost-effectiveness of our policies on Merseyside in creating small business enterprises has been far greater than the regional policy of successive Governments.

The precept for Merseyside for the current year is 65p in the pound. The gauleiters in Marsham street are telling the county council that it should impose 82.8p in the pound. As I pointed out, that is a 27 per cent. increase. The Secretary of State has not addressed himself to the fact that if the artificial target of £219 million, which he set, is adhered to by Merseyside county council, there will be a 10 per cent. cut in the budget. That budget covers only current developments, not new ones. It pays for what is, and not for what many people believe should be. The Secretary of State asks for a 10 per cent. cut but a 27 per cent. increase in the rate precept. Where then is the famous Tory argument about the need for value for money?

My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) pointed out that 700 policemen may have to be dismissed to meet that cut. It is ironic that last year the Home Office approved £100 million expenditure by Merseyside police authority and was willing to provide the 50 per cent. grant to maintain and improve policing standards in an area which needs more adequate policing. But the Department of the Environment said, "We approve only £88 million. If you spend £100 million, which the Home Office has approved, and for which it will supply a grant, you will be £12 million overspent." To meet that overspend, it cost the county council an additional £18 million.

The hon. Member for Wirral, South (Mr. Porter), who is no longer present—he has probably returned to finish what he was doing before he strolled into the Chamber — was alarmed at the sums being spent on public transport. He read from the central office brief, which I have — it is not only Labour councillors who allow documents to go astray. The document says that ratepayers are being taxed heavily to subsidise the buses. What the document does not say is that after 1981—the policy was found to be correct in a case before the High Court when the county council was prosecuted by General Universal Stores—for the first time in more than 12 years, there was an increase in passenger usage of the buses on Merseyside. In the constituency of my hon. Friend the Member for Liverpool, Riverside (Mr. Parry) and in parts of my constituency, 75 per cent. of the population do not have the use of a private motor vehicle. Indeed, many are recipients of DHSS benefits.

Mr. Eddie Loyden (Liverpool, Garston)

Does my hon. Friend recall the way in which the large stores in the city reacted commendably when increased trade was brought about the greater mobility of people caused by the metropolitan county council adopting a "fares fair" policy?

Mr. Wareing

I am obliged to my hon. Friend for that intervention. The stores committee, which opposed our transport policy in 1981, is now our firmest ally on this issue, and it wants the cheap fares policy to continue.

Mr. Robert Parry (Liverpool, Riverside)

Recently the stores committee made it clear that if there was a heavy increase in rates in Liverpool, many hundreds of jobs would disappear.

Mr. Wareing

That committee is learning the real reason why rates have increased. The blame lies at the door of the gauleiters in Marsham street, not at the door of the councillors of any party that has been in control in Liverpool. I would like to be a fly on the wall when the Secretary of State meets the Conservative group on Merseyside county council next Friday. I am sure that those councillors realise that, despite political differences—there are some politically sensitive areas in Liverpool— the order will not deal with the real problems of Merseyside. The Secretary of State should consider more disregards.

If the council cuts the fire service budget by 10 per cent., four fire stations on Merseyside will have to close. There is the possibility that 3,000 jobs will be lost in an area of great deprivation. There was a time when the Tory party chided the Labour party for believing that the man in Whitehall knew best. But we have gone full circle. Merseyside has many social needs, a great problem with drug abuse—Merseyside police have only eight officers in their drug abuse squad — a declining port industry, and more than 50,000 people who have been out of work for well over a year. Where do the civil servants in Marsham street put those factors when they are making their calculations? They are completely ignored.

The Government believe in public expenditure cuts, and that is the real exercise here. By 1986–87, local authorities will have a shortfall of £2.3 billion if they are to maintain their existing services. The Secretary of State should talk to his right hon. Friend the Secretary of State for Defence, who was Secretary of State for the Environment at the time of the Toxteth riots, and ask him how he gets money from the Cabinet. When the Trident programme was introduced, we were told that it would cost £4.3 billion, but last week, taking the exchange rate of June last year, we were told that the cost would be about £10 billion. Everyone knows that it will cost at least £12 billion. The Government can find money for Trident, but they cannot find money to deal with the social problems of the area that I represent. But the people of Merseyside will not work with a pistol at their heads. They will defy the Minister, and he will have to negotiate with them, as there will have to be negotiations to solve the problems of other areas.

8.24 pm

Mr. Tony Banks (Newham, North-West)

This rate-capping order is a further step towards centralised and authoritarian Government, and towards the destruction of local government democracy and accountability. Scarcely a week goes by without the House becoming more and more enmeshed in the day-to-day affairs of local government. At present, things are relatively easy for the Government, because they are merely setting up the machinery of control. The real problems will arise when that machinery is operated. In the not-too-distant future, hon. Members on both sides of the House will be so sick of being asked to decide about local government minutiae that there will be a major revolt against the Government.

The Government have clearly abandoned their previous promises to take Whitehall off the back of local government and to replace the domestic rating system. The Government and the Secretary of State stress the economic case for ever-increasing control over local authorities, but their real motivation is a political one, based on party political malice. Rate capping and the abolition of the GLC and the metropolitan county councils arise directly from the intolerant, bigoted and dictatorial attitude of the Prime Minister. To her, all opposition is anathema. To her—she said this in her Carlton house speech—there is no difference between Left-wing Labour councillors and international terrorists. That was an insult to all democratically elected local councillors.

The Prime Minister lives in a world of dangerous self-deception and increasing fanaticism. To her, everything is either right or wrong, and she is always right. To strengthen that self-deception, she surrounds herself with political eunuchs who lack principles, honesty and self-respect.

The Secretary of State talked about high spending in Labour-controlled London boroughs, but he should be honest enough to tell the House and the country that about £3,000 million has been removed from London's rate support grant between 1980–81 and 1985–86. The reduction from 60 per cent. to 48.7 per cent. in central Government support for local government since 1978–79 represents a massive switch from national taxation to local taxation. The Government are also using nationalised industries to charge artificially high prices to extract taxation from ordinary people.

Labour-controlled local authorities have tried to defend themselves against the legalised robbery of the withdrawal of rate support grant. But the Government say that those authorities are spendthrifts, and they talk about extravagance. My hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) hit the nail on the head when he mentioned Trident. Its cost has increased from an estimated £4,500 million in July 1980 to about £11,000 million in January 1985. What would the Secretary of State have said if a local authority had got its capital expenditure programme so wrong that it more than doubled during five years? His hon. Friends would have been jumping up and down blaming incompetent financial management in local government. The incompetent financial management is not there, but in central Government.

The Government say that the local government overspend of about £770 million imperils their economic strategy. That is a bit of a joke, because we do not believe that the Government have any economic strategy. That £770 million represents less than 1 per cent. of total public expenditure. If only the Government could get their central financial programmes accurate to less than 1 per cent. of a margin of error, they would have something on which to applaud themselves. However, they are wildly overspending in terms of their capital and revenue programmes. Then they have the cheek to turn around to Labour-controlled local authorities trying to defend themselves from central cuts and call them extravagant and spendthrift.

Overspend is a matter of opinion rather than an economic tool. The GLC, which has always been described by the Secretary of State as an overspender, found that, because of a sleight of hand in accounting, its target was increased by 63 per cent. from last year to this year. Therefore, at a stroke, a massive amount of so-called overspending was written off by the Government.

The Minister made another point that was echoed by Tory Members, which was that high rates destroy jobs, and Treasury Ministers regularly parrot that. The hacks of Fleet street in Tory rags such as The Sun, the Daily Mail and the Daily Express continue to write about it all the time, but the fact is that it is simply not true. The London Chamber of Commerce, for example, in a report that it produced in June 1983, found that rates ranked last of seven costs identified as important by London firms. It found that rates came after labour costs, payroll taxes, bank charges, other taxes, rents and transport.

As the Secretary of State knows, we have now seen a copy of the report commissioned by the Department of the Environment from the University of Cambridge. It is a most exhaustive report examining the correlation between rates and jobs. It examined every district in England and Wales, and found that there was no connection between rates and jobs.

Mr. Holt

On a point of order, Mr. Deputy Speaker. I realise that this puts you personally in a difficult position. However, earlier, when I was speaking on this point, your predecessor in the Chair, the Chairman of Ways and Means, ruled that I was out of order in seeking to refer to the report that the hon. Member for Newham, North-West (Mr. Banks) is now referring to. If it was out of order for me to do so, it must be out of order for him.

Mr. Deputy Speaker (Sir Paul Dean)

The Chair is indivisible in these matters. It is important that we keep within the rules of order.

Mr. Banks

I could not agree more, Sir Paul.

However, the Government gave as their justification for their rate-capping order and the precept limitation order on ILEA and the GLC the impact of high rates, as they see it, on jobs. This report, commissioned by the Department of the Environment, shows that there is no such correlation. Therefore, the report should be made widely available to hon. Members. I want to hear the Secretary of State try to refute the large report that his Department commissioned, and that destroys one of the major points of the Government's case for rate-capping and this precept order.

The Government's policies are responsible for the gross overspending in the economy and for the, destruction of jobs, and not the rates, town halls or county halls. It is about time that the Secretary of State got honest, and started to admit this fact to the House.

The GLC's expenditure limit is to be £785 million, with a precept limit of 36.52p. Will the Secretary of State provide the House with information on how he calculated that precept limit? As far as we can work out, either he or a bunch of his civil servants plucked it out of the air. They assumed GLC reserves of £71 million. Where did the Secretary of State get that figure? That is not a figure that the GLC can recognise. Speaking as a member of the GLC, I do not think that it has reserves like that. The Secretary of State then says that if we tell him what our reserves are he will tell us what he will do about it. The GLC members have said that, before they are prepared to have talks with the Secretary of State, he should tell us how he arrived at the figure of £71 million for the reserves. What does he define as reserves? The answer to that might give us a clue as to how he arrived at the figure.

I ask the Secretary of State to address himself in particular to the issue of non-uniform rates. The GLC's statutory responsibilities vary in different parts of London. For example, it is responsible for magistrates courts only in the outer London area. Accordingly, the precept varies and in practice there are five separate precepting areas within the Greater London area. The Secretary of State has provided no information on the way that the maximum precept of 36.52p in the pound is to be interpreted within the separate accounts of the council, which it is required by statute to maintain for each of the precepting areas.

In a letter of 14 January, the Department of the Environment expressed the view that it would be lawful to levy a precept in excess of the prescribed maximum in some precepting areas. The Rate Limitation (Non-Uniform Rates and Precepts Limits) Order 1985, laid before the House on 23 January, confirms this position. However, the GLC's provisional legal advice, provided by Roger Henderson, QC, suggests that no precept should exceed the maximum, and that the statutory instrument may be ultra vires. I hope that when he replies, the Minister for Local Government will tell us the position of the GLC and the application of non-uniform rates within the Greater London area.

What will happen if ILEA stays within its existing budget? Will the Secretary of State be taking over ILEA? These are the practicalities of the order. The Government are bogging themselves down in a morass of local government finance, and they will live to regret the day.

8.37 pm

Mr. Simon Hughes (Southwark and Bermondsey)

I declare an interest, which I share with some other hon. Members, in that I pay rates to two of the four named authorities—ILEA and the GLC. As the Secretary of State reminded me earlier, under these orders, I stand to benefit personally. I shall have a third benefit if he goes ahead with rate capping for my borough, and Southwark is also prevented from levying the rate it would wish to. However, that does not change my view that rate capping is unprincipled and that redetermination of rate limits would have been the wrong way forward.

What we are witnessing tonight on these four authorities is the second part of a pincer movement. The first part was the reduction of their rate support grant. Having reduced what they received, the second part is reducing what they can require people to pay to them. The authorities are caught from both ends, and the money is not made up in other ways or by money from other sources. They will be short of money.

The Secretary of State knows that I do not hold any brief for the most substantial part of local government finance coming from the taxpayer. I do not believe that, just because the rate support grant was at 60 per cent., that should always be the level. Local government expenditure should, where it can be, be raised and spent locally.

Encapsulated in this order, however, is a tale of arbitrariness, full of assumptions, and of removing accountability. I criticise the arbitrariness, the assumptions and the removal of accountability.

The Secretary of State has never explained the arbitrariness of the choice of the 18 authorities, four precepting and 14 others, that he has chosen to be rate-capped. He has never explained why only those authorities with an expenditure of 4 per cent. above target, itself arbitrary, and 20 per cent. above GREAs, themselves arbitrary, should be the group chosen. There is an artificial cut-off point. We all know that, if he had altered the criteria slightly, more Tory authorities would have been included and there would have been another grouping based on an equally arbitrary basis.

One of the results of this arbitrariness affects ILEA in particular. Its budgetary year runs for 12 months from September. Although it will be rate-capped for the coming financial year, its funds are committed for the current academic year. Therefore, what is now a 6 per cent. cut becomes in reality a 10 per cent. cut for ILEA in the coming year.

There are also many assumptions that the Government can be shown to have got wrong. One is the Government's understanding of the effect of rates on businesses. In terms of the psychology of the business man, high rates do matter, but the reality is that they are not nearly so severe a penalty or imposition as the Government always claim. Another of the Government's assumptions, about waste and about the advantages of their system of financing, was disproved by the report of the Audit Commission last August. That report was much heralded but brushed under the carpet as soon as it came out with the wrong conclusions.

We need to know what assumptions are made about the reserves when the facts have not been made available. Southwark is proposed to be rate-capped. When we debate that proposal before long, will the Secretary of State assume that a reserve is available in Southwark which can be brought into his calculations? The Secretary of State's announcement in December did not make a specific assumption about this authority. We need to know the figures; otherwise I make the same criticism of the Government as I make of the Labour group on Southwark council: that they do not produce options for the opposition or the public to consider to enable them to judge whether or not there are reserves and whether or not they can get to, or near to, the rate-capping limit. We cannot legislate and make orders simply upon assumptions. Departments and Governments work on facts and those facts ought to be before the House.

It is important to recognise and to proclaim the fact that this order will take away accountability. Under the Rates Act the Government set up a consultation process. The imposition of rate capping is coming before the end of the consultation process, which shows that the consultation process is a sham. Unless the Secretary of State tells the House what the assumptions are, there will be rumours like the one about Haringey repeated earlier today, with certain Members asserting that assumptions of one sort or another have been made while the Secretary of State is saying that that is not the case. The Government have taken the town hall to Whitehall. We are spending much more time debating local government matters because that is what the Government want. Therefore, the Government must make available what they criticise local councils for not making available.

It was a tragedy that when the order was introduced there was no mention of services by the Government. That is what rates are about. The Government seem to ignore arguments about services. That is not to say that the ruling Labour groups in certain councils do not frequently distort them. They do. Liberals believe that it will be impossible, without reducing services, to get down to the proposed limits. If this is the case, I should like to know whether the Minister is prepared to listen to authorities such as mine in Southwark. Southwark should be able to prove to the Secretary of State that it is prepared to make savings, although it cannot reach the Secretary of State's targets.

All the Liberal and alliance groups in rate-capped authorities have said that they want to talk to the Government. We believe that negotiation will be in the interests of our constituents and will provide an opportunity to protect services. Negotiation is better than no talk at all. The Labour party has let down the people in the areas that it represents. If it insists upon spending money upon controversial matters—for instance, upon arts services festivals in London—and does not provide money for home helps and for basic services, it will find that that is not what people are asking for. The people in London, south Yorkshire and Merseyside say that those authorities waste money. If, after cutting out unnecessary expenditure, it can be shown that the money available is insufficient, we can then make a good case to the Government.

The Government have asked us to go down a road that leads ultimately to disaster. Every time the Government impose their will upon local government, local government seeks ways round the law. There will be more abuse. The result of more abuse will be even more Government intervention. The result of more intervention is even more abuse. Local democracy is then demeaned and does not serve the people it is intended to serve. The result is a battle between central Government misusing its position to interfere and Labour authorities often exploiting people simply for political, retaliatory purposes. That is not in the interests of the people of this country. That is not what democracy is about. That is why these orders are bad and unacceptable. We shall vote against them. I hope that the Government will soon be persuaded that to cap rates is to go down a foolish, misguided and, in the end, an economically unjustifiable path, and that they are not serving anybody by going down it.

8.46 pm

Mr. Eddie Loyden (Liverpool, Garston)

Reference has been made by the hon. Member for Southwark and Bermondsey (Mr. Hughes) and by the hon. Member for Liverpool, Mossley Hill (Mr. Alton) to Liverpool. During an inquiry by academics from Liverpool university and elsewhere there was clear evidence that many of the problems facing Liverpool were the result of eight to 10 years of Liberal party control. The hon. Member for Mossley Hill has had the audacity to refer to the confrontation in Liverpool. The hon. Gentleman ought to remember that it was while his party was in office that Liverpool suffered so greatly over housing developments and in many other ways. It was the Labour party in Liverpool that inherited the mess left by the Liberal party, which at the end of the day was acting in concert with the Conservative party.

Figures against the case put forward by the Secretary of State have been mentioned by my hon. Friends the Members for Liverpool, Walton (Mr. Heffer) and for Liverpool, West Derby (Mr. Wareing). I do not intend to repeat what my hon. Friends have said. However, it is very important to look at what I consider to be the kernel of the problem for local authorities and at the reason why we are debating this order.

Like some other hon. Members, I was a city councillor and a member of Merseyside county council. Indeed, I was a member of both of those bodies during the transitional period. I knew a great deal about what was going on then. But in all truthfulness and honesty I must say that I did not welcome with open arms the reorganisation that was brought about by the Tory Government and which created the second-tier authorities. At the time there was a lot of concern about the overlapping and duplication that would occur between the two tiers. Thus. I do not speak as one who was totally committed then to the metropolitan counties.

The local government reorganisation did not do what was needed. It did not assess the changes taking place in terms of community needs and matters involving the environment, housing and so on. Those changes went virtually unheeded by the reorganisation in the early 1970s. However, the metropolitan counties have been innovative. As my hon. Friend the Member for West Derby pointed out, Merseyside county council recognised that the Government's policies were creating mass unemployment, and as it had resources at its disposal, it created organisations that were capable of training people and that created jobs for the unemployed. Since then, the metropolitan counties have been innovative and have not gone on doing the same thing for decade after decade and generation after generation. They have not acted as if they were caught up in impervious rings that they were unable to get out of, but have recognised the need to tackle the changing problems facing them.

Local authorities did very little about minority groups or about the unemployed. Some of the greatest criticism came from the Liberals in Liverpool, when the metropolitan county accepted the need for it to do something about the unemployed on Merseyside. Despite all the Liberals' criticisms and snide remarks about the unemployed centre, that centre now houses many community groups and is cited as a tremendous example of what can be done by local authorities.

It is wrong to argue that local authorities must be rigid in their activities. Many new problems are emerging and local authorities must adjust themselves to them and must consider whether their expenditure meets the needs of the people. Thus, although the reorganisation was far from perfect and did not relate to the changing conditions of the people, I recognise that a new generation of councillors has tackled many problems that were neglected for too long.

The Secretary of State's arbitrary decision means that authorities such as Merseyside will be unable to continue to help to deal with the deprivation that has resulted directly from the Government's policy. Some argue that authorities such as Merseyside are responsible for the confrontation, but it was the Government who threw down the gauntlet to local authorities and who interfered with their democracy. It is the Government who have created confrontation and not the local authorities. The Government constantly interfere directly. A supposedly non-interventionist Government have done more intervening in the rights of local authorities than any Government before them.

In that sense, local authorities will feel the full effect of the decision that is to be taken tonight. Local authority unions and ratepayers recognise more and more the role that the Government are playing in destroying local democracy. They now understand that to defend it they must join those who were elected to represent them to resist the Government's excesses.

8.55pm

Mr. Jack Straw (Blackburn)

I, too, declare an interest in that I am a ratepayer of the GLC, ILEA and of the London borough of Lambeth. Thus, the Secretary of State is about to perform a triple on my rates, having forced them up considerably during the past four years by cutting out most of those authorities' RSG.

The order has been brought to the House with undue and unnecessary haste, and with the House being denied crucial information that is in the Secretary of State's possession about the way in which he has exercised his discretion and judgment. The order should be rejected on those grounds alone.

My hon. Friend the Member for Denton and Reddish (Mr. Bennett), in his capacity as Chairman of the Scrutiny Committee, pointed out to Mr. Speaker this afternoon that his Committee was deeply concerned about the short notice that it had been given to scrutinise this measure. Those observations are all the more powerful since they come from a Committee which contains a majority of Conservative Members but which has discharged its responsibilities to the House in a non-partisan way.

In his defence, the Secretary of State has pleaded that the maximum rate for the precepting authorities has to come into force by 15 February. He is gravely misleading the House. By his own Act, he gave himself powers under section 5 to set an interim maximum where, in any circumstances, no final maxima had been prescribed by the relevant date. In commending that clause, as it then was, to the Committee, the Under-Secretary of State, the hon. Member for Bristol, West (Mr. Waldegrave), said: Clause 5(1) provides that stopgap—an interim maximum which allows an authority to levy a rate while negotiations continue." — [Official Report, Standing Committee G, 28 February 1984; c. 813.] Yes, it is unfortunate that negotiations about rate limits have only recently commenced, but the fault for that lies fairly and squarely with the Secretary of State. It was he who forced into the Act conditions attaching to the redetermination procedure so potentially onerous that no authority could conceivably have used that appeal mechanism, as we warned in Committee last year, and as he well knows.

Then there is the crucial question of information that is central to the order but which the Secretary of State has denied to the House. He made a series of assumptions about, among other things, the reserves available to the authorities. He sought repeatedly to reassure the Committee upstairs and the House last year that all his decisions would be subject to the fullest possible scrutiny by Parliament. How can that scrutiny be exercised without the information upon which his decisions are based being made available to the House?

In no way does it lie in the right hon. Gentleman's mouth to complain that the authorities have not provided him with information. Indeed, the Secretary of State said this afternoon that information flowed into the Department thick and fast, and he added that all the authorities had provided a great many figures. It is outrageous and unacceptable that the House, and not just the authorities, should be denied the central information on which the Government are making orders such as this.

The Secretary of State has sought to justify draconian controls over local government by reference to the Government's economic policy. There is no justification for that, as I spelt out in the rate support grant debate on 16 January. Let us be clear that, stripped bare, these provisions are nothing more than a crude attempt to stitch up Labour authorities which are seeking to defend jobs and services against the ravages of unemployment caused by the Government. The order is an abuse of power.

The Secretary of State claims that the authorities were fairly selected by reference to what he has, in the past, described as the "robust" and "objective" tests of GREA, as he told the Standing Committee on 21 February 1983—[Interruption.] I am glad to see the Minister of State blowing in incredulity at the thought that his right hon. Friend would have used such words. If the Secretary of State believes that these measures are robust and objective, he should talk to the Minister of State, for only three weeks ago that Minister made it crystal clear that he thinks no such thing either about GREA or target. Indeed, he described the system as well nigh incomprehensible, as exceptionally difficult to explain and as byzantine in its complexity. Any system that is incomprehensible and byzantine cannot possibly be robust and objective, for to be that it would have to be fair and be seen to be fair.

In the rate support grant debate, many Conservative Members complained bitterly about the nonsense of GREA. The crucial defect in the Secretary of State's case is that GREA is being used for a purpose for which it was never intended, as my hon. Friend the Member for Copeland (Dr. Cunningham) spelt out.

If GREA were an objective test, one must ask why the City of London has not been rate-capped when its expenditure is three times above GREA compared with any other authority, at 263 per cent. The Minister will answer that, although the City of London's expenditure is 263 per cent. above its GREA, the city does not meet the other test for rate capping, that of target. But target is supposed to relate to an authority's cash growth in expenditure, and the City of London's cash growth in expenditure has also, since 1978–79, been the highest of any authority in the land, at 274 per cent., way above that of the much abused GLC.

Nothing illustrates better the thoroughly arbitrary and disreputable way in which the Secretary of State has fixed and fitted up these tests than to compare the treatment of the GLC with that of the City of London. The City's target has been fiddled so that it escapes rate capping. The GLC's target has been fiddled so that it is heavily penalised and is now rate-capped.

If the Secretary of State does not accept that, perhaps he will explain how, as one of the many costs that he has had to pay to make rate capping work, he has this year, at a stroke, increased the GLC's target by 64 per cent. over last year.

The four rate-capped authorities we discuss today have increased their expenditure by more than the average for all authorities. It is inherent in any system of local democracy that some authorities will spend more than the average and that some will spend less. No freedom is exercisable without diversity. But of the four authorities, only one, the GLC, has increased its expenditure since 1981–82 by more than central Government have increased their expenditure on, for example, defence.

For the GLC, Merseyside and South Yorkshire, a large part of their expenditure increase has been on public transport. That expenditure has proved overwhelmingly popular, as the Government know now that they have taken control of LRT, and, despite the lunancies, illegalities and irrationalities of the Secretary of State for Transport, have had broadly to maintain the Fares Fair policy. This expenditure has also been efficient in economic terms. The Department of Transport's study showed that, for every £1 in subsidy, the local economies benefited by £1.20.

Part of the increase in expenditure by South Yorkshire and Merseyside has been on the police, at the behest of the Home Office. If these provisions go through, Merseyside may have to cut its expenditure on its police force by over £5 million, to a level that could not be achieved without severe emasculation of the police service", as the chief constable of Merseyside, Mr. Kenneth Oxford, said a few weeks ago. The Merseyside fire service would have to be cut by £2.5 million, despite the fact that Merseyside is one of the most risky fire areas. The ability of the fire service to meet its statutory obligations would be critically impaired.

The other significant part of the increase in expenditure by these three authorities is seen in the employment policies. We applaud those policies. All three of the authorities are working in areas of massive economic deprivation and high levels of unemployment. They have been able, not least through constructive partnership with the private sector, to create and secure jobs and to reduce the terrifying levels of unemployment. If these programmes are cut, jobs will go and unemployment will rise. Is that what the Secretary of State wants? I believe that the answer is certainly yes.

I declare a further interest because I am a parent of a child at an ILEA school. From 1971 to 1974 I was the Islington borough representative on that authority. ILEA has higher unit costs than other authorities, but that is the product of providing a higher level of service and providing many services for people who work in London, but whose homes are in the lower rated shire areas, and is the product of the additional costs, which cannot be avoided, of running a service in a capital city.

The Government recognise those factors when they consider financing the Metropolitan police. Even though there are more police officers in London than in comparable areas outside London—we recognise that—the Government must explain why it costs 40 per cent. more to employ a police officer in London and £800 more for the Metropolitan police to buy a police vehicle than it costs outside London. Why does it cost £5,500 to clear up each crime within London, but only £1,500 to clear up each crime in metropolitan areas outside London?

The Government understand these additional costs in relation to the Metropolitan police, but they are blind to the extra costs of the capital city in relation to ILEA. ILEA has a fine record. It is one of only six authorities regarded by HMI as having a proper standard. If ILEA were required to spend as these rate limits suggest, a great many jobs in the service would be at risk and the quality of the education provided for all our children could well suffer.

The Secretary of State made the preposterous claim that he was doing all this to bring down rate levels and to improve expenditure in the non-rate-capped areas. When will the Secretary of State understand that the system he has created is so barmy that, if rate capping works to bring down expenditure in the rate-capped areas, rates will have to increase in the non-rate-capped areas? How many more times do we have to tell the Secretary of State about this? He has spelt this out in parliamentary answers. Does he not read those answers? Does he not understand that if all the authorities did what he told them and all spent at GREA, rates in Berkshire would have to go up by 20 per cent. and rates in Essex would have to go up by 25 per cent?

Mr. Patrick Jenkin

That is silly.

Mr. Straw

Will the right hon. Gentleman tell me why it is silly? The Secretary of State says that he knows that no authority will do this. I assume that means that GREA is a nonsense of an exercise. Is that the point? Of course that is true.

Mr. Jenkin

It is stupid.

Mr. Straw

The right hon. Gentleman says that it is stupid. He gave me the answer. It may be true that his policy will not work overnight and do what he wants it to do so that all authorities can spend at GREA. The right hon. Gentleman told the House that the idea was that the policy should work towards all authorities spending at GREA. In that case, at the very least, rates in Essex would not be forced up by 30 per cent. They would be forced up by 15 per cent. The Secretary of State must understand the simple arithmetic of this system — "overspending" by Labour authorities has protected jobs and services and the ratepayers not only in those Labour areas but in the lower-rated Tory areas. Such is the madness and utter lunacy of the system created by the right hon. Gentleman.

I have two concluding points. The first is about the crucial connection between rates and jobs. When will the Secretary of State and the Minister of State have completed their evaluation of the Cambridge report? It is a final report, and they no doubt knew about its contents before it was submitted to them. [Interruption.] Do they want a copy?

The Minister for Local Government (Mr. Kenneth Baker)

Put it in the Library.

Mr. Straw

I am not allowed to put things in the Library. We have had that problem before. Only Ministers can deposit documents in the Library.

When will the Secretary of State publish the report, which concludes: the analyses provide no evidence that either the level of rates or the increase in rates affects the distribution of employment between local authority areas."? It continues: If the failure to detect a widespread and general impact of rates on the location of jobs reflects the absence of such a link, there are important implications for public policy. In particular, the findings suggest that local authorities that have above average levels of rates, or that levy above average rate increases, are probably not damaging their local economies. It suggests that it is highly probable that additional expenditure out of rates in the higher rated areas is increasing employment.

If the order is carried, it will do nothing for the Government's economic policy; it will severely damage the lives of people in some of our worst-off areas; and it will force up unemployment and replace the democratic will of those communities by centralised dictation. It must be rejected by the House.

9.11 pm

The Minister for Local Government (Mr. Kenneth Baker)

The House will be pleased to know that the debate does not have to go on until 10 o'clock. The arrangement is that I speak for about 10 or 15 minutes.

This is the first occasion that the House has had a chance to debate the first order under the Rates Act 1984. I found myself agreeing with the phrase used by my hon. Friend the Member for Wirral, South (Mr. Porter) when he said that he looked upon the order as a disagreeable necessity. No Government go readily into the business of rate capping.

The hon. Member for Woolwich (Mr. Cartwright) talked about the strained relationship that exists between central and local government and how it has changed over the past four or five years. It has not changed solely because we have been in office. Underlying forces have been at work for a long time. One fundamental change is that we have succeeded in putting the handbrake on local authority expenditure. In the 1960s and 1970s it was growing at about 3 per cent. a year. Since 1979, it has grown at about 1 per cent. per year. I would be the first to recognise that that imposes a great strain upon the relationship between local and central government.

Dr. Cunningham

Even if that were a valid argument in respect of that part of local government expenditure provided by the Exchequer—one can see and concede the arguments for a cash limit on that expenditure at some point — what is the relevance of all that to local government expenditure from its own resources?

Mr. Baker

It arises because successive Governments, not just ours, have been worried by the totality of local government expenditure and the sources from which local government can finance it.

We are bringing in this order today, and we shall be bringing in an order for the lower-tier authorities in about a fortnight, because the overspending of the 18 rate-capped authorities together represents £632 million against target. That is a massive sum of money. Since 1979, those 18 authorities have increased their expenditure from £1.3 billion to £3.1 billion. That is a massive, threefold increase, and infinitely higher than the rate of inflation.

The four authorities covered by the order are overspending against targets some £523 million when we are asking local authorities to exercise restraint, and most of them are doing so. Some 85 per cent. of the local authorities are spending at target or close to it.

I should like to refer to the meeting that took place earlier this week, when a group of rate-capped authorities came to see the Secretary of State and myself. There were not just rate-capped authorities — 26 authorities were there in all, led by Councillor Blunkett. It was a self-appointed caucus. There was nobody in the delegation from those significant authorities controlled by Labour — Birmingham, Newcastle, Coventry or Gateshead—and there were no representatives from the shire counties. One had to ask oneself whom those people represented. They represented just themselves.

The rate-capped authorities were there, plus another nine. If we negotiated with them as a group, we would betray the other 387 authorities that are working broadly or precisely within the system—[Horn. MEMBERS: "Why did the Government have the meeting?"] Because we are reasonable people. Those representatives asked to see us and we said that we would meet them. If we had not met them, the Opposition Front Bench would say, "Why are you so pigheaded, obdurate and obstinate in not seeing them?" Of course my right hon. Friend the Secretary of State or I are willing to see them, but they cannot be expected to enter into negotiations with the Government as representing the broad mass of local authorities.

We made it clear to Councillor Blunkett, the leader of Sheffield, that we would not be blackmailed into providing more finance. That was the point that my hon. Friend the Member for Sheffield, Hallam (Sir J. Osborn) asked me to reconfirm. That meeting on Monday this week was not the first round of a 15-round contest. Uppermost in our minds have been the interests of the domestic and commercial ratepayers who have suffered considerably through a blizzard of increased rate demands over a period of years.

Mr. Heffer

The Minister will agree that the various authorities put forward a series of very important proposals, to which the Secretary of State referred. Why were they just pushed aside without any serious consideration?

Mr. Baker

I shall tell the hon. Gentleman why. Councillor Blunkett was asking us whether we would suspend the operation of the rate support grant system, which is separate from the order that we are discussing. He asked us to suspend the Rates Act and to recalculate the entire rate support grant system. He asked for a cooling-off period.

The 18 rate-capped authorities had from 24 July' last year — the date on which my right hon. Friend announced the expenditure levels for those 18 authorities — roughly until Christmas to discuss with the Government, if they wanted to, whether those expenditure levels were adequate. They chose not to do so. All right. That was their choice, but by not coming to discuss the matter with my right hon. Friend, they denied themselves the opportunity of discussing whether the expenditure level for their areas was appropriate for next year. When the rate limits were announced—

Mr. Barnett

Will the right hon. Gentleman give way?

Mr. Baker

I should like to proceed.

On 11 December my right hon. Friend announced the rate limits. Again, the authorities had an opportunity to come and see us. When the statement was made, we made it clear that they had until 15 January. We extended the date until the end of January. We have followed an open-door policy. We have said that we would be prepared to meet them, and that the meetings would be only on an individual basis. However, when the authorities asked whether we would see a collective delegation, we said yes. In view of what I have said and in view of the time that the authorities have had since 24 July to discuss the matter with the Government, all that I can say is that they have been warming up for that cooling-off period for 30 weeks.

Mr. Simon Hughes

I hope that the Minister will come to the conclusion that the whole point of the meeting was to cover up the divisions in the Labour party between those who believe that they can make some savings and those who believe that they should not do so. Whatever the merits of the authorities meeting the Secretary of State, that was the reason for the meeting, and those people are to blame for its failure.

Mr. Baker

I could not have put it better. Sometimes the alliance is right, as it is on this occasion. The purpose of the exercise was political brinkmanship and to cover up the clear divisions between the individual authorities. Some wanted to settle and some were prepared to move into illegality.

Mr. Michie

I do not want the House to be misled by the claim that no local authorities have communicated. I do not have the information in front of me, but I remember that the chief executive of Sheffield wrote to the Secretary of State about the anomalies of the block grant as opposed to the urban programme and its problems. The Audit Commission also brought to the Government's attention the anomalies in GREA, and so forth. The problems have been presented to the Government and the Minister is well aware of them without being reminded of them every five minutes.

Mr. Baker

The hon. Gentleman is a county councillor in south Yorkshire. We have had one letter from south Yorkshire, virtually declining to give us any information. I believe that we have had a little more information from Sheffield, but I shall have to check. We have told the authorities to provide us with the information which, under the Act, the onus is upon them to provide. Indeed, some of the authorities did. When we met the delegation on Monday we had on the desk in front of us the piles of information that we had received from ILEA and the GLC.

Mr. Barnett

I am grateful to the Minister for giving way. He says that the authorities have had since last July, and in theory he is correct. But does he not understand that it would be inappropriate for the authorities to make an approach to him until they have made their budgets or their estimates as to their expenditure for 1985–86? Is he not also aware — surely he is — that they now have a statutory responsibility to consult in their areas before setting that budget? Therefore, it is important that they know what they are talking about before they make any approach to the Secretary of State.

Mr. Baker

The timing of consultation is specifically provided for in the Rates Act, although I cannot remember in which section. There was no reason why the authorities should not come to talk about expenditure levels way back in the summer and autumn if they had wanted to. They chose not to for political reasons.

The hon. Member for Southwark and Bermondsey (Mr. Hughes) asked me what the effect of rate capping would be upon local communities and their services. I can only say that if authorities had started last year, after the announcement of the expenditure levels, to live within those levels, they would not now be facing some of the problems that they are having to face. He said that he was worried that the authorities had not come in. That means that the decisions that will have to be taken now will be more serious and grave than they would otherwise have been.

Again, it is depressing that, far from trying to live within the expenditure levels that we have set, the 18 rate-capped authorities have subsequently published their own budgets showing an increase of some £424 million over and above the expenditure levels. That is a cumulative act of considerable irresponsibility. Those authorities are building up expectations that no Government could possibly meet. For example, the GLC has just published a budget that increases its revenue expenditure next year by £100 million and its capital expenditure by some £300 million. For an authority that has only 12 months to survive and operate—

Mr. Tony Banks

rose—

Mr. Baker

—that is to dance on the deck of the Titanic.

Mr. Tony Banks

Will the right hon. Gentleman give way?

Mr. Baker

No, I have given way several times.

Several hon. Members, especially hon. Members from the Merseyside area, have said that services will be slashed. The authorities should have addressed the problem a year ago. We are asking authorities only to cut expenditure according to the cost of inflation, by about 4.5 or 5 per cent. The authorities budget up and then say that they have to cut from the higher budget. There are many examples of authorities that have cut their expenditure effectively.

Mr. Wareing

Will the right hon. Gentleman give way?

Mr. Baker

Many authorities have been able to make such cuts. My hon. Friend the Member for Langbaurgh (Mr. Holt) mentioned Brent. That authority, which is under mixed control, though led by the Conservatives at the moment, has cut £20 million without cutting a single member of staff.

Mr. Laurie Pavitt (Brent, South)

Will the right hon. Gentleman give way?

Mr. Baker

With great respect, I have given way many times, and the hon. Gentleman has not spoken in the debate.

I should like to remind the House of the extent to which we are protecting the ratepayers in these proposals. Under the precept limit in the order, the precept for the GLC is 36.5p. The precept in the GLC budget will be 43p—an increase of 18 per cent. The ILEA's precept in the order is 77.25p. The budget that ILEA has issued implies 83p—7 per cent. more.

In Merseyside, the figures are much better—I mean much higher—[Interruption.] The figures are better in the sense that they are even more irrational and show that the council is living in a dream world. The precept in the order is 82.86p. If the ratepayers of Merseyside were not protected by the order, they would have to pay 130.5p—57 per cent. more. The ratepayers of south Yorkshire would have to pay some 43 per cent. more.

The precepting authorities have spent extravagantly. The GLC has probably been the most extravagant. In the past 12 months, the GLC has taken on some 1,490 extra members of staff. It has indulged in a huge advertising campaign costing some £10 million.

The hon. Member for Woolwich fears that authorities that will not levy the precept approved by Parliament will be gambling with people's livelihoods and, in some cases, lives. I agree with him. I hope that the Labour councillors in the authorities under discussion will, during the next month, agree a legal precept. That was the advice that they were given by the hon. Member for Copeland (Dr. Cunningham). I congratulate the hon. Gentleman on his courage in giving that advice. It was the advice given by the leader of the Labour party at the Labour local government conference last weekend. That was the right advice. The right hon. Gentleman and the hon. Gentleman want no hand in condoning the illegality that some of the wilder leaders of the extreme Left in Labour councils advocate. I hope that their wise advice will be followed. Having seen the Labour party dragged down by Mr. Scargill, they want to ensure that it is not clubbed to death by Councillor Hatton, Councillor Livingstone and Councillor Knight. I hope that, now that Parliament is about to approve the precepts, the various councils will act and pass them into law during the next few weeks.

Question put:—

The House divided: Ayes 255, Noes 193.

Division No. 94]	[9.28 pm
AYES
Adley, Robert	Brooke, Hon Peter
Aitken, Jonathan	Brown, M. (Brigg amp; Cl'thpes)
Alexander, Richard	Bruinvels, Peter
Alison, Rt Hon Michael	Bryan, Sir Paul
Amess, David	Buck, Sir Antony
Ancram, Michael	Budgen, Nick
Arnold, Tom	Bulmer, Esmond
Ashby, David	Burt, Alistair
Aspinwall, Jack	Butcher, John
Atkins, Rt Hon Sir H.	Carlisle, John (N Luton)
Atkins, Robert (South Ribble)	Carlisle, Kenneth (Lincoln)
Atkinson, David (B'm'th E)	Cash, William
Baker, Rt Hon K. (Mole Vall'y)	Channon, Rt Hon Paul
Baker, Nicholas (N Dorset)	Chapman, Sydney
Baldry, Tony	Chope, Christopher
Banks, Robert (Harrogate)	Churchill, W. S.
Batiste, Spencer	Clark, Hon A. (Plym'th S'n)
Bellingham, Henry	Clark, Dr Michael (Rochford)
Bendall, Vivian	Clarke, Rt Hon K. (Rushcliffe)
Bevan, David Gilroy	Cockeram, Eric
Biffen, Rt Hon John	Colvin, Michael
Biggs-Davison, Sir John	Coombs, Simon
Blackburn, John	Cope, John
Blaker, Rt Hon Sir Peter	Corrie, John
Body, Richard	Couchman, James
Boscawen, Hon Robert	Critchley, Julian
Bottomley, Peter	Crouch, David
Bottomley, Mrs Virginia	Currie, Mrs Edwina
Bowden, A. (Brighton K'to'n)	Dicks, Terry
Braine, Rt Hon Sir Bernard	Dorrell, Stephen
Brandon-Bravo, Martin	Douglas-Hamilton, Lord J.
Bright, Graham	Dover, Den
Brinton, Tim	Dunn, Robert

Edwards, Rt Hon N. (P'broke)	Lawrence, Ivan
Eggar, Tim	Leigh, Edward (Gainsbor'gh)
Emery, Sir Peter	Lester, Jim
Evennett, David	Lloyd, Ian (Havant)
Eyre, Sir Reginald	Lloyd, Peter, (Fareham)
Fallon, Michael	Luce, Richard
Finsberg, Sir Geoffrey	Lyell, Nicholas
Fookes, Miss Janet	McCurley, Mrs Anna
Forman, Nigel	MacKay, Andrew (Berkshire)
Forsyth, Michael (Stirling)	Major, John
Forth, Eric	Marshall, Michael (Arundel)
Fowler, Rt Hon Norman	Mather, Carol
Franks, Cecil	Miller, Hal (B'grove)
Fraser, Peter (Angus East)	Mills, Sir Peter (West Devon)
Freeman, Roger	Monro, Sir Hector
Fry, Peter	Moynihan, Hon C.
Galley, Roy	Nelson, Anthony
Gardiner, George (Reigate)	Neubert, Michael
Gardner, Sir Edward (Fylde)	Newton, Tony
Garel-Jones, Tristan	Nicholls, Patrick
Glyn, Dr Alan	Normanton, Tom
Goodhart, Sir Philip	Onslow, Cranley
Goodlad, Alastair	Osborn, Sir John
Gow, Ian	Pattie, Geoffrey
Gower, Sir Raymond	Pawsey, James
Grant, Sir Anthony	Percival, Rt Hon Sir Ian
Greenway, Harry	Pollock, Alexander
Griffiths, Peter (Portsm'th N)	Porter, Barry
Grist, Ian	Powley, John
Ground, Patrick	Proctor, K. Harvey
Hamilton, Hon A. (Epsom)	Raison, Rt Hon Timothy
Hamilton, Neil (Tatton)	Rathbone, Tim
Hampson, Dr Keith	Rhodes James, Robert
Hanley, Jeremy	Roberts, Wyn (Conwy)
Hannam, John	Robinson, Mark (N'port W)
Hargreaves, Kenneth	Roe, Mrs Marion
Harris, David	Rossi, Sir Hugh
Harvey, Robert	Rost, Peter
Haselhurst, Alan	Rowe, Andrew
Hawkins, C. (High Peak)	Rumbold, Mrs Angela
Hawkins, Sir Paul (SW N'folk)	Ryder, Richard
Hawksley, Warren	Sackville, Hon Thomas
Hayhoe, Barney	Sainsbury, Hon Timothy
Hayward, Robert	Sayeed, Jonathan
Heathcoat-Amory, David	Scott, Nicholas
Henderson, Barry	Shaw, Giles (Pudsey)
Heseltine, Rt Hon Michael	Shaw, Sir Michael (Scarb')
Hickmet, Richard	Shelton, William (Streatham)
Hill, James	Shepherd, Colin (Hereford)
Hind, Kenneth	Shepherd, Richard (Aldridge)
Hogg, Hon Douglas (Gr'th'm)	Shersby, Michael
Holland, Sir Philip (Gedling)	Silvester, Fred
Holt, Richard	Sims, Roger
Hordern, Peter	Skeet, T. H. H.
Howard, Michael	Smith, Sir Dudley (Warwick)
Howarth, Alan (Stratf'd-on-A)	Smith, Tim (Beaconsfield)
Howarth, Gerald (Cannock)	Speed, Keith
Howe, Rt Hon Sir Geoffrey	Speller, Tony
Howell, Rt Hon D. (G'ldford)	Spence, John
Howell, Ralph (N Norfolk)	Spencer, Derek
Hubbard-Miles, Peter	Spicer, Jim (W Dorset)
Hunt, John (Ravensbourne)	Squire, Robin
Hunter, Andrew	Stanbrook, Ivor
Irving, Charles	Stanley, John
Jackson, Robert	Steen, Anthony
Jenkin, Rt Hon Patrick	Stern, Michael
Jessel, Toby	Stevens, Lewis (Nuneaton)
Johnson Smith, Sir Geoffrey	Stevens, Martin (Fulham)
Jones, Robert (W Herts)	Stewart, Allan (Eastwood)
Joseph, Rt Hon Sir Keith	Stewart, Andrew (Sherwood)
Kershaw, Sir Anthony	Stewart, Ian (N Hertf'dshire)
Key, Robert	Stokes, John
King, Roger (B'ham N'field)	Sumberg, David
King, Rt Hon Tom	Tapsell, Sir Peter
Knight, Gregory (Derby N)	Taylor, John (Solihull)
Knight, Mrs Jill (Edgbaston)	Terlezki, Stefan
Knowles, Michael	Thomas, Rt Hon Peter
Lamont, Norman	Thompson, Donald (Calder V)
Lang, Ian	Thompson, Patrick (N'ich N)
Latham, Michael	Thorne, Neil (Ilford S)

Thornton, Malcolm	Watson, John
Thurnham, Peter	Watts, John
Townend, John (Bridlington)	Wells, Bowen (Hertford)
Townsend, Cyril D. (B'heath)	Wells, Sir John (Maidstone)
Tracey, Richard	Wheeler, John
Trippier, David	Whitney, Raymond
Trotter, Neville	Wilkinson, John
Twinn, Dr Ian	Wolfson, Mark
van Straubenzee, Sir W.	Wood, Timothy
Vaughan, Sir Gerard	Yeo, Tim
Viggers, Peter	Young, Sir George (Acton)
Waddington, David	Younger, Rt Hon George
Walden, George
Walker, Bill (T'side N)	Tellers for the Ayes:
Waller, Gary	Mr. Mark Lennox-Boyd and
Ward, John	Mr. Tony Durant.
Wardle, C. (Bexhill)
NOES
Abse, Leo	Cox, Thomas (Tooting)
Adams, Allen (Paisley N)	Craigen, J. M.
Alton, David	Crowther, Stan
Anderson, Donald	Cunningham, Dr John
Archer, Rt Hon Peter	Davies, Rt Hon Denzil (L'lli)
Ashdown, Paddy	Davies, Ronald (Caerphilly)
Ashley, Rt Hon Jack	Davis, Terry (B'ham, H'ge H'I)
Ashton, Joe	Deakins, Eric
Atkinson, N. (Tottenham)	Dewar, Donald
Bagier, Gordon A. T.	Dixon, Donald
Banks, Tony (Newham NW)	Dobson, Frank
Barnett, Guy	Dormand, Jack
Barron, Kevin	Douglas, Dick
Beith, A. J.	Dubs, Alfred
Bell, Stuart	Duffy, A. E. P.
Benn, Tony	Dunwoody, Hon Mrs G.
Bennett, A. (Dent'n amp; Red'sh)	Eastham, Ken
Bermingham, Gerald	Edwards, Bob (W'h'mpt'n SE)
Bidwell, Sydney	Evans, John (St. Helens N)
Blair, Anthony	Ewing, Harry
Boothroyd, Miss Betty	Fatchett, Derek
Boyes, Roland	Field, Frank (Birkenhead)
Bray, Dr Jeremy	Fields, T. (L'pool Broad Gn)
Brown, Gordon (D'f'mline E)	Fisher, Mark
Brown, Hugh D, (Provan)	Flannery, Martin
Brown, N. (N'c'tle-u-Tyne E)	Foot, Rt Hon Michael
Brown, R. (N'c'tle-u-Tyne N)	Forrester, John
Caborn, Richard	Foster, Derek
Callaghan, Jim (Heyw'd amp; M)	Foulkes, George
Campbell, Ian	Fraser, J. (Norwood)
Campbell-Savours, Dale	Freeson, Rt Hon Reginald
Canavan, Dennis	Freud, Clement
Carlile, Alexander (Montg'y)	Garrett, W. E.
Cartwright, John	George, Bruce
Clark, Dr David (S Shields)	Gilbert, Rt Hon Dr John
Clarke, Thomas	Godman, Dr Norman
Clay, Robert	Golding, John
Clwyd, Mrs Ann	Gould, Bryan
Cohen, Harry	Gourlay, Harry
Coleman, Donald	Hamilton, James (M'well N)
Concannon, Rt Hon J. D.	Hamilton, W. W. (Central Fife)
Cook, Frank (Stockton North)	Hardy, Peter
Corbyn, Jeremy	Harman, Ms Harriet
Cowans, Harry	Harrison, Rt Hon Walter

Hart, Rt Hon Dame Judith	Park, George
Hattersley, Rt Hon Roy	Parry, Robert
Haynes, Frank	Patchett, Terry
Healey, Rt Hon Denis	Pavitt, Laurie
Heffer, Eric S.	Pendry, Tom
Hogg, N. (C'nauld amp; Kilsyth)	Penhaligon, David
Howell, Rt Hon D. (S'heath)	Pike, Peter
Howells, Geraint	Powell, Rt Hon J. E. (S Down)
Hughes, Robert (Aberdeen N)	Prescott, John
Hughes, Roy (Newport East)	Radice, Giles
Hughes, Simon (Southward)	Rees, Rt Hon M. (Leeds S)
Janner, Hon Greville	Richardson, Ms Jo
John, Brynmor	Roberts, Allan (Bootle)
Johnston, Russell	Roberts, Ernest (Hackney N)
Jones, Barry (Alyn amp; Deeside)	Robertson, George
Kaufman, Rt Hon Gerald	Rogers, Allan
Kennedy, Charles	Rooker, J. W.
Kilroy-Silk, Robert	Ross, Stephen (Isle of Wight)
Lambie, David	Rowlands, Ted
Lamond, James	Sedgemore, Brian
Leadbitter, Ted	Sheerman, Barry
Leighton, Ronald	Shore, Rt Hon Peter
Lewis, Ron (Carlisle)	Short, Ms Clare (Ladywood)
Lewis, Terence (Worsley)	Short, Mrs R.(W'hampt'n NE)
Lloyd, Tony (Stretford)	Silkin, Rt Hon J.
Lofthouse, Geoffrey	Skinner, Dennis
Loyden, Edward	Smith, C.(lsl'ton S amp; F'bury)
McCartney, Hugh	Smyth, Rev W. M. (Belfast S)
McCusker, Harold	Snape, Peter
McDonald, Dr Oonagh	Soley, Clive
McGuire, Michael	Spearing, Nigel
McKay, Allen (Penistone)	Steel, Rt Hon David
McKelvey, William	Stott, Roger
Mackenzie, Rt Hon Gregor	Strang, Gavin
Maclennan, Robert	Straw, Jack
McNamara, Kevin	Taylor, Rt Hon John David
McTaggart, Robert	Thomas, Dafydd (Merioneth)
Madden, Max	Thompson, J. (Wansbeck)
Marek, Dr John	Thorne, Stan (Preston)
Marshall, David (Shettleston)	Tinn, James
Maxton, John	Wainwright, R.
Maynard, Miss Joan	Wardell, Gareth (Gower)
Meacher, Michael	Wareing, Robert
Meadowcroft, Michael	Weetch, Ken
Michie, William	White, James
Mikardo, Ian	Williams, Rt Hon A.
Millan, Rt Hon Bruce	Winnick, David
Miller, Dr M. S. (E Kilbride)	Woodall, Alec
Morris, Rt Hon A. (W'shawe)	Wrigglesworth, Ian
Morris, Rt Hon J. (Aberavon)	Young, David (Bolton SE)
Nellist, David
Oakes, Rt Hon Gordon	Tellers for the Noes:
O'Brien, William	Mr. Sean Hughes and
O'Neill, Martin	Mr. Lawrence Cunliffe.
Orme, Rt Hon Stanley

Question accordingly agreed to.

Resolved, That the draft Rate Limitation (Prescribed Maximum) (Precepts) Order 1985, which was laid before this House on 30th January, be approved.