Commons Sitting of 25 February 1985

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  TRANSPORT

    London Regional Transport
    Mr. Cohenasked the Secretary of State for Transport what arrangements exist for formal budget consultations between the London boroughs and London Regional Transport.
    The Minister of State, Department of Transport (Mrs. Lynda Chalker): None, Sir. As with other nationalised industries, London Regional Transport's budget and external financing limit are matters for determination, in the course of the annual investment and financing review, between the Government and the industry.
    Mr. Cohen: Has not the initial operation of LRT shown that there has been no consultation with the London boroughs before major decisions have been taken about fares, services and the level of rate, or, indeed, about the Secretary of State's level of subsidy to London's transport? Has not the Minister set up LRT as a completely undemocratic quango, immune from influence from the public or London's local authorities? Is it not a case for the ratepayers of taxation without representation?
    Mrs. Chalker: The hon. Gentleman served on the Committee stage of the London Regional Transport Bill
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    and he knows only too well that it is up to the Government to make the decisions for a nationalised industry and for debate to take place, as it did on the levy order, in the House. It was because the GLC deliberately used up to £200 million of the balances in the financial year 1984–85 in order to keep its precept down in 1984–85 that it has left the Government to take the rap for the LRT levy in 1985–86. The £200 million that it used up equates almost exactly with the £212 million which is the ratepayers' levy for 1985–86.
    Mr. Tracey: Far from LRT being unrepresentative and undemocratic, does that not apply to the GLC, which is still precepting the same amount from the boroughs this year as last year although it now no longer has responsibility for London's transport?
    Mrs. Chalker: My hon Friend is right. The GLC has nobody but itself to blame for its budgeting. It is responsible for the debts that it has built up and for using ratepayers' money in a way that local government never intended to use ratepayers' money. It should be made clear that by manipulating the finances of the ratepayers it is doing a disservice to Londoners everywhere.
    Mr. Spearing: The Minister referred to London Regional Transport as a nationalised industry. Is there any other example of a nationalised industry which, through its appropriate Minister, levies local government on a rate precept?
    Mrs. Chalker: None of the other nationalised industries were set up in the way that LRT has been set up. Because of that, the London Regional Transport Act required LRT to make available comprehensive information, to consult upon and publish a three-year statement of strategy, to publish an annual business plan, an annual report and accounts, and, indeed, to inform local authorities and the London regional passengers committee each year on what it is doing. That consultation goes far further than of any other nationalised industry.
    Mr. Adley: Nevertheless, is my hon. Friend aware that the liberalisation of coach services in London has caused LRT a problem on the timekeeping of its buses in central London? If she cannot and will not consult the GLC, for

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    reasons that we all understand, will any machinery be set up whereby LRT's transport problems can be discussed with the Government?
    Mrs. Chalker: It will interest my hon. Friend to know that the GLC has been present at the meetings that I have held with the London Boroughs Association about the way in which coach parking in London can interfere with the passage of buses through London, and we shall continue to discuss that matter together.

    Transport Policy Functions
    Mr. Andrew F. Bennettasked the Secretary of State for Transport what studies he has conducted since June 1983 into the optimum allocation of transport policy functions between the different tiers of local government in England.
    Mrs. Chalker: In the months leading up to the publication of "Streamlining the Cities", and during the subsequent period of consultation, considerable time was given to the allocation of transport functions in the metropolitan counties.
    Mr. Bennett: Which professional or academic bodies came out in favour of those proposals? How far can those proposals guarantee to my constituents in Stockport and Tameside that buses will run more frequently, and on time, and that fares will be cheaper?
    Mrs. Chalker: Where districts are talking to the regional offices of my Department, it is possible to make progress on detailed matters such as the running of buses. The districts that refuse to talk to the Government, as so many are doing, do nothing but harm to the passengers in their areas. The Association of County Surveyors has asked for more information. Seeing that the Bill was going through, it has made helpful suggestions on ways in which matters may be arranged for the highway authorities to take over their responsibilities on abolition of the metropolitan county councils.
    Mr. Marlow: In transport, as elsewhere in local government, should not local authorities be restricted increasingly to the control and oversight of policy rather than the provision of services, particularly as it is patently obvious that in many areas of local activity the local authority is unable to provide a fair balance between the demands of the public sector unions and the needs of the public.
    Mrs. Chalker: I have much sympathy with what my hon. Friend said. As he knows, the subsidy for public transport rose from £10 million in 1972 to £520 million in 1982. We are not against subsidy, but we favour it only where it is a sensible use of money. Local authorities have muddled up the running of a transport service with their use of ratepayers' money.

    National Bus Company
    Mr. Gregoryasked the Secretary of State for Transport when he expects to receive proposals from the National Bus Company for the restructuring of that company.
    The Secretary of State for Transport (Mr. Nicholas Ridley): I expect to begin discussions with the NBC about restructuring and associated matters soon.
    Mr. Gregory: Will my right hon. Friend favour proposals that will encourage share owning by employees, so that as many as possible may participate in the fruits of deregulation and in their own companies, bearing in mind that if we split up the NBC there could be 50 or 60 companies?
    Mr. Ridley: I agree with my hon. Friend that it would be most desirable for employees of the subsidiaries of the NBC to be able to buy their companies through an employee buy-out or to participate in share schemes if they do not wish to take part in a buyout. The Bill includes a provision to that effect.
    We shall be asking the NBC to provide options, which will include a large number of subsidiary companies, though a final decision will not be taken until we see what options are put forward.
    Mr. Stephen Ross: My question has already been put, but I will ask the Secretary of State—
    Mr. Speaker: Order. If the hon. Gentleman would rather not ask a question, I shall call someone else.
    Mr. Ross: As I am on my feet, may I ask the Secretary of State to give an assurance that priority will be given to management buy-outs if the privatisation scheme has to go through? I do not believe that it will go through, because I do not think that there will be as many buyers for the companies as the right hon. Gentleman expects.
    Mr. Ridley: I look forward to having the hon. Gentleman in our Lobby on that point, if on no other, when we reach that clause in the Bill. When I was Financial Secretary to the Treasury, I was happy to seek provisions in a Finance Bill to help employees borrow money with tax relief for that very purpose. I hope that those provisions will be helpful in this case.
    Mr. Rowe: Is my right hon. Friend aware that in Maidstone in my constituency we run a successful local authority bus undertaking? When he considers the restructing of the NBC, will he work out why it is proposed that the Maidstone undertaking should have to declare itself a company long before the NBC locally has to do anything of the kind?
    Mr. Ridley: I know the point that my hon. Friend is making, but it is not quite like that. The National Bus Company will have to be organised into separate arm's length subsidiaries at the same time as the municipal operators, such as Maidstone, do exactly the same thing. The question of ownership involves a separate and later stage. Although we seek to privatise the National Bus Company subsidiaries, we are not seeking to privatise the municipal undertakings. Thus, I think that my hon. Friend will agree that there is nothing unfair about the timing, as the different sorts of company will have to be at arm's length.
    Mrs. Dunwoody: What criteria will the Secretary of State use in judging the viable size of the companies into which he wants the NBC to be broken down? What effect will it have on the municipal bus companies if the National Bus Company can run over certain routes because there is no protection? Why cannot the right hon. Gentleman accept that various stockbroker firms have given evidence to the NBC that there is a viable number of companies which is much larger than the 40 or 50 companies that he seems to demand?
    Mr. Ridley: Competition will depend on what plans are put forward by the NBC in relation to the letter that I wrote it—which the hon. Lady has no doubt read, and knows intimately—in which I said that the first priority must be to consider how the bus industry can be made competitive. I am surprised that the hon. Lady, of all people, should proxy stockbrokers in aid of her argument. It is highly desirable to make competition the first requirement and to ensure that that competion is fair as between the private sector, the NBC subsidiaries, the municipals and the passenger transport executives.

    British Rail (Privatisation)
    Mr. David Marshallasked the Secretary of State for Transport if he has any plans to introduce legislation to privatise any part of the British Rail network.
    The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): We have no present plans to do so.
    Mr. Marshall: As the basis of paying transport supplementary support grant has now been changed, how does the Minister intend to finance uneconomic rural rail services?
    Mr. Mitchell: The normal system for uneconomic rural rail services continues with a PSO grant. If the hon. Gentleman is referring to the PTE areas, I must tell him that it is for the PTEs to decide their priorities within their own areas.
    Mr. Maude: Is my hon. Friend aware that many people believe that it is only when British Rail is subjected to the full discipline of the private sector that the deep-seated problems of overmanning will be dealt with?
    Mr. Mitchell: We have set BR very tough requirements in its objectives. It is for it to decide on the most effective way of pursuing them.
    Mr. Flannery: If the Minister should ever think of privatising any section of BR, will he bear in mind that there was a time when the bus and rail services were subject to the "full discipline of the private sector"? They failed the British people to such an extent that it became necessary long before the war to municipalise the buses, and absolutely essential to nationalise the train network, as it just was not functioning properly.
    Mr. Mitchell: I fear that the hon. Gentleman is living in the past. A considerable number of private bus operators are in existence, and have been for many years.
    Mr. Flannery: I was talking about the past, not living in it.
    Mr. Watts: Is my hon. Friend aware of the two sets of proposals to privatise the branch line from Slough to Windsor, and of BR's rather discouraging reply? Will he urge BR, in his most persuasive manner, to look seriously at those proposals to turn a loss-making branch line into a profitable private undertaking?
    Mr. Mitchell: Having set British Rail very tough objectives, including a reduction of about £200 million in the amount of subsidy that it receives from the taxpayer, it must be for it to decide the most effective way of pursuing them. If it feels that it can achieve its objectives
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    more effectively in the way that my hon. Friend has outlined, we shall certainly not discourage it from doing so.
    Mr. Harris: If my hon. Friend will not consider privatising the network, will he at least acknowledge that one section of British Rail, the catering services, is positively crying out for privatisation?
    Mr. Mitchell: British Rail has recently drawn up criteria for competitive tendering for services. I do not doubt that many in the private sector will seek to tender for catering and other services against those criteria.

    Fare Stage Bus Services
    Mr. Adleyasked the Secretary of State for Transport which cities he has taken as models for the style and extent of public service for fare stage bus services he expects to emerge upon enactment of the Transport Bill.
    The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer): Our proposals for the bus industry are based on a wide body of evidence from throughout the economy that the customer gets the best deal in a competitive market. This is certainly so in the city of Hereford.
    Mr. Adley: I presume that there is no major city in the world that my hon. Friend can quote me as an example of where that policy may work. Having voted reluctantly for the Second Reading of the Bill, may I ask my hon. Friend whether he is aware that we need evidence that the Government's proposals can and will work? Otherwise, there is a danger that, if the outcome does not match the intention, some of our cities will become public transport deserts, as Los Angeles has done.
    Mr. Spicer: We make no claims that these are not new and radical policies, but the present policies of protectionism, supported by more and more taxpayers' money, have failed. In 10 years the number of passengers on buses has fallen by 30 per cent., while in real terms the taxpayers' money spent on revenue support has increased thirteenfold. All the evidence from Hereford, from Guildford and from the express services points to the fact that our policies will give the industry and the travelling public much new hope.
    Mr. Cartwright: The evidence from Hereford may give some indication of what deregulation may mean in the rural areas, but how can the hon. Gentleman claim that that provides any evidence about what deregulation may mean in the urban centres, which depend upon integrated bus services?
    Mr. Spicer: Hereford and Guildford are cities, and there have been extensive studies in Guildford showing that there will be considerable savings to the taxpayer if our proposals are introduced there.
    Mrs. Dunwoody: Is the Minister aware that the officers of Hereford city council were extremely worried by the environmental damage and that it was considered that 25 years of progress had been wiped out by that one short, chaotic experiment? The Minister cannot tell us of any major city in the world which operates such chaotic ideas. If it is such a marvellous scheme, why does he not intend to introduce it in London?
    Mr. Spicer: The hon. Lady forgot one element in Hereford—the passengers. All the evidence in Hereford is that they are very satisfied with the experiment there.

    Metropolitan Counties (Rail Services)
    Mr. Wareingasked the Secretary of State for Transport what assessment he has made of the contribution of local rail services to the effectiveness of the transport system in the metropolitan county areas of England.
    Mr. David Mitchell: Such assessments are the responsibility of the passenger transport executive of each metropolitan county.
    Mr. Wareing: I do not think that anyone will be satisfied with that answer. Will the Minister now explain what guarantees he can give to rail commuters in metropolitan areas that their services will continue after 1986? Is he prepared to give such guarantees in amendments to the Transport Bill, which is now under consideration?
    Mr. Mitchell: As for guarantees to rail commuters, the decision about the priorities of locally elected people for services in their local areas is for them to take and not for the Government to dictate.
    Mr. Meadowcroft: Is the Minister aware that in many metropolitan counties, including my own county of West Yorkshire, considerable progress has been made towards the integration of bus and rail services? How on earth can that integration survive once deregulation takes place, as it will undermine the whole principle?
    Mr. Mitchell: If the integrated services are along corridors on which people want to travel, they will be able to compete successfully against other forms of transport. On the other hand, if people are being made to fit a planner's blueprint, there will be trouble for them.
    Mr. Adley: How will the Transport Bill affect the Tyne and Wear metro service?
    Mr. Mitchell: The Tyne and Wear metro service will be able to retain not only its existing service but the feeder services to it. I judge that with that arrangement it will be able to compete very successfully.
    Mr. Snape: Now that the hon. Gentleman has replied to the question from his hon. Friend the Member for Christchurch (Mr. Adley) about the Tyne and Wear metro, will he tell the House the difference between the feeder service to that metro and feeder services to other PTE operated railway services around our major conurbations? Will he further tell us what is the similarity between those conurbations and their transport problems and the cities of Hereford and Guildford?
    Mr. Mitchell: Feeder services—whether they are in PTE areas or anywhere else—will depend for their success on the number of people who want to use them. That is the criterion against which any business success should be judged.

    Local Government Reform
    Mr. Stottasked the Secretary of State for Transport what effect he expects abolition of the metropolitan counties to have on the use of section 20 grants.
    Mr. David Mitchell: Abolition of the metropolitan county councils should not have any effect on support for local rail passenger services under section 20.
    Mr. Stott: I am as satisfied with that answer as my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) was with his. Is the Minister aware that the current Molotov cocktail that the Government have been mixing in respect of the TSG reshaping, the abolition of the metropolitan counties, rate capping and bus deregulation must at least pose some element of uncertainty regarding the continuation of section 20 grants?
    Is the hon. Gentleman further aware that, under the legislation we are discussing in Committee, the PTEs will have to be broken down into smaller Companies Act company units? How can those companies sustain the level of money required to keep those rail services in operation at the present time? If the Bill goes through without substantial amendment, will not many of the section 20 lines currently operating in our large cities have to close?
    Mr. Mitchell: I am very sorry that the hon. Gentleman has misunderstood the Bill being discussed in Committee. When he looks at it in more detail, and when we come to discuss the relevant clauses, he will discover that the broken down companies of the PTEs are not responsible for providing subsidy under section 20. That will remain a matter for the PTA and the whole PTE, not the bus operations.

    Departmental Expenditure
    Mr. Peter Bruinvelsasked the Secretary of State for Transport how much his Department has spent on (a) trunk road and (b) motorway (i) building and (ii) maintenance since June 1979.
    Mrs. Chalker: From June 1979 to 1 February 1985, £1,290 million has been spent on construction and improvement of trunk roads and £1,480 million on motorways. The corresponding figures for maintenance are £370 million and £530 million.
    Mr. Bruinvels: I thank my hon. Friend for her reply. Does she agree that the Government have spent far more on maintenance and construction than have any previous Government? Is that not good for all motorists and lorry drivers?
    Mrs. Chalker: My hon. Friend is right to say that we have been reversing the shortsighted cuts of the previous Labour Administration. Capital spending on roads is now 123 per cent. higher in cash terms and 30 per cent. higher in real terms than in 1978–79. The return on investment will be £1·70 for every pound spent during this and the next three years. There are no cuts in the programme resulting from last year's public spending review. That shows the Government's commitment to the programme, including both building and maintenance.
    Mr. Higgins: While those figures are good, is my hon. Friend aware that they do not include expenditure on a Worthing bypass? Is she aware that the case for a bypass was accepted some time ago, but that the route originally suggested went through the centre of the town? When is Worthing likely to have a proper bypass?
    Mrs. Chalker: My right hon. Friend is only too well aware of the very difficult position that affects his town,

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    which is surrounded by a very pleasant rural area and has a fairly busy and dense route through the centre. He also knows that we are considering the matter most carefully and will come back to him as soon as we possibly can.
    Mr. Yeo: Is my hon. Friend aware that because of the success of Felixstowe and the growth of the East Anglian economy, the A12 in Suffolk is now carrying as many heavy vehicles as the A2 in east Kent, but certainly does not receive the same level of investment?
    Mrs. Chalker: With the building of the Orwell bridge and the bypasses in the area, East Anglia has not suffered from a lack of investment in recent years. There are problems as ports develop faster than might have been predicted. We are looking carefully at the entire road network in East Anglia, and the hon. Gentleman will be aware that that is being done on the basis of the new traffic figures published in December.
    Sir Reginald Eyre: Is the Minister aware of the severe congestion affecting the M6 motorway where it passes through the Birmingham and west midlands conurbation? Is she further aware of the urgent need for an orbital route to relieve this overburdened stretch of motorway, and can she give encouraging news of action in that respect?
    Mrs. Chalker: My hon. Friend shares with me concern about the amount of traffic on the M6 in that area of Birmingham. The road can carry a substantial amount of traffic, but it has become necessary to consult the local councils and others about the possibility of another road. I shall be meeting my right hon. and hon. Friends shortly to discuss the matter in further detail.

    Transport Bill
    Mr. Dixonasked the Secretary of State for Transport what benefits to the consumer he expects from immediate implementation of the Transport Bill.
    Mr. Ridley: Implementation puts the customers first and brings a better standard of service, lower fares on many routes and the prospect of ending a 30-year decline of bus services. The main provisions of the Bill will be implemented during the course of 1986.
    Mr. Dixon: Is not the opposite of what the right hon. Gentleman has said in fact the truth—that not only will it eliminate early morning, evening, weekend and rural services, but will put in jeopardy the Tyne and Wear integrated system and threaten pensioners' concessionary passes?
    Mr. Ridley: The hon. Gentleman is quite wrong. It will do none of the things that he alleges. It will, indeed, improve rural services and allow concessionary fares and other such concessions to continue. If the Tyne and Wear metro is as good as he and many others think—myself included—I do not see what the threat to it can be. The hon. Gentleman may not know that I have asked my officials to consider with the local authority associations whether the GRE formula can take account of the extra revenue support costs of the metro. That is already the case, as he may know, with BR services under section 20. We are prepared to look at the problem, but I do not believe that it would be right to deny customers the freedom to go how and where they like just because a metro is in existence.
    Mr. Sayeed: Is my right hon. Friend aware that in Avon the bus subsidy has increased from £66,000 to over £4½ million in 10 years, representing a real increase of 2,100 per cent., while services have declined? As exhortation has failed in the past, is it not now time for legislation?
    Mr. Ridley: I agree with my hon. Friend. I visited Avon last Friday and discussed the matter with representatives of Avon county council and others in the area. It appears to be breaking on party lines, with the Labour-controlled councils, with their usual reason of resistance to change and new thinking, now being the main opponents of the Bill.
    Mr. Pike: As the Bill states that, when inviting tenders it is not possible to lay down conditions of employment, is it the intention of the Secretary of State that the main benefits to consumers shall be achieved on the backs of the workers in the industry by way of poor working conditions and low pay?
    Mr. Ridley: Not a bit. The local authority associations asked, and we were happy to agree, that there should be greater flexibility in the rules of tendering, and that is allowed for in the Bill. The hon. Gentleman may know that the Midland Red Bus Company in Hereford and Worcester achieved a 25 per cent. increase in productivity without any of the scare stories that he is now peddling.
    Mrs. Kellett-Bowman: Is my right hon. Friend aware that I have been besieged with protests from ratepayers in my area at receiving through their letter boxes—every ratepayer in Lancashire has received one—a copy of this expensive looking glossy leaflet which I hold in my hand, which tries to mislead the public about the situation applying to buses? Will my right hon. Friend accept that many of my rural constituents are looking forward eagerly to the day when we get more frequent and more flexible bus services and when we do not have 72-seater buses running round country areas, each carrying only one or two people?
    Mr. Ridley: I entirely share my hon. Friend's views. If the money that has been spent on publicity by some county councils had been spent on improving rural services, we might have a very much better system of services.
    Mr. Hoyle: In view of the considerable volume of correspondence that the Secretary of State has received from those protesting about the Bill, will he drop it? Is it not true that it will provide a worse deal for the consumer? Many consumers will have no bus services and there is a risk to safety because of the pirates that the right hon. Gentleman will put on the road.
    Mr. Ridley: I never understand why the Labour party is incapable of thinking that anything new can be done. It is unable to contemplate actions that are taken on behalf of customers. Is it dominated totally by interest groups and the unions?
    Mrs. Dunwoody: If the Bill is so marvellous, why has the Women's Institute produced a number of surveys showing that over 40 per cent. of women in rural areas have no access to cars during the day, and in many instances do not have cars available to them at the times that would be most useful to them? As we know from the Hereford experience that many rural areas will not have

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    any services, why does the right hon. Gentleman think that communities are protesting if they can see that the Bill will be of benefit to the consumer?
    Mr. Ridley: It is because so many people in rural areas, especially women, are dependent upon bus services that we seek to improve rural bus services. Perhaps the hon. Lady will take on board the representations of consumers. The National Consumer Protection Council has welcomed the provisions in the Bill. It believes that they will lead to better rural services, as in Hereford.

    Buses
    Mr. Amessasked the Secretary of State for Transport how many representations on the White Paper, "Buses", he has received from taxi drivers and taxi associations; and what were the main points made.
    Mr. Michael Spicer: We have received over 300 representations from individual taxi drivers and their associations. About two-thirds of these took the form of circular letters. Ministers have also met many delegations from the trade. The taxi trade generally accepts the opportunity for new types of business contained in the Bill but is principally concerned that the quantity of taxi vehicle licences may be increased.
    Mr. Amess: Is my hon. Friend aware that many of my constituents who are taxi drivers are concerned that the value of their investment in a licence will be dramatically reduced if there is no provision in the Transport Bill for a transitional period? Has my hon. Friend any words of comfort for them?
    Mr. Spicer: My hon. Friend has taken a close and continuous interest in this matter on behalf of his constituents. We believe that the taxi trade generally accepts that something is wrong with a licensing system where it is necessary to pay large sums to enter the trade. Licence holders already stand to lose the plate value of their licence because district councils may refuse to renew them or because a council may issue more licences.
    Mr. Dobson: Will the Minister recognise that, besides being bothered about its future, the taxi trade is extremely bothered about the prospect of all sorts of crooked outfits, some of them financied by experience gained in Hong Kong, moving into the British market, ripping off the public and providing a very poor standard of service? Their financial probity is, to say the least, in doubt.
    Mr. Spicer: One of the worries is quantity licensing. After many representations from the industry, to which we have listened carefully, we have set out in the Bill that district councils can withold the granting of licences if they are satisfied that to issue more licences would have an adverse effect on the general availability of taxi services.

    St. Pancras-Sheffield Line
    Mr. Flanneryasked the Secretary of State for Transport if he is currently considering any proposal for investment by British Rail on the St. Pancras to Sheffield line.
    Mr. David Mitchell: Inter-city HST services, running at speeds up to 100 mph, were introduced in 1982–83 between Sheffield and St. Pancras. There are no further investment proposals for this line awaiting our approval.
    Mr. Flannery: Does the Minister appreciate that the big cities along that line — Derby, Nottingham, and specially Sheffield—feel that they are being demeaned and demoted and that the line is being run down? As a regular user of the line, may I ask him to accept from me that what he has just said is not the proper answer? Individual trains are faster, but there are far fewer of them and fewer carriages per train, with the result that over the day the service is much worse than it was before. Will the Minister talk to the councils, which have repeatedly met to discuss this because they believe that the line is about to disappear due to lack of investment?
    Mr. Mitchell: The hon. Gentleman claims that the line has been demeaned and demoted. Having introduced 100 mph high-speed trains and improved the journey time from Sheffield to St. Pancras by 20 minutes, and having achieved an improvement of 15 to 20 per cent. in the number of passengers using it, I can only say that many other services would like to be demeaned and demoted in the same way.

  ATTORNEY-GENERAL

    Legal Aid
    Mr. Dubsasked the Attorney-General when he will respond to the 34th annual report of the Lord Chancellor's legal aid advisory committee.
    The Solicitor-General (Sir Patrick Mayhew): The report was published on 28 January. The Lord Chancellor wishes to consider carefully the committee's recommendations before taking any decisions on them.
    Mr. Dubs: Does the Minister agree that it is urgent to act on the recommendation of the advisory committee about the threat to the future of law centres and citizens advice bureaux consequent on the possible abolition of the GLC and the metropolitan councils and on possible uncertainties in urban programme funding? Will he take urgent action to give law centres and CABs security for the future?
    The Solicitor-General: My right hon. Friend the Secretary of State for the Environment has formulated proposals for transitional and supplemental financial support for voluntary bodies, which would include the law centres, as a basis for further consultations with those concerned. It is, of course, right that there should be a viable and sensible basis for funding the law centres, but this must be got right and there are conflicting interests.
    Mr. Sayeed: Will my right hon. and learned Friend consider whether there is not a good case for a contingency legal aid system, as at present recourse to the law seems to be available only to the very poor and the very rich?
    The Solicitor-General: I do not wholly accept the terms in which my hon. Friend has framed his question, but there is certainly room for improvement. He will recall that my right hon. and noble Friend the Lord Chancellor introduced a regulation, which took effect in March last year, to raise the thresholds for legal aid, thus meeting a need. I will, however, pass on my hon. Friend's comments to my right hon. and noble Friend.
    Mr. John Morris: Does the right hon. and learned Gentleman agree there is a great need, not for transitional arrangements, but for certainty of funding for the law

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    centres? Only a year ago, in answer to my hon. Friend the Member for Peckham (Ms. Harman), we were told that the matter was receiving urgent consideration. Given the rundown of urban funding, is there not a dispute between the Lord Chancellor's Department and the Department of the Environment about the future of the law centres? How does the right hon. and learned Gentleman reconcile the Government's support for citizens advice bureaux nationally with the fact that they do not do so locally? With the additional danger of rate capping, will there not be a considerable diminution of advice for hundreds of thousands of people?
    The Solicitor-General: The right hon. and learned Gentleman referred to an answer given "only a year ago", which puts the matter in context. The demands made on legal aid and advice services, including law centres, tend to vary between localities. It is not easy to resolve the conflicting interests, but local circumstances are best identified at local level. The Government therefore see advantage in local diversity in funding arrangements, but this and other matters are kept under review.

    Coal Industry Dispute
    Mr. Adleyasked the Attorney-General if he will update the statistics on cases outstanding in the courts in relation to offences alleged to have been committed in relation to the miners' strike, which he gave to the hon. Member for Christchurch on 4 February, Official Report, column 606.
    The Attorney-General (Sir Michael Havers): During the period from 13 March 1984 to 19 February 1985, 7,785 persons were charged with a total of 10,153 offences alleged to have been committed during the course of the current miners' dispute. Of these, 5,329 defendants have been dealt with and the cases of 2,456 remain to be heard.
    Mr. Adley: I thank my right hon. and learned Friend for that answer. Now that the strike looks as though it is crumbling—or, indeed, has crumbled—and in so far as it is within his power, will he do all that he can to see that a differentiation is made between the tiny minority of miners and their politically motivated leaders who have been involved in much of this violence, and the overwhelming majority of miners who, I am sure, have found it as distasteful as the rest of us? On that point, has he anything to say to the right hon. Member for Barnsley, Central (Mr. Mason) in reply to the point that the right hon. Gentleman has made in the last few weeks?
    The Attorney-General: The figures speak for themselves. A total of 7,500 over nearly 12 months indicates a great deal of restraint from the police.
    Mr. Mason: Will the Attorney-General now update the figures relating to all those miners who have been charged and since been acquitted? Will he, in league with the Home Secretary, now publicly advise the chief constables to call in those miners so that they see their fingerprints and photographic records destroyed, thereby giving them a chance of continuing work with the NCB without embarrassment or difficulty?
    The Attorney-General: I have absolutely no control in any way over chief constables. This is a matter for the Home Secretary, and I shall ensure that the right hon. Gentleman's remarks are drawn to his attention.
    Mr. Mason: What about the numbers acquitted?
    Mr. Hardy: The Attorney-General did not give the figure for the number of cases dismissed. Given that a large percentage of the charges have been dismissed, will he request that a review of outstanding charges be conducted so that the time of the courts is not wasted?
    The Attorney-General: The number acquitted is 1,306 up to the end of last week—much less than 75 per cent.—but I shall bear in mind what has been said.
    Mr. Meadowcroft: Has not the number of charges withdrawn been increasing in recent months, and does not a problem therefore arise in as much as the NCB has been dismissing people in that category? What consultations has the right hon. and learned Gentleman had on that aspect of his figures?
    The Attorney-General: It would not be for me to consult. Practically all those cases would be cases that were not drawn to the attention of the DPP at all.
    Mr. Peter Bruinvels: I welcome the fact that so many miners have been dealt with successfully, and the speed with which this has been done. Will my right hon. and learned Friend in some way arrange for publicity to be given to the large number of offences that have been committed so that it will act as a deterrent to other miners intent on following the same course?
    The Attorney-General: The variety of charges is enormous, as is the variety of those who have been charged. The bulk are miners, but also included are students, lecturers, manual workers and the unemployed.
    Mr. Nicholas Brown: Following—
    Mr. Mason: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Attorney-General's reply, I give notice that I shall raise this matter on the Adjournment at the earliest possible opportunity.
    Mr. Brown: Following the answer that the Attorney-General gave my right hon. and learned Friend the Member for Aberavon (Mr. Morris), when this matter was raised on 4 February—
    Mr. Speaker: Order. I am afraid that the right hon. Member for Barnsley, Central (Mr. Mason) has, by his action, prevented any further questions arising on this matter and, therefore, I cannot allow the hon. Gentleman to continue his question.
    Mr. John Morris: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. Unfortunately, the right hon. Member for Barnsley, Central has gazumped the Opposition Front Bench.

    Legal Aid
    Mr. Tom Coxasked the Attorney-General what information Her Majesty's Government gather about the level of charges made by solictors in the context of monitoring public expenditure on legal aid.
    The Solicitor-General: The average cost of solicitors' bills for legal aid work is monitored on a monthly basis.
    Mr. Cox: Is the Solicitor-General aware that many people find it extremely difficult to obtain legal aid? Is it because of the cost? Is he further aware that in the London area the going rate for legal advice on immigration matters from solicitors is around £75 an hour? Against that

    15
    background, will he inquire into, and publish a report on, the charges that solicitors present to their clients, which are often outrageously high?
    The Solicitor-General: I shall ensure that the Lord Chancellor considers the hon. Gentleman's point. The part of the legal aid scheme for which the Law Society is responsible is monitored. Results of cases, charges and fees paid are fed into the Law Society's computer, and referred to the Lord Chancellor's Department. Statistics derived from that information are already published in the annual legal aid reports. There are other monitoring exercises carried out for the Crown and county courts.

  OVERSEAS DEVELOPMENT

    Ethiopia
    Mr. Chapmanasked the Secretary of State for Foreign and Commonwealth Affairs what is his estimate of total United Kingdom Government aid to Ethiopia since 1982; and how much of that has been since 1 October 1984.
    The Minister for Overseas Development (Mr. Timothy Raison): Our aid to Ethiopia since 1982 amounts to about £52 million. That includes actual and estimated expenditure and recent commitments which, since 1 October 1984, total about £26·6 million. The figures include our share of European Community aid.
    Mr. Chapman: Will my right hon. Friend confirm that the United Kingdom Government have probably given more aid than any other Government to that unfortunate country, and in particular that they started giving aid before the media reported the extent of the famine? Will he assure the House that sufficient food is available for the needs of the people in Ethiopia, at least for the foreseeable future?
    Mr. Raison: It is difficult to draw precise comparisons between different countries, but our record is good. Regarding my hon. Friend's final and important point, Mr. Jansson, the United Nations' co-ordinator, told me on 12 February that shipments are sufficient until the end of May. A further 600,000 tonnes pledged for delivery after that should meet most needs until the end of the year. Clearly, we need to keep in close touch.
    Mr. Alton: Has the Minister seen the telex from the Tigré Relief Society, which suggests that 3·8 million people are at risk in that northern province of Ethiopia and that 1,500 people have died there? Will he assure the House that additional aid will be sent there? Is he aware that 750,000 people have signed the Oxfam petition asking for additional aid to sub-Saharan Africa?
    Mr. Raison: I am aware that many people are rightly worried about sub-Saharan Africa. There is no doubt that the position in Tigré and Eritrea is difficult, largely because of the civil war and the drought. Substantial food aid is coming from the Ethiopian side. The best way to try to help meet the problem is to work through international and voluntary agencies.
    Sir Frederic Bennett: To put into proper perspective the generosity of aid from this and other Western countries, will my right hon. Friend arrange to place in the Library such details as he has available of aid from all sources to Ethiopia, especially those from the Soviet
    16
    Union, within whose empire Ethiopia presently rests, and whose aid, so far as one's own research shows, seems to be limited to arms and ammunitions to allow the present Government there to continue repressing the people?
    Mr. Raison: A later question on the Order Paper will provide some of the facts for which my right hon. Friend asks. It is notoriously difficult to discover the figures for Soviet bloc aid. I have no doubt that in so far as they exist, they show that the record of the Soviet Union is greatly inferior to that of western countries.
    Mr. Barnett: The Minister said that he was anxious to work, as far as possible, with and through international agencies. Can he tell the House why he continues to refuse to co-operate fully in contributing to the special fund for sub-saharan Africa?
    Mr. Raison: That is a little outside the scope of the question. The fact is that we have offered to make available for exactly the purposes of that special fund £15 million a year for five years. I believe that that will prove to be a valuable contribution towards the objectives that the special facilities seek to achieve.

    Sudan
    Mr. Mark Robinsonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his recent visit to Sudan.
    Mr. Raison: My visit enabled me to see the relief programmes being mounted for the Sudanese famine victims and for the very large numbers of refugees who have entered Sudan. Very substantial food supplies are now beginning to build up. I have decided to allocate a further 30,000 tonnes of bilateral food aid now so that this can arrive before the June rains. In addition, I am making a further £1 million available to be divided between Oxfam and Save the Children Fund.
    During my visit I was also able to have discussions with President Nimeiri, as well as visiting development projects being financed from British and European Community aid.
    Mr. Robinson: I am sure that all hon. Members will welcome the speed of my right hon. Friend's response following his visit to the Sudan. The problem in that country is not so much the supply of relief but the means of getting it to the places where it is needed. During his visit, did my right hon. Friend examine that aspect to see whether there was any way in which Britain could help with transport?
    Mr. Raison: I am grateful for what my hon. Friend said about my announcement. It is helpful to note that many lorries are available in the Sudan, but that does not mean that all the transport problems can be solved. Diesel and petrol are in especially short supply and the position must be watched carefully. We are providing help at the port and to the railway system.
    Mr. Tony Lloyd: Will the Minister confirm that what is most important for the Sudan and the entire region is not simply energy aid, important though that is, but a guarantee of long-term development projects, especially for reafforestation, the prevention of soil erosion and the provision of adequate water supplies? Should not such projects be at the forefront of Government thinking?
    Mr. Raison: I confirm that in the Sudan the problem is not just one of short-term famine relief. It is extremely

    17
    important that there should be long-term development. During my visit I examined projects financed by Britain and the EC covering exactly the activities to which the hon. Gentleman referred. Britain has a substantial development programme in the Sudan.

    Sub-Sahara Africa
    Mr. Stuart Hollandasked the Secretary of State for Foreign and Commonwealth Affairs what are his priority objectives for food aid and its distribution in the drought-affected countries of sub-Saharan Africa.
    Mr. Raison: The relief of famine victims most in need in Africa is our priority. We shall provide bilaterally at least 110,000 tonnes of grain in 1985, of which 25,000 tonnes have already reached Ethiopia and Sudan. We meet the costs of internal distribution, and have financed improvements in handling capacities at the ports and inland.
    Mr. Holland: While those sums sound impressive, and while we are glad that the Minister has been able to visit Sudan, he must realise that his earlier reply about Tigré is inadequate. It is not true to say that substantial food aid from Ethiopia is reaching Tigré. It is receiving less than 2,000 tonnes a month, when it needs 20,000 tonnes a month. The right hon. Gentleman told the House that Mr. Jansson of the United Nations is most concerned that food aid should go to those areas, but Mr. Jansson has stressed that food aid is not being adequately distributed. Further, in terms of the EC aid to which the Minister referred, when will he see the Commissioners and ensure that the aid is distributed rather than simply awaiting distribution?
    Mr. Raison: The hon. Gentleman has got it wrong. He has ignored the fact that substantial quantities of food go into Eritrea and Tigré from the Ethiopian side. I fully accept that not all needs in the rebel-held areas are met from that source, which is why we stress the importance of other sources being created. I hope soon to visit the newly appointed Commissioner at the EC who is responsible for development activities.
    Mr. John Townend: Does my right hon. Friend agree that the United Nations Organisation should have the same priorities as this country? Is it not a scandal that it is spending millions of pounds financing a conference centre when the money could be better spent on food aid or agricultural development?
    Mr. Raison: I agree that that venture is entirely uncalled for now, and we have opposed it. However, I do not argue that all the activities of those who work for the United Nations in this area are abortive. I have seen good work carried out by several agencies and by Mr. Jansson, the co-ordinator in Addis Ababa.
    Mr. Deakinsasked the Secretary of State for Foreign and Commonwealth Affairs what provision is made in the aid budget for contingencies such as the famine in sub-Saharan Africa.
    Mr. Raison: The bulk of the aid programme is focused on longer-term development, but an element is held back at the beginning of each financial year — some £45 million in 1984–85—to enable us to respond to urgent new requirements, including emergency relief, arising within the year.
    Mr. Deakins: Do we not need an increase in the overall aid budget in total? Will the Minister press this on his skinflint colleagues in the Treasury so that unexpected needs, which are likely to loom larger and larger as the years go by—not merely in Africa but in other parts of the world—can be met without cutting back on other essential parts of our development budget?
    Mr. Raison: The Government are committed to the control of public expenditure, but within our aid programme we set aside substantial sums of money to meet famines and disasters such as those that we have been seeing, and we shall continue to do so.
    Dr. Mawhinney: Is my right hon. Friend aware that many of my constituents are most appreciative of the generosity of the Government and of the leadership that he has shown in this matter, but that they would also want him to be aware of their hope that, in the face of this unprecedented crisis, an arbitrary restriction on the aid budget will not be allowed to stand in the way of humanitarian relief?
    Mr. Raison: I am grateful to my hon. Friend for what he has said about our contribution. As to our aid budget and the humanitarian considerations, it is obviously essential, as I have already stressed, to make sure that within that budget there is proper provision for emergencies. That is what we have done, and that is what we intend to continue doing.
    Mr. Hardy: Will the Minister confirm that he and his Department expect that the horrific experience of Ethiopia and the Sudan in recent months is likely to be repeated, perhaps more intensely, in the years ahead? Will he guarantee that there will be even more attention to prevention rather than to the necessary relief?
    Mr. Raison: It is always important to stress the vital importance of long-term prevention and the development programme. I have given figures for relief. Our total aid expenditure in Africa last year was about £225 million. In other words, we have a substantial development programme and a great deal of that is directed towards building up the agriculture of that continent.

Interception of Communications
3.31 pm
Mr. Gerald Kaufman: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the allegations published yesterday in The Observer newspaper about illegal and political acts by MI5 relating to telephone tapping and other activities".
The matter is specific, in that a named person has made precise and detailed allegations. It is important, because at stake is the fundamental right of citizens to conduct legitimate activities free of oppressive interference by the state. It should have urgent consideration, because such charges have been current for several days without any specific response or denial by the Home Secretary.
The charges are made by Miss Cathy Massiter, who was employed in MI5 for 14 years, and who has been ready to risk prosecution under the Official Secrets Act as a result of speaking out openly. Miss Massiter alleges that MI5 has falsely classified hundreds of members of the Campaign for Nuclear Disarmament as subversives so as to justify opening files on them. She says that MI5 deliberately chose as a subject for telephone tapping a leading member of CND who was a Communist so as to justify this interception on the ground that a Communist could reasonably be classified as a subversive.
Miss Massiter further alleges that the Home Secretary in August 1983 signed a warrant authorising that this man's telephone be tapped, even though the Home Secretary himself has insisted that the test of subversion is a strict one, involving an intention to undermine or overthrow parliamentary democracy. This authorisation enabled MI5 to listen in to conversations with other leading members of CND.
Miss Massiter further alleges that secret information obtained by covert and clandestine methods was passed to the DS19 unit at the Ministry of Defence and a briefing paper was specifically prepared by MI5 for the Secretary of State for Defence and that this material was then used for party political purposes by the Secretary of State for Defence, even though the Maxwell Fyfe directive says:
"the Security Service should be kept absolutely free from any political bias or influence".
In the past few days, the Home Secretary has repeated that point.
Miss Massiter again says that the housing organisation, Shelter, has been spied upon on the ground that it might be a target of Communist penetration.
These allegations are of the utmost importance for freedom in a democratic society. If they are true, it means that the security services are being wrongly used by the Government in pursuit of party political objectives.
Some of these matters could have been put before the nation for consideration had it not been for the craven and sycophantic attitude of the Independent Broadcasting Authority in banning the programme, "MI5's Official Secrets". But it is particularly urgent that we in the House debate these allegations because, for all we know, these oppressive and instrusive activities are still going on now, possibly with new targets being spied upon and listened to.
Mr. Tony Marlow: As they were under the right hon. Gentleman's Government.
Mr. Kaufman: All who care about liberty and democracy — that clearly excludes a considerable number of Conservative Members of Parliament—and all who are opposed to the Big Brother or Big Sister state want these allegations to be cleared up, one way or the other. The House is the proper place for the Government to be questioned and to be held to account, so a debate is needed. Therefore, I beg to ask leave to move the Adjournment of the House.
Mr. Speaker: The right hon. Member for Manchester, Gorton (Mr. Kaufman) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter which should have urgent consideration, namely,
"the allegations published yesterday in The Observer newspaper about illegal and political acts by MI5 relating to telephone tapping and other activities."
The right hon. Gentleman knows, as does the whole House, that the only decision that I have to make is whether to give this matter precedence over the business already set down for today or tomorrow. I regret that I do not consider the matter which he has raised is appropriate for discussion under Standing Order No. 10, and I cannot therefore submit his application to the House.
Mr. David Winnick: On a point of order, Mr. Speaker. Obviously I am in no way challenging your decision—[HON. MEMBERS: "Sit down, then."—That is your decision, and we must respect it.
If it was decided that there should be a prosecution under the Official Secrets Act, am I right in the view that it would be impossible for the matter to be raised on the Floor of the House because it would be sub judice?
We are told that the matter is being considered by the Director of Public Prosecutions. There is widespread concern in the country, as my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) has properly said, and there is a great deal of discussion going on about it. However, at the end of the day we are unable to raise the matter with the relevant Minister.
During business questions last Thursday, you will recall that I attempted to raise the matter, as did one or two of my hon. Friends, and all that the Leader of the House said, understandably, was that he would refer it to the appropriate Minister. Today, Monday, there is to be no statement. There is no other way of raising the matter. If it was decided that the employee who exposed the malpractices in MI5 should be prosecuted, which in my view would be outrageous, we should not be able to raise the matter. It would be sub judice.
As I see it, a very important part of our job in the House in safeguarding democratic liberties is being eroded because we are unable to raise the issue by means of an emergency debate, a statement or in other ways that I cannot mention here. Therefore, we are denied the opportunity that we on the Opposition Benches want—I cannot speak for Government supporters—which is to play our role in defending people's democratic rights.
Mr. Speaker: I cannot rule on what is obviously a hypothetical case. It is an individual case, and I have no knowledge of whether there is to be any prosecution. However, the hon. Gentleman is correct in saying that if cases are sub judice they may not be raised here.
As for the general proposition, the House knows that there is shortly to be a debate on this subject.
Mr. Mark Carlisle: On a point of order, Mr. Speaker. Further to the application made by the right hon. Member for Manchester, Gorton (Mr. Kaufman), since the vast majority of the allegations made in the film to which the right hon. Gentleman referred relate to the telephone tapping of trade union leaders at the time when a Labour Government were in office, would it not be more appropriate for such a debate to take place in Opposition time?
Mr. Speaker: That is not a matter for me.
Mr. Kaufman: Further to that point of order, Mr. Speaker. The concern of the Opposition is that all allegations should be considered. The point is that Ministers of the Crown who are answerable to the House of Commons refuse even to come to the House to make a statement. When will the Leader of the House fulfil his undertaking that the House will be given a statement on these matters by the Home Secretary, so that all allegations, whomever they are against, can be considered by Parliament?
Mr. Speaker: That is not a matter for the Chair.

Rate Limitation (Prescribed Maximum)
Mr. Speaker: We come now to the debate on the rate limitation order.
Mr. Simon Hughes: On a point of order, Mr. Speaker. My point of order relates to the ability of this House to debate the order this afternoon. The week before last, the House debated a similar order in relation to four precepting authorities. Last week two of those precepting authorities, the Greater London council and the Inner London education authority, commenced an action in the High Court challenging the reasonableness of the assumptions made by the Secretary of State in assessing the rate limit under the order. The action was heard last week by Mr. Justice Forbes on a preliminary point. He required the Secretary of State to produce certain information to the two authorities in question by five o'clock last Friday afternoon. He also announced that there would be a four-day hearing of the issue of reasonableness, commencing this Wednesday.
The issue that is raised in that court proceeding is the same issue as underlies today's order — whether the order as announced by the Secretary of State—this, of course, is the second occasion, because the first order was withdrawn and replaced last week—can be debated by this House when the assumptions behind the order, so far kept secret by the Secretary of State, may be found by the court to be unreasonable. You will appreciate, Mr. Speaker, that the test of reasonableness will no doubt be similar in the case of the first order as in the case of the second, the Secretary of State having announced that the same criteria have been used by him in his two assessments.
The reason that I seek your ruling, Mr. Speaker, as to whether the debate can go ahead this afternoon, has both a legal implication—that the matter is sub judice—and a practical implication. The sub judice implication is the same reason, I would assert, as prevented the Secretary of State's right hon. Friend the Secretary of State for Transport from dealing some weeks ago with matters of this sort in the context of London Regional Transport.
The matter of practical importance is that, although under section 5 of the Rates Act 1984 a rate must, in the first instance, be set by 1 March, if in the case of any of the designated authorities no maximum has been prescribed, the Secretary of State can prescribe an interim rate pending the matter being resolved. If the debate goes ahead today there is a possibility—some hon. Members believe a probability—that the order may, in part or in whole, be held to be invalid, that the House will therefore have to go through this exercise again and that the process adopted by the precepting authorities and the 13 authorities affected by this order—in particular the authorities in London, of which there are nine—will be held to be invalid if they seek to set a rate on 7 March, the date that they have announced.
I ask for your ruling, Mr. Speaker, as to whether the House can go ahead with a debate on these matters in the light of the overriding concern that is being dealt with by the courts, which relates to what is at the core of the order.
Mr. Speaker: I am obliged to the hon. Member for having given me notice that he was going to raise that point of order, because it has enabled me to look into it carefully. The only point in his submission on which I can

23
rule relates to the sub judice convention. Today's debate can take place without inhibition because that convention does not apply when the House is debating legislation; that includes delegated legislation, which is what the order is. It is not a matter for me whether it is more appropriate to debate the order before or after other decisions have been reached elsewhere.
Mr. Laurie Pavitt: Further to that point of order, Mr. Speaker. You will recall that I raised a similar problem with the Leader of the House. My borough is rate-capped and receives about £850,000 from the GLC for voluntary organisations for the disabled, and so on. Whether it will receive that sum is now in doubt because of legal action. The rate that is now being determined will be affected by that and that creates a problem.
Mr. Speaker: What is the point of order for me? I was hoping to call the hon. Gentleman so that he could make that point in the debate, which would be more appropriate.
Mr. Pavitt: The point of order relates to whether, in view of those circumstances, it would be more appropriate for the debate to be deferred until such a time as we have the answer that we are awaiting.
Secondly, several authorities are concerned and those hon. Members who represent those authorities will wish to speak during the debate. Is it your intention, Mr. Speaker, to operate the ten-minute rule after 7 pm today?
Mr. Speaker: I am sure that the hon. Gentleman listened to what I said to the hon. Member for Southwark and Bermondsey (Mr. Hughes). It is not my intention to operate the ten-minute rule today, because this is an order and can, if the House so wishes, run until 11.30 pm. Therefore, I would not be justified in doing so.
Mr. Jack Straw: Further to that point of order, Mr. Speaker. In view of your ruling, will you confirm that it is open to the House, on the laying of a further order by the Secretary of State at a later date, to revoke, vary or repeal the order before the House so that if the court found that the order had been laid unreasonably, under the Interpretation Act 1978 the Secretary of State could come back to the House with another order, however embarassing that might be for him?
Mr. Speaker: That is always possible.
3.46 pm
The Secretary of State for the Environment (Mr. Patrick Jenkin): I beg to move,
That the draft Rate Limitation (Prescribed Maximum) (Rates) Order 1985, which was laid before this House on 19th February, be approved.
Let me begin by expressing my sympathy and that of my right hon. and hon. Friends for the hon. Member for Copeland (Dr. Cunningham) in his illness. I know that he would have liked to be in his place today for a debate to which he attaches great importance. We hope that he will make a swift recovery and be back in the House soon.
There should be no doubt about what the debate is all about. It is about the authority of the House of Commons, about the authority of Parliament, in the face of obstruction by a tiny minority of mostly extreme Left-wing dominated local authorities determined to challenge the democratic process.
24
Last year Parliament put the Rates Act on the statute book and since then, at every opportunity, that small group of local authorities has made no secret of its intention to defy the will of Parliament.
The Labour party-inspired local government campaign unit has systematically, month by month, enforced a policy of non-compliance on its authorities. Because of that stupid boycott, councils have refused to operate the procedures of the Act even when that would be to their advantage. They have been threatening to break the law, either by failing to make a rate or going in for deficit budgeting. Instead of spending money sensibly for the benefit of their communities, they are squandering millions on extravagant propaganda campaigns intended to discredit the Government and the legislation of the House.
That coterie of Marxist-dominated authorities is just another example of what we have seen in the actions of the National Union of Mineworkers, the strikers who nearly brought Cammell Laird to its knees and the repeated disruption of the nation's railways.
That is the ugly face of the Labour party and it is to the eternal discredit of the Opposition Front Bench, who claim to represent the reasonable face of the Labour party, that they have lent their authority to the disreputable campaign of the town hall wreckers.
The House should be aware of the kind of authority that we are dealing with in the order. Let me take Hackney first. It claims to be the poorest borough in England. How does it go about helping its poor? By improving efficiency? By saving unnecessary costs? By urging its employees to work a bit harder? By making the best use of its resources? No. It does the precise opposite. Contrary to national agreements, it has cut the hours of its manual employees to 35 a week; it has increased its staff this year alone by 400; its direct labour organisation is losing £2·5 million this year; it owns about 3,500 empty houses. The House will not be surprised to learn that one of Hackney's Labour councillors has recently resigned, saying that he will not break the law to fight Government cuts.
How does Leicester react to the Government's proposals? It has found the money to make the city a nuclear-free zone. Perhaps it is good news that Leicester has provided a rent-free office and a free telephone to the striking miners, because the result has been that 95 per cent. of Leicestershire miners have been at work for months.
Leicester's manpower per thousand population is double the average for its class of authority. Leicester's rates have risen in three years almost five times as fast as the average for its class.
Islington is rather more internationalist in its approach. It flies people to Nigeria on the rates. It has even employed two people to stamp out Irish jokes, at a cost of £17,000. Unfortunately, the £31,000 scheme "Aerobics on the Rates" never got airborne. Islington's spending has grown in three years two and a half times as fast as the local government average and its rates have gone up three times as fast as those of authorities in its class.
Basildon's rates have risen five times faster than the class average; Greenwich's rates have gone up 113 per cent. in three years; Lewisham spends £55,000 for each child in residential care. At the same time, it has earmarked £5,000 for research into the history of the golliwog and its rates have gone up twice as fast as its class average.

25
If Sheffield's rates were no higher than those in comparable councils, Sheffield could save £11 million. If Sheffield's refuse collection were no more efficient than that of the average council of its class, it could save £1 million.
The ratepayers in such areas have had to pay for that extravagance and incompetence. The hundreds of responsible councils that spend and rate sensibly have faced tougher targets because of the extravagance of the few. That is why rate capping is needed.
Mr. Straw: The right hon. Gentleman mentioned Sheffield, but is he not aware that Mr. John Banham, the Controller of his Audit Commission, said that Sheffield provided outstanding value for money and that its increase in expenditure since 1978 is exactly the same as the national average? If Sheffield's services provide outstanding value for money, why is the city being rate capped?
Mr. Jenkin: Mr. Banham must be responsible for his own opinions, but I can tell the hon. Gentleman that the average number of manual employees for its class of council is 9·15 per thousand. Sheffield employs 14·3 per thousand, and if it merely came back to the average, it could save £2·8 million. Thus, it is an extravagant authority. If the hon. Gentleman has spoken to any business men in Sheffield, he will know precisely what they think about it.
Of course rate capping is needed, yet what do we find? These authorities now scream blue murder about the savings that they are being asked to make. Every council on the list has known its spending level since last July and its rate limit since last December. Every council has had the right to appeal against both, but not one of them has chosen to do so. So to extravagance and incompetence they add obstinacy.
Mr. Tony Marlow: Is not the basic problem that certain local authorities have thrown aside the ground rules that have tied local government for so long? Instead of local government now providing an opportunity for local authorities to provide services to their local electorates, some of the more lunatic Left-wing authorities now look upon local government as purely an opportunity to provide a platform for Socialist propaganda at the expense of the public and the ratepayers.
Mr. Jenkin: Yes indeed, and my hon. Friend will know that that has aroused widespread concern throughout the country, and is one reason why we asked the Widdicombe committee to look into the whole question.
Several Hon. Members rose—
Mr. Jenkin: We have had an argument about whether these councils would have appealed and whether they might have been worse off if they had done so. But the right of appeal on rate limits would, if successful, allow only an increase in the limit. Thus, the councils have had no fig leaf of an excuse this time. I cannot reduce the proposed rate limits, nor have I any power to impose conditions. Thus publicly the councils bellow defiance at the Government, although privately—as I pointed out in our earlier debate — they have made sure that large amounts of information have reached me one way or another. So to obstinacy they have added some hypocrisy.
Mr. Simon Hughes: Will the Secretary of State explain why Conservative-controlled Brent council did not avail itself of the right to appeal against the rate limit set by his Government?
Mr. Jenkin: The answer to that is that Brent has been a hung council, and has made it perfectly clear that it is prepared to accept the limit which has been set. The leader of Brent council will no doubt wish to explain his position when he moves his rate, but he has made it clear to me that that is why he had no wish to appeal.
Mr. Allan Roberts: If Brent has made that clear, why is it designated in the order? Why has it not agreed the order with the right hon. Gentleman as Portsmouth has done? Surely it is not up to the leader to decide. Even if there is a hung council, it is still up to the council to decide.
Mr. Jenkin: To accept the limit would require a vote of the council. I understand that the Liberals were reluctant to accept the view of the largest party—that of the Conservative majority—that it should be agreed to, so Brent is in the list.
Mr. Pavitt rose—
Mr. Jenkin: I should like to explain the position that I found myself in over Haringey. Even at the very last minute I withdrew the original order and substituted a new one, because Haringey, only a week ago — late last Monday, over two months after its original limit was announced—gave me a letter from the district auditor showing that, instead of the anticipated surplus of £2 million on the general rate fund at 31 March 1985. there is likely to be a deficit of almost £5 million. Such a deficit must by law be rated for, together with the holdback effects, so I had to alter the limit.
There can be only two reasons why, after months of silence, Haringey came in at the very last minute. Either the council was so incompetent that it did not know that it was running a £5 million deficit, or it was determined, as was suggested by John Carvel in The Guardian, to reduce the whole rate-capping policy to tatters. In the case of Haringey, I am more inclined to believe the former, but is it not a measure of that council's woeful irresponsibility that it did not know that it was heading for a £5 million deficit this year, that it did not know its DLO was losing £2·5 million, and that it did not know it was overspending to the tune of further millions in other areas?
The ratepayers of Haringey now have to pay a bitter price for their council's folly. The 16·5 per cent. increase on this year's borough rate is due entirely to the failure of the Labour majority on that council to know that it was heading for a deficit, and the failure to take steps to put is right in time.
I offer a word of grim comfort to Haringey's ratepayers. Without rate capping, and based on the £148 million budget which was planned by the Labour majority, ratepayers in Haringey would have had a rate increase not of 16·5 per cent. but of over 50 per cent.—three times as big. Rate capping is now protecting them from that.
Sir Hugh Rossi: Although it may be of some comfort to my constituents to know what might have been, they are concerned with the grim and dismal prospect that is before them. Does my right hon. Friend mean that any local authority can budget for a certain figure and then, year in and year out, deliberately

27
operate at a deficit, thereby destroying the basis of rate capping, because in the following year my right hon. Friend is obliged in law to make up that deficit?
Mr. Jenkin: I understand my hon. Friend's point and I sympathise with him and his constituents, knowing the position into which the council has put them. I do not think that authorities should believe that by deliberately overspending they have a secure way of breaking the rate limits.
All authorities have a clear duty, under the General Rate Act 1967, to balance estimated income and expenditure, and I am in no doubt that an authority's auditor would be seriously concerned about any attempt to subvert the process of budgeting and financial control by deliberate overspending, and about the attitude to financial management that that would imply. I would expect the auditor to draw the build-up of any deficit to the attention of the authority concerned at the earliest possible stage, so that it could take urgent action to put matters right.
The House will know that, where the auditor believes that the build-up of a deficit has led to a loss or deficiency—for example, in relation to interest charges—and that results from wilful misconduct, the loss will be surchargeable on the councillors responsible. Disqualification from office would follow automatically if the amount concerned were over £2,000. Any councillor would be well advised to consider his position very carefully before embarking on such a course.
I should like to add one further point which may be of some comfort to my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi). Where authorities were selected for a second year of rate limitation, I would feel fully entitled, in considering the sort of spending reductions that they could reasonably be asked to make, to take into account any failure on their part to achieve reductions which had been asked for in their first year of limitation.
Dr. Keith Hampson: Is my right hon. Friend thinking of giving new instructions to district auditors to cover the point that he has just mentioned? Some of us find it extraordinary that Haringey should have got into its present position. As my hon. Friend the Member for Wood Green and Hornsey (Sir H. Rossi) said, it is amazing that the council did not realise how heavily it was spending in certain areas. What on earth was the district auditor doing in not telling the council to watch its expenditure?
Mr. Jenkin: It is not for me to give instructions to the district auditors. The Audit Commission is an independent body, and it would be for the Audit Commission to decide its policy on such matters. I have stated what I believe to be the law and what I think should be the facts, and I hope that the councils concerned will take note.
Mr. Norman Atkinson: Will the Secretary of State accept that Haringey would welcome an inquiry into its finances of the past 12 months, particularyly bearing in mind that its statutory obligations have increased since the rate-making dates to which the Minister has referred? Not only have Haringey's statutory obligations increased; there has been an increase in other areas of its negotiated expenditure during the year.
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Haringey, like many other authorities, has had to face the problem that, for every additional pound it has to raise, it costs the ratepayers £2·70 because of the penalties which are imposed by the Secretary of State. Therefore, budgeting is no longer a precise art; it is entirely within the hands of the Secretary of State.
Mr. Jenkin: All I can say is that the great majority of authorities, including many inner-city authorities, have been perfectly well able to live within their budgets this year. It is entirely due to thoroughly slack administration by Haringey council that it has a £5 million deficit. Haringey has not asked for an inquiry. There is nothing to prevent Haringey from going to the Audit Commission and asking for an inquiry into its affairs under section 29 of the Local Government Finance Act 1982. I commend that point to the hon. Member for Tottenham (Mr. Atkinson).
In my administration of the Rates Act I have done my best to be reasonable, as the law requires. I have kept my mind ajar. I have extended the timetables even to the point of incurring some criticism from the Joint Scrutiny Committee. But I now have to fulfil the duties imposed on me under the Rates Act which was passed by this House, and that is why the order comes before us today.
I have been accused by Opposition Members of imposing limits and refusing to explain how they have been calculated. Great play has been made about assumptions and guidelines. I will tackle those criticisms head on.
The word "assumptions" does not apply to the whole process of calculating the rate limits. It is a legally precise word, the meaning of which is clear from section 8 of the Rates Act. It is only if there is a particular figure that I should have had from the council and have not had that I am entitled to make an assumption to fill the gap. Where information has been provided, I need make no assumptions. I have tried to get the information I need from each authority to enable me to consider its financial reserve position. We put out a special questionnaire last October. It is only where authorities have not given the necessary information that I have had to make assumptions about particular figures—for example, spending shortfall at the end of this year.
Whether or not I have had to make assumptions in arriving at the proposed rate limits, I had used some consistent guidelines as a means of ensuring even-handed treatment between authorities. The guidelines are not allowed to be overriding, because I have to look at each authority's individual circumstances. I think it would be helpful if I spelt out to the House the two general guidelines that I have used.
First, in considering authorities whose reserves—that is, their rate fund balances and special funds—seemed large, I compared them with the reserves held by other authorities, if any, of the same class. The figures that I used were 10 per cent. of total expenditure for metropolitan counties and districts, 15 per cent. for the London boroughs, and 30 per cent. for shire districts. Where authorities' reserves were greater, it was reasonable to expect them to reduce their reserves to something closer to the average.
Secondly, as regards special funds, my concern was that, where authorities were budgeting to make substantial use of special funds in 1984–85, their reserves might be run down too far and leave inadequate reserves for 1985–86. Where authorities had budgeted to use special funds this

29
year which exceeded 5 per cent. of their expenditure levels, I took account of that excess in fixing the rate limit. The 5 per cent. figure was that which the Haringey treasurer had been able to calculate from the figures that he had.
I have said all along that I would be ready to discuss any individual authority's assumptions if that authority appealed under the Act and proposed a higher limit. No authority has done that, so there been no such discussions.
Mr. Tony Banks: Will the Minister give way?
Mr. Jenkin: No. I want to development my argument, if I may.
Secondly, I am prepared to open up the debate on assumptions only in the proper context—that is to say, a proper appeal under the Act for a different rate limit. It is now as plain as a pikestaff that the Labour councils never had any intention of making the proper use of the appeals procedure under the Act. I invite the House to look at the Blunkett report which was made available to the press and others during the past few weeks. The report was prepared by Mr. David Blunkett, the leader of Sheffield council, for the local government management committee, and is dated 16 January. I shall not weary the House by reading the whole report, but only what it set out as its objectives in wanting to send representatives to meet me — representatives who came on 4 February. Their aim was to achieve the following:

"(i) place the Secretary of State on the defensive and force him to respond and to look negative and unbending.

(ii) ensure that should he lay Parliamentary Orders, he cannot claim that authorities have simply refused to meet him and that they and not him are obstructive and bloody minded …

(iii) 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 …

(iv) prevent the break up of groups arguing about whether or not we should meet Jenkin, which is not a central issue and may well become a diversion which would unnecessarily damage the much more important long term struggle.

(v) dislocate the Department's Parliamentary timetable."

Those were the objectives. Therefore, I am perfectly entitled to view any suggestion that they should come and discuss the assumptions as unwise.
Mr. Tony Banks: It is all very well for the Minister to tell the House about the political tactics of various Labour councils, but he is speaking to the House, not to individual Labour councils. He is asking the House to make certain assumptions and to reach certain conclusions on the order. All that we have constantly asked is that he should come clean with the House and tell Members of Parliament the basis of his assumptions on the reserve. We do not want to hear about the councils—we want him to tell Members of Parliament.
Mr. Jenkin: What matters both to the councils and to the House is the rate limits themselves, not the detailed figuring by which they were reached. If the councils had wanted to discuss the detailed figuring, they had their remedy; they could have appealed, but they refused to do so.
Mr. Straw: As the Secretary of State has said, we are talking about the authority of Parliament, not the decisions and judgments of individual members of local councils. Parliament is being asked to make decisons on orders
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about which Parliament is being denied the necessary information. Late in the day, the Secretary of State has given the briefest possible details of some of the principles behind his calculations. Is he now willing to give the House the calculations themselves?
Mr. Jenkin: No, because what matters for both the councils and the House is not how the figures are arrived at but whether the rate limit in the order is reasonable for the council to levy. That is the only thing that matters. It is a question whether the council can rate sensibly and live within its limits.
As to the rate limits themselves, I thought it reasonable to leave eight of the authorities with the rate limits I originally proposed. In four of those authorities, ratepayers can look for an actual reduction this year, and in the other authorities rates will be less than they would have been without rate capping.
For the other five authorities in the schedule, I have made changes in the limit proposed last December to take account of the most up-to-date information. Several councils have supplied me with many facts and figures.
For Islington, there was a change in the estimated product of a penny rate and, therefore, a marginal change in the rate limit. For Hackney and Haringey, there were auditors' letters warning of deficits. For Lewisham, its creative accounting this year artificially reduced its apparent spending, and I have made allowance for that. Finally, Leicester gave more details of its reserves and I have taken account of that.
My purpose throughout has been to uphold the purpose of the Rates Act and to protect ratepayers from exorbitant rate increases. The real saving for ratepayers is to compare what the rates will be next year with what they would otherwise have been in the absence of rate capping. Conveniently, Councillor Blunkett and his friends have furnished me with the ammunition. At our meeting on February 4, they tabled a paper with detailed figures showing what each council would have spent if it had not been ratecapped. From that, I have worked out what their rates would have had to be.
For example, in Greenwich ratepayers would have faced a 40 per cent. increase instead of a 19 per cent. cut. In Lambeth, it would have been a 49 per cent. increase instead of a 12 per cent. cut. Even where rates will go up next year, the increases will be far below what would have happened if those spending figures had been allowed. In Basildon, the rate increase would have been twice as high. In Thamesdown, it would have been more than six times as high. In Hackney, it would have been more than seven times as high—an appalling increase of 168 per cent. if it had spent at the level it wanted.
If, as I hope, the House approves this order, all the selected authorities will have had rate or precept limits set for them. That is the time for them to abandon the rhetoric and comply with the law. The law requires a council to set a budget and to levy a rate sufficient to meet it. A council which deliberately fails to rate will have to borrow to cover its spending. Any extra interest incurred could well be regarded by an auditor as a loss or deficiency for which the councillors responsible could be surcharged. If the surcharge is more than £2,000, they are automatically disqualified from office. So the issue becomes one for the rule of law.
I must ask where the Opposition stand on that issue. Will the hon. Member for Blackburn (Mr. Straw) make it

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clear in his speech where he stands? Will he repudiate any statement by Labour councils that they intend to break the law? He has said that the Labour party's position is clear. The only problem is, which Labour party is he being clear about—the one that is prepared to obey the law or the one that is not?
My hon. Friends know that the Labour party is riven down the middle on this issue. Its leader says that one cannot pick and choose which law to obey, but many of the council leaders are saying exactly that. The Opposition's nightmare must be that, where the miners and Mr. Scargill leave off, the Labour town halls will carry on. The hon. Member for Blackburn owes it to his party to defend the decent, moderate law-abiding labour councillors who have no wish to defy the law.
Rate capping 18 councils will save more than £500 million of public expenditure during the coming year. That saving has let me set fairer targets for the far larger number of prudent councils, and, no less important, put a ceiling on the rates of the 18 councils that will protect their ratepayers from the exorbitant rate demands with which they would otherwise have been faced.
That is the purpose behind the Rates Act that Parliament passed last year, and it is a purpose that will not be thwarted by the incompetence or obstinacy of the councils. If the House approves the order tonight, as I hope it will, it will be for those councils to accept the will of Parliament and make their rates accordingly.
4.19 pm
Mr. Jack Straw: I am deeply grateful to the Secretary of State for his kind remarks about my hon. Friend the Member for Copeland (Dr. Cunningham) who is in bed with severe bronchitis. I am sure that the whole House joins me in wishing him a speedy recovery. I know that we all agree about that, but it is probably the only matter on which we shall agree today.
In seven and a half hours of debate, the House is asked to determine the budgets and rates of 13 major local authorities, which last year spent £1,200 million, which employ 120,000 staff and which are responsible for the provision of essential services for more than 3 million people in areas as different as Sheffield, Southwark, Lambeth and Leicester.
Today's order represents the culmination of a squalid and politically corrupt process presided over by a Secretary of State who is blind to the consequences of his actions and whose name has become a by-word for incompetence in an Administration in whom there are many competitors for such an accolade.
So unsure and uncertain of himself and so lacking in confidence in his judgments is this Secretary of State that, in laying these instruments before Parliament, he has refused, as we heard only moments ago, to provide almost any information to hon. Members about the basis on which he has made the decisions embodied in the orders. When, a few moments ago, I asked him to provide the House with the calculations, he replied with the direct negative, "No".
In doing that, the Secretary of State shows not only contempt of a serious and flagrant kind for the House but also breaks solemn pledges that he gave to Parliament less than 12 months ago. As I have reminded Conservative Members on three occasions — I make no apology for doing so again — the prophets of the new Right, Karl
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Popper and Hayek, have eloquently warned that, while it is easy to centralise power, it is extremely difficult to centralise the information to exercise that power wisely. Indeed, Popper's criticism could well have been directed at the monstrous centralist system of controls of which the Secretary of State has been the architect.
Last year, when the Rates Act was being pushed through, we spent hours in Committee and on the Floor of the House challenging the Secretary of State to spell out how he would be able wisely to substitute his judgment—that of one man—for the judgment of hundreds of councillors, each with skill, knowledge and expertise of the areas they served. To those challenges the Secretary of State replied, as he did today, that he was a reasonable man, that his mind was ajar, that in any event the law would require him to act reasonably and that above all it would not be his decision alone, but that of Parliament, to rate-cap authorities.
Thus, on 27 March last year, in resisting Opposition amendments which were designed to ensure that at least we should have separate debates for each authority rate capped, the Secretary of State spoke movingly about the supervisory role of the House overs Ministers. Earlier in the year, on Second Reading, he said—to persuade not least the many sceptics on the Conservative Benches—that
"unless the spending limit is agreed, it is only with the authority of the House that the capping process can take effect. It is not true that it is a matter for the Secretary of State alone."—[Official Report, 17 January 1984; Vol. 52, c. 180.]
When the point was developed in Committee, the Under-Secretary, the hon. Member for Bristol, West (Mr.Waldegrave), said:
"We of course recognise that the disagreed rate limit order is the point in the procedure at which Parliament has the opportunity to scrutinise the Government's proposals."—[Official Report, Standing Committee G, 28 February 1984; c. 804–5.]
Unless that scrutiny is to be a contemptible farce, Parliament must be given the information on which the Secretary of State has made his judgments, and it must be given time to consider those judgments. It has been given neither.
Repeatedly, since the rate limits were announced in mid-December, my hon. Friend the Member for Copeland has, by parliamentary question and by letter direct to the Secretary of State, sought from the right hon. Gentleman details of the basis on which he had arrived at the rate limits set down in the orders. Repeatedly the Secretary of State has refused all information, and he has done so on the most spurious and disreputable grounds.
On 30 January, the right hon. Gentleman said that he was willing only to give details of how he had arrived at his proposed limits in the context of negotiations with authorities about possible alternative limits, but he went on:
"I have of course acted with consistency between authorities and it is my firm belief that the rate and precept limits I have set are reasonable for each authority."
Dr. Hampson: If the hon. Gentleman believes that the only effective source of such information is the local authority, would he say that the inability of that information to come through to the Government, particularly in the case of Haringey, shows incompetence or malice?
Mr. Straw: The hon. Gentleman has not followed my argument because I am saying precisely the opposite. I am

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saying that the only source of information about the judgments behind the orders is that of the Secretary of State and not that of the local authorities.
Dr. Hampson: Answer my question.
Mr. Straw: I am answering the hon. Gentleman. As for Haringey, the Secretary of State told Parliament on 11 February that he had had all the information he needed from Haringey.
Dr. Hampson: It is incompetence, therefore?
Mr. Straw: The hon. Gentleman talks of incompetence. The record of the local authorities in judging their budget out-turns is far better than that of central Government. Consider the record of any local authority and its attempts halfway through the year to judge whether it will be in deficit or in surplus. Then compare that with the record of Treasury Ministers in judging whether the public sector borrowing requirement will be £8 billion or £13 billion. One can see whose record is one of incompetence. Year after year the Treasury Bench, by billions of pounds, mistakes its estimates of the public sector borrowing requirement. Local authorities need no lectures from this Government, of all Governments, about competence.
I quoted the reply of the Secretary of State in his letter of 30 January saying that the limits that he had set for each authority were reasonable. We know that the right hon. Gentleman would say that he had acted reasonably. In view of his record, however, it is asking too much even of the most supine of his supporters on the Conservative Benches to expect them to judge that the rate orders are reasonably simple because he says they are.
The Secretary of State's explanations reached their most bizarre in a letter which he sent to my hon. Friend the Member for Copeland last Friday, 22 February. Again, the right hon. Gentleman refused to publish full details of the basis on which he had arrived at the rate limits, and he said:
"What are before the House for approval"—
and he said the same this afternoon—
"are not the detailed calculations by which I have arrived at the rate limits, but the limits themselves. The question is whether or not the rate limits are reasonable."
Of course, that is the question, but the query that we put to the right hon. Gentleman is how on earth can the House possibly be expected to judge whether the limits are reasonable when he is denying us the information on which he has made them.
Mr. Patrick Jenkin rose—
Mr. Straw: I will give way to the right hon. Gentleman when I have finished quoting from his letter. He had the unbelievable reply to our request that
"the authorities are themselves in possession of all the information they need to make that judgment, and to brief Members of Parliament accordingly."
I now give way to the Secretary of State.
Mr. Jenkin: I did not think that the hon. Gentleman intended to quote the last part of the letter.
Mr. Straw: I will do the right hon. Gentleman the justice of quoting the whole of his letter, if he wishes; I have read only the most bizarre part of it. By definition and by the very face of the orders, none of the authorities specified in them regards the rate limits that have been set as reasonable. If they had regarded them as reasonable,
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they would have agreed them with the right hon. Gentleman, as did Portsmouth, and there would have been no order for us to debate.
The question, in any event — although the Secretary of State keeps speaking about the authority of Parliament—is not whether the authorities regard the limits as reasonable, because we know that none of them does, but whether this House regards them as reasonable. The right hon. Gentleman is saying that he will not release this information and that it is up to the authorities to engage in a ludicrous game of arithmetical cat and mouse in which they must go through the process of iterative algebra until they come up with what they think lies in the Secretary of State's fevered imagination.
The Secretary of State pleads in his defence that the authorities have not come to him with the information that he requires. However, he knows—he is damned out of his own mouth — that that is not the case. All the authorities responded by the 15 January deadline with mountains of information for him and his advisers. So much so did they do that that in the case of Haringey—when he was confidently seeking to justify his original decision to Parliament that Haringey should suffer a 3p in the pound rate reduction—he claimed:
"I have not needed to make any assumptions, as all the figures required to calculate its rate limit have been supplied to me at various times by the council itself." — [Official Report, 11 February 1985; Vol. 73, c. 19.]
Sir Hugh Rossi: That is true, but the wrong figures were given and the deficit was not revealed. That information came only a few days ago.
Mr. Straw: The hon. Gentleman must take up that argument with the district auditor. It was the information from the district auditor that led to the Secretary of State's change of mind. I know from conversations that I have had with members of Haringey borough council that they were very concerned about the financial chaos into which the right hon. Gentleman's original decision would have plunged them. They were seeking to alert the Secretary of State to that fact.
The Secretary of State has complained that authorities did not see him before December 1984 to negotiate on rate limits. He is right to say that representatives of the authorities did not go to see him. This happened because the pre-conditions which he imposed upon the negotiations were so onerous that not even Conservative Portsmouth dared to risk them. The leader of that Conservative-controlled council, Mr. Ian Gibson, said:
"The thing about redetermination is that it could come with strings attached that my council could not possibly accept."
The Secretary of State imposed outrageous pre-conditions and soured the atmosphere of negotiations. When authorities came to negotiate with him at the beginning of the year, he pulled the rug from under the negotiations by rushing orders through the House when the Act that he had placed on the statute book provided a more measured procedure for setting interim maxima. The Committee which considered that measure last year was told that the procedure would provide flexibility while negotiations were continuing.
The real motive of the Secretary of State in refusing Parliament information on which to make a judgment is revealed at the end of the right hon. Gentleman's letter to which I have already referred.
Mr. Guy Barnett: Even if negotiations were to take place between each local authority and the

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Secretary of State in arriving at a fair rate cap, my hon. Friend is right to lay emphasis on the need for the House to be informed. The House must satisfy itself that there is fairness between one local authority and another in the rate cap that the Secretary of State proposes to apply. That test of fairness is impossible for us to decide unless we know the assumptions on which the right hon. Gentleman is operating.
Mr. Straw: I accept what my hon. Friend has said. The end of the Secretary of State's letter reads:
"The demands of many of the rate capped authorities for detailed information on the background figures stem from their desire to make mischief and disrupt the Parliamentary timetable."
In yesterday's edition of The Sunday Times the right hon. Gentleman was quoted as saying of the authorities:
"Their object is to embarrass me, and to make the whole process unworkable."
He went on to accuse councils of presenting "a Marxist challenge" to the parliamentary decision-making process. He used words to that effect earlier this afternoon. Were this not such a serious matter, the sorry farce which he has created in the local government financial system would owe much more to Groucho Marx than to Karl Marx.
We do not need to make the system unworkable because it is unworkable. We do not need to embarrass the Secretary of State because he does that quite well himself without our help. Only someone reckless of his own political future as well as monumentally insensitive to the democratic process would believe that Parliament could and should consider a rate-capping order laid the previous day and amended in such haste by the Secretary of State that the correction on the official version available from the Vote Office appeared in Biro over Snopake and not in print. That is how it has appeared before the House today.
Mr. Jerry Hayes: The hon. Gentleman spoke in rather derisory terms about Marxism and councils' defiance. Does he recall what Hilda Kean, the leader of the Hackney council, was quoted as saying in "London Labour Briefing" in March 1984? She said:
"Defiance should be maintained at every level and any public platform, including the council chamber, will serve."
Mr. Straw: Mrs. Hilda Kean can answer for herself. I seek to deal with the order before the House and the due process which Parliament is being expected to follow without proper information on which to make decisions.
Mr. Jeremy Corbyn: When the Secretary of State was making his rather lengthy and inaccurate attack on borough councils and their spending, and by innuendo on their powers of decision making, does my hon. Friend agree that it is significant that at every stage and at each attack on individual councils he refused to say how much money his Department and he personally have taken away from the boroughs in the past six years? It is the removal of these moneys that has caused rates to rise. Rate increases have had nothing to do with local spending. There is an increasing number of unmet needs in many of the rate-capped authorities and the order will make them more numerous and worse and not better.
Mr. Straw: My hon. Friend is right. At no stage in his speech did the Secretary of State show a recognition of the
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consequences of his action for authority staff and the hundreds of thousands of those who depend upon authorities for the quality of their daily lives.
The Secretary of State claims that local authorities wish to make mischief. By this, the right hon. Gentleman means that some rate-capped authorities might take him to court for being unreasonable. What arrogance he has and what amnesia, too. Time and again in Committee last year, following the tabling of amendments by the Opposition designed to increase the scrutiny of Parliament and to set out explicitly in the Bill, as it then was, that the Secretary of State had to act reasonably, the right hon. Gentleman sought to reassure us by saying that reasonableness was a duty upon him in any event and that all his actions would be justiciable—in other words, testable in the courts.
If Labour-controlled authorities are making mischief when they seek information about decisions which affect all their services, and if Labour Members are making mischief when they seek information before they are forced to make a judgment on the order, will the Secretary of State apply the same insult to Mr. Justice Forbes, who is hearing the action between the GLC, ILEA and the Secretary of State? Mr. Justice Forbes said last Friday that he expected the Secretary of State to provide to the court the information that he is now seeking to deny to the House. It appears that the right hon. Gentleman may be playing the same game with the High Court of justice as he is with the high court of Parliament. There are serious fears that he may be about to claim Crown privilege for the information that the GLC and ILEA are seeking. If that is not the position, I offer the right hon. Gentleman the opportunity to intervene.
Can the proposed system operate without chaos and indecision when indecision has characterised the Secretary of State's actions? He will recall that in the Green Paper entitled "Alternatives to Domestic Rates" the former Secretary of State for the Environment, the right hon. Member for Henley (Mr. Heseltine), who is now Secretary of State for Defence, stated:
"the case for the Government taking such powers"—
draconian powers to control rates—
"has to be judged against the very considerable constitutional and practical difficulties that would be involved."
If reasonableness is to be the test of whether the order should be accepted, that must be the test of the limits and the selection of authorities. The authorities in question were all Labour controlled when the selection was made and that control has continued at all the authorities except Brent.
At the commencement of my speech I charged the Secretary of State with operating a politically corrupt system, a phrase that I chose with care. The Secretary of State and the Prime Minister are obsessed by the fact that the electors of the selected authorities have had the temerity to elect councils that are controlled by a party different from their own. The authorities have pursued policies designed to meet needs in their areas and to counteract the appalling savagery that has been inflicted on their economies and peoples by the Government's reckless and hopeless policies over the past six years. The Secretary of State has no confidence in the ability or intelligence of the electors to make their own judgments about their authorities and their willingness to pay for the services that are provided. Instead, he rides roughshod over their wishes.

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If the Secretary of State is hurt by the charge of political corruption, let him explain the difference in his treatment of Britain's poorest areas and Britain's richest. It happens that Hackney and the City of London lie cheek by jowl. It happens, too, that on the Department's criteria, Hackney is Britain's poorest borough while the City of London is the richest. In an endeavour to meet the terrifying need in its area, Hackney borough council has increased its expenditure by 151 per cent. The City of London has surpassed any other authority by increasing its expenditure by 274 per cent. The increases have taken place since 1978–79 and these are the Department's own figures. On the right hon. Gentleman's criterion, which he has described as robust and objective, Hackney is 41 per cent. in excess of its grant-related expenditure assessment while the City of London has exceeded its by 263 per cent. Hackney has been rate capped, but the City of London has not. Moreover, to fit Hackney into the frame the Secretary of State had to bend his own rules.
Some local authority expenditure in which central Government have played a leading part—for example, urban programmes and projects jointly financed with health authorities—is disregarded by the Secretary of State in calculating the authorities' penalty. Had it also been disregarded for rate-capping purposes, as any reasonable Secretary of State would have done, Hackney would not have been rate capped even on the present Secretary of State's criteria.
The Minister for Local Government (Mr. Kenneth Baker): If the hon. Gentleman is calling for the City of London to be rate capped, he should remember that London would suffer because the City of London contributes hundreds of millions of pounds per year to the rate equalisation scheme.
Mr. Straw: I am not suggesting that the City of London should be rate capped. I am suggesting that Hackney should not be rate capped. I am glad that the Minister for Local Government, who does not share the Secretary of State's view of the objectivity and robustness of the GREA criteria, believes that London would suffer if another council in London was rate capped. The logical conclusion is that no authority should be rate capped because so much damage is being done to this great city by that policy and by the policy of abolition.
Mr. Hayes: Will the hon. Gentleman give way?
Mr. Straw: No, I shall not give way.
There is no other explanation for what the Government have done to Hackney than that they wished to stitch that authority up because its political colour did not suit them. Merit and excellence of service is the Secretary of State's last consideration.
Two rate-capped authorities—Sheffield and Basildon—have been singled out for insult by the Secretary of State but they have been singled out for praise by the Audit Commission. That independent body was created by the Government and endowed at the its inception with nothing but virtue, but it is now subject to slights and insults because it has begun to tell the truth about local authorities while the Government continue to repeat their own lies. The Controller of the Audit Commission, John Banham, said not only that Sheffield council had achieved outstanding value for money but:
"There is no connection between rate capping and value for money … It does not follow that the reason Sheffield is being
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rate capped is because it is providing bad value for money any more than it necessarily follows that all the authorities that are not rate capped are providing good value".
When it was put to him that Sheffield was losing £15 million in grant he commented:
"That is a lot of money to be losing. And if you are penalised as well, then you are suddenly losing very large sums of money indeed".
The Audit Commission said that in Basildon there were opportunities to improve value for money locally, as there are in most authorities, but that the study showed that the council seemed to manage its basic services more effectively than the average.
Some rate-capped authorities have increased expenditure faster than the average. [HON. MEMBERS: "And their rates."] The rate increases have been due to the Secretary of State's policies. If rate support grant had remained at 61 per cent., as it was under the Labour Government, and if no penalty system had been introduced, rates in most of the rate-capped areas would be half the present level. As the Audit Commission pointed out, however, it does not follow that high spending is in any sense a sign of waste or profligacy. Thamesdown has spent more than the mean-minded districts elsewhere in Wiltshire. Much of the prosperity of north Wiltshire, for which the Tories now seek to take credit, was built on the pioneering work of the Labour-controlled Thamesdown council and its predecessor, Swindon borough council.
Mr. Robert Key: Will the hon. Gentleman give way?
Mr. Straw: No, I have given way enough already.
Recognising the disastrous consequences that the Beeching cuts would have on a town so dependent on one industry—
Mr. Key rose—
Mr. Straw:—the hon. Gentleman can make his own comments later—those authorities set about diversifying the industrial base and providing decent homes for people previously in overcrowded accommodation in our capital. Rate-capping Thamesdown is doubly unfair because the increase in spending occurred years ago. The Government's own figures show that since 1978–79 the increase has been exactly the rate of inflation and 7 per cent. below the average for local authorities. In west Wiltshire, spending increased by 120 per cent. and in north Wiltshire by 94 per cent., but those authorities are Tory-controlled. The same applies in Sheffield and Haringey. Despite the calumnies heaped upon them, their spending has been exactly the average for all authorities since 1978–79.
Good, caring authorities should not be in the dock today. It should be the unbelievably callous and mean-minded authorities such as east Sussex, which spends even less than the Government say that it should, which has abolished school meals for all but the children of those on social security and has told pupils who cannot afford school meals to bring sandwiches instead. It has cut the staff in adult education by one third and in the youth service by a half. It has reduced the capitation allowance in schools by 20 per cent. and even axed one third of school crossing patrols.
The Secretary of State has said not a word about the effect of his policies on the people in the areas concerned. He seeks to justify the authoritarian and anti-democratic

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system over which he presides by claiming to be the ratepayer's protector. What humbug. Even Conservative Central Office, in its confidential briefings on the rate limitation orders which, like all its other briefings on local government, are sent to the Opposition by a well-wisher there, has discovered that rates in England have gone up far faster than prices. As the Conservative-controlled Association of County Councils has pointed out time and again, that is because the Government have cut the rate support grant. The Secretary of State points to lower percentage increases this year, but the cash increases will be much higher because they are made against a much higher base.
For many authorities rates have been forced up not just by cuts in rate support grant but by the vicious penalty system whereby authorities can lose as much as £9 for every £1 expenditure over target. The great protector of the ratepayer who has forced rates up throughout the country gives himself away in the order laid before Parliament this month. In five cases, rates are not being cut but forced up—by 27 per cent. on Merseyside, 23 per cent. in Hackney, 17 per cent. in Haringey, 6 per cent. in Thamesdown and 18 per cent. in Basildon. It might be different if the people in those areas were to benefit from a commensurate increase in expenditure, but under the Government's crazy and malicious system those people will be the last to benefit. After the water tax, the electricity tax, the gas tax and the tax on teeth, we now have the rates tax. For every £3 extra raised in rates, £2 will go not to the ratepayers or to the council but straightback to the Treasury. The Government and not the local councils are responsible for the rate increases in rate-capped and non-rate-capped areas alike.
When the argument about responsibility for rate increases fails him, the Secretary of State challenges the democratic basis of local government by saying that not all voters pay rates. On this point, it is time that the Secretary of State either put up or shut up. The only conclusion that can possibly flow from his argument is that only those who pay rates should have votes. If that is the Secretary of State's proposal, he should have the courage to say so. If it is not, what else is he trying to prove? In reality, local government is far more accountable to its electorate than central Government. More households pay rates than pay income tax. Is the Secretary of State suggesting that pensioners, the unemployed and people on low incomes who do not pay income tax should have their vote in national elections taken away? Local government needs no lectures from the present Administration. Despite the swingeing cuts in rate support grant, central Government expenditure and taxation have risen much faster than rates. For the average family, rates constitute one-thirteenth of their total tax bill—£6 per week out of a total of £75 per week.
Business men, too, know who is responsible for their rate increases. The Association of British Chambers of Commerce has complained that the cut in rate support grant from 61 per cent. in 1978–79 to 48 per cent. in 1985–86
"is a clear example of how the burden of direct taxation has been moved from taxes on individuals to taxes on business".
If the Secretary of State is so confident about his argument on rates and jobs, perhaps he will now tell us why the number of jobless in Birmingham rose faster when
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rates were being cut by the Conservatives and whether and when he intends to publish the Cambridge report on rates and jobs. That report wholly condemned the Secretary of State's arguments, who so far has even refused to say when he will publish it. If he had had any confidence in his own arguments, and in the reputation of that report, he would have told the House when it would be published.
Where will all this lead, and what is behind this destruction of local democracy? These rate-capping orders will produce no gratitude in the areas affected, where Government policies have meant that rates have increased while services have been reduced. The shire district elections showed that in Thamesdown, Basildon and Leicester. The metropolitan county and GLC elections would have shown it this year had the Secretary of State not been so scared of the outcome that he had to cancel them.
Nor will this mad policy produce benefits for those for whom this incompetent Secretary of State claims to speak—those in the Tory shires. They found it impossible to believe at first, but they have now come to the astonishing truth that if rate-capping brings expenditures down in the rate-capped areas, it will force the rates up in the non-rate-capped areas. Indeed, the right hon. Gentleman's own figures show that if all authorities were to do what he tells them, and spent at their GREA, one Conservative-controlled shire county and shire district after another would lose millions of pounds in grant. The Minister of State's own district, Mole Valley, would receive no grant, and rates in Surrey, Essex, Kent, east Sussex, west Sussex and Wiltshire would be forced up by between 25 per cent. and 40 per cent.
Where exactly will this policy lead? The Secretary of State speaks of his desire to abolish target and penalty, although he has become progressively more reticent on the subject. We want both abandoned, but properly and not to be replaced by a penalty system based on GREA.
The right hon. Gentleman's policies are in ruins, and he knows it. They have failed. But faced with this failure, he does not step back and rationally seek a better way; instead he continues with his failed policies, but more obsessively and frenetically. Will we next year see not 20 but 40 authorities rate-capped, and the following year 60? As so many in the next list are Tory, how will the Secretary of State bend the rules to ensure that once again principally only Labour authorities are punished?
We are being asked to approve the judgment and decisions of a Secretary of State who has lost the confidence of this House, his colleagues and the country. We are asked to approve these orders without information or material upon which to base our judgment. These orders do nothing for the ratepayers whose bills have been increased by the Secretary of State's own actions. They place at risk jobs and services in many of our hardest pressed towns, cities and boroughs. They deprive the electors of those areas of their right to choose. They are an unparalleled exercise in elective dictatorship, and they must be rejected tonight.
4.53 pm
Sir Hugh Rossi: It is with deep disappointment, if not anger, that I address my right hon. Friend the Secretary of State on the rate limitation order that he has just presented to the House. I have some harsh things to say, but I assure my right hon. Friend that I do so without any personal animosity towards him. We

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have known each other and have worked together for far too long for that—in the order of 30 years in local government, in opposition and in government.
Mr. Frank Dobson: Can I suggest that we begin by my entertaining the House with a rendition of "My Old Dutch"?
Sir Hugh Rossi: That is typical of the hon. Gentleman and the level down to which he will drag an extremely serious debate.
I also appreciate that my right hon. Friend has inherited policies which were initiated by others and which have left him with the intractable and almost impossible problems of detailed implementation. Moreover, circumstances have come to light in the past few days which were outside his control, as he has adequately explained. Nevertheless, I must reflect the bitterness felt by my constituents, who for the past eight months have looked to a promised reduction in their rates, suddenly to be told that they must face a 17 per cent. increase—this in a borough where the general rate is already 277·77p in the pound, one of the highest in the land.
It is very difficult to respond to a constituent who tells me that when he first came to live in my constituency, in a modest semi-detached house in 1970, he paid £111·32p in rates, inclusive of water rates. This year he is paying £1,259·51p general rates, and as a result of this order he will pay £1,636 plus water rates, which themselves will go up by 10 per cent. as a result of the recent order on which I could not find my way to support the Government.
I must remind my right hon. Friend of the background against which these intolerable burdens are being imposed on my constituents. In the summer of 1974, my right hon. Friend the Prime Minister, as chief environment spokesman for the then Opposition, announced the Conservative Shadow Cabinet's decision to abolish the domestic rate as an unfair and regressive tax, which it is. The memories of that promise still linger in the electorate, although the country rejected that manifesto and elected a Labour Government in October 1974. Hence, it must be said that no compact to abolish rates was made between the Conservative party and the electors.
During the ensuing years of opposition, between 1974 and 1979, the policy was reconsidered and modified in the light of Layfield. The new electoral promise for the 1979 general election was to review the rating system, and public expectations remained understandably high. Between 1979 and 1983, all the possible alternatives to domestic rates were carefully examined by the new Conservative Government of which I was a member. The conclusion was reached that each created more problems than it solved. I was among those who favoured a poll tax as overcoming the difficulties of accountability of which I shall say more in a moment. However, this proposal did not find sufficient favour, and instead we went down the road of central Government seeking to control local government expenditure.
At first, the idea was to penalise local authorities which spent above certain levels, by withdrawal of rate support grant. That makes sense. Why should central Government subsidise a percentage of local authorities' overspending when full account is taken of their needs and resources in the rate support grant? It was hoped that by this method, rather than incurring penalties, local authorities would curb their spending. Some responded, but others such as
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Haringey went their own sweet way and simply passed on the additional burden to the ratepayers. To overcome that difficulty, rate capping was invented — that is, the imposition of a ceiling on the rates that a local authority may charge.
Mr. Corbyn rose—
Sir Hugh Rossi: No, I shall not give way.
For that reason, we expect a combination of a limit on permitted expenditure with penalties, and a limit on the rate that may be charged will bring expenditure under control. As we have been told, the intended consequence for Haringey was a reduction in the rate by 3 per cent. in the coming year. However, Haringey overspent in the current year by nearly £5 million. The Secretary of State must see that deficit eliminated and ensure that it does not recur in the ensuing year. For that reason, the rates cannot be reduced by 3 per cent. On top of that, higher spending attracts even greater penalties, and the rate burden increases even further to balance the books.
A combination of Haringey's profligacy and inefficiency and the penalties imposed by the Government mean that the rate will now be 268·5p in the pound. It is of some comfort for me to be able to tell my constituents that if it were not for rate capping they would face an increase in rates, not of about 17 per cent., but of 54 per cent. On the whole, people are more concerned about what is than what might have been. It remains a difficult proposition to explain, given the background to the entire matter.
Will my right hon. Friend say whether the deficit that Haringey has incurred could have been foreseen? Part of it is caused by the £2·5 million loss by its direct labour organisation. That has not occurred overnight, but has been the subject of public comment locally for the best part of a year. Why was it not examined and the necessary warnings or adjustments made in the Department's figures so that people would not have expected a 3 per cent. decrease in their rates? Furthermore, how is it that the district auditor made a mistake in 1980–81, when he allowed a claim for housing subsidies, which apparently were not justified, and now concludes that claims for housing subsidies must be struck out of the accounts? There appears to be a muddle in more than one direction.
Does not that tell us that rate capping may never work? I have already asked my right hon. Friend whether, by incurring a deficit, a local authority can evade rate capping. He gave me something of an assurance and warned that recurring deficits would bring the wrath of the law on the heads of those involved. It is all very well saying that, but it would be far better to avoid a deficit in the first place. Although, in answer to an intervention, my right hon. Friend said that he could not give a direction to a district auditor about how the auditor carries out his duties, will my right hon. Friend seek powers that will enable him in suitable circumstances to ask for a monthly audit from authorities that are known to be inefficient or incapable of running their financial affairs properly?
I have no truck with Haringey. Its grant-related expenditure is 30 per cent. above that of neighbouring boroughs, yet it spends 34 per cent. above that. That is pure profligacy. For years the direct labour organisation has been running a deficit, but because of the mental attitude of councillors and, behind them, certain unions

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whom they fear, they dare not touch the direct labour organisation and ensure that it runs efficiently and correctly. How does one overcome that problem?
I now turn to education expenditure. Despite a declining school roll and the closing of schools, the non-teaching establishment has increased year after year. The cost per child is way above the expenditure of equivalent authorities with equal problems and similar ethnic groups within their communities. It is worth while remembering what Her Majesty's inspectorate recently said about the education system in Haringey:
"The impression gained in the schools inspected was that, regardless of the ethnic background, few pupils were receiving overall the quality of education they need and have a right to expect. The causes of this state of affairs are not to do with a shortage or absence of resources."
We know that they are more than abundantly provided. The report continues:
"Rather they lie with … a shortage of effective leadership and planning at many points in the system"—
that is the direct responsibility of councillors—
"inadequate checks on whether or not available resources and support agencies are being used to best effect"—
that is also the direct responsibility of local councillors—
"and shortcomings in the oversight of teaching and learning."
That is a comment on the education system. A bad service is provided despite the tremendously high costs. Resources are not the answer. The answer is proper management and effective direction from the top, but it is not being given. A report on virtually every other service for which Haringey council is responsible would have a similar conclusion. That is where the problem lies.
How do we overcome the problem? The Government seek to do so with a combination of penalties and rate capping. It is virtually imposible for central Government to control local government to its finest detail. Resources at the Department of the Environment do not exist, and the will and wish does not exist among officials at the Department of the Environment to turn themselves into local government officers, as they would have to do if there was to be an effective, detailed control of local authorities.
I have always believed that there is a better road to follow. In a contest between central Government and local government, surely central Government are bound to lose. First, no methods can be made truly effective. The fact that we must debate this order in this way is a sign of that. Secondly, such a contest leads to totally unnecessary confrontation between central Government and local government, which should be avoided at all costs. The traditions of local government are extremely strong. I had the privilege to serve in local government at both borough and county levels for 10 years before I came to the House. I appreciate and understand the value of local government. I also recall the slogan of the Conservative party in those days and for many years thereafter:
"Town Hall not Whitehall knows best."
Now it seems to have forgotten that slogan. We must trust the people more—[HON. MEMBERS: "Hear, hear."] I am being cheered by the Opposition, who will say that the ballot box is the answer. I now come to accountability. The ballot box would be the answer to all those problems, and the electors would exercise the proper disciplines upon their elected councillors if the electors and the ratepayers were the same, but they are not. For many years, we have
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consciously eroded the principle of accountability. We have reached the point where many people who pay rates do not vote. We abolished the business man's vote and have never restored it, and in many areas businesses bear a substantial part of the rate burden.
Mr. Corbyn: Will the hon. Gentleman give way?
Sir Hugh Rossi: No, I will not give way. The hon. Gentleman will have the opportunity to make his own speech in his own way.
Many people who vote do not pay or perceive themselves to pay rates. The consequence must be that councillors are subject to greater pressure from those who want more and more expenditure to suit their tastes and interests, and the people who must pick up the bill have a smaller and smaller voice in the way in which the money is spent. If the House believes that the ballot box and the people are the best way of dealing with the rating problem, it should address itself to that question.
I must tell Ministers that they have made a mistake in going down this road of trying to impose central Government control on local authorities. A local authority must be controlled by its electors, and its electors must be the people who pay the bills. Then we shall have the control that is necessary. That is why I favoured a poll tax when we considered ways in which to replace the domestic rating system.
For all the reasons that I have given, I regret that my right hon. Friend the Secretary of State will not find me with him in the Lobby tonight.
5.12 pm
Mr. Simon Hughes: This debate is based on a series of ludicrous propositions. We are being asked to examine the budgets, spending plans and needs of 13 local authorities—nine in London and four outside—and we are being asked to limit not the money that they are given by central Government but the money that they can raise from their residents, ratepayers and electors, even though the primary purpose behind the order has been regularly shown to be defective.
The most recent authoritative example of that was the leader in The Times on Saturday of last week, which stated:
"We turn … to one of the paltry efforts made by the Government to explicate its policy, Protecting the ratepayer, randomly distributed in the rate-capped areas. It makes a promise. 'If you are a ratepayer in one of the areas affected, your rates next year will be lower than they would otherwise have been.' But why then is the Government allowing Merseyside a rates increase of 27 per cent., Hackney a rise of 22 per cent., and awarding Haringey"—
we have just heard a powerful and poignant speech from a Conservative Member of Parliament from the borough of Haringey—
"a rates rise up to 16·5 per cent.?"
The Secretary of State has calculated his figures on the basis of assumptions as to the reserves that local authorities have. Some he knows, but, as he said in a parliamentary answer and has repeated since, some he has had to guess. The folly of that exercise has been illustrated by the Haringey experience. The Secretary of State made an order, discovered new figures, withdrew it and recalculated the figures at the last moment.
There is a second and equally valid objection to the exercise. We are trying to determine the maximum rates permitted to those 13 authorities when the reasonableness

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of the assumptions has not yet been established, not even in relation to the four precepting authorities. The GLC and ILEA are the two precepting authorities on the nine London boroughs. Let us imagine that the High Court rules in one or both of the cases before it that the Secretary of State has acted unreasonably and that he has made an error, arithmetical or otherwise, in his calculations. What will ILEA and the GLC do when they meet on 7 March? Will they have the power to make a rate or will they decide that they cannot because a new order must be laid before the House?
If they cannot or do not make a rate, despite the fact that the Act obliges them to do so by 10 March, because the rate-cap limit determined by the Secretary of State is invalid, what will the London boroughs do when they meet that evening? Should they go ahead and make their rates, although they do not know what the GLC and ILEA will ask for? The Whitehall against town hall meetings advertised in boroughs such as mine will be a farce. At great expense, most rate-capped London boroughs are inviting their populations to attend their town halls on 7 March. If they all turn up, the councils will need slightly more room than Peckham town hall and other venues. It will be even more ludicrous if ratepayers must pay for the exercise but then discover that the authorities cannot make their rates.
The third objection is that we have a maximum of eight hours in which to judge the budgets and budgetary restraints that should be imposed upon 13 local authorities, which have a population of millions. It takes local authority officers and members weeks to work out the appropriate figures, after minute poring over detail. As the Secretary of State said in debates on the Rates Act last year, the House is meant to scrutinise such matters. However, it can only be a rubber stamp. That is not entirely appropriate. Parliament has been asked suddenly to replace the local authorities in making those decisions, yet it is given no real opportunity or inadequate information to do its job properly.
The entire exercise is folly. The Times stated:
"A little arithmetic. The City of Westminster, indelibly Conservative, prides itself on its efficiency and its history of minimising taxation. … All told, Westminster will be asking them to pay nearly 7 per cent. more in the current year. So much for the benefits of rates limitation."
The thrust of the Government's activity on rates is that by limiting the rates in some areas, which means that not so much penalty will be imposed in some areas, more money must be raised elsewhere. The shire counties and districts will have to pay more for the folly of the order.
Then there is the final folly. Any document will show that public spending by Governments has increased far more considerably than local authority expenditure by councils. It should be that expenditure that the Government seek to get under control first. They have concentrated on the wrong targets.
We should address this argument in the context of the history of local government expenditure. The Layfield committee, which reported in May 1976, made the point that, since 1890, local authority spending has been growing steadily and at a faster rate than the economy as a whole. Increasingly, more money has been spent by, and on behalf of, local councils, with a varying amount of support from central funds. The pattern has been that since the war, in general terms, the amount of money contributed to local spending by Government has gone up
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from 34 per cent. in 1949–50 to 37 per cent. in 1959–60 and to 40 per cent. in 1969–70. If we take the criteria of relevant expenditure, it has gone up from 51 per cent. in 1964–65 to its peak of 67·3 per cent. of all local spending serviced by Government from the taxpayer in 1975–76. Since then, the percentage has gone down.
There is no validity in the argument now being voiced by many local authorities that use as a slogan "Give us back our millions" because they are not their million. They are the taxpayers' millions and for as long as we allow central Government to have their hand on the larger part of local authority expenditure, there will always be intervention, arbitrariness and the power to increase or decrease by central Government according to whatever they think are the appropriate criteria.
Mr. Corbyn: The hon. Member represents part of a poor borough and is talking about self-sufficiency in local government. I should have thought that the likely effects on Southwark and particularly his part of Southwark—Bermondsey—which is one of the poorer parts, will be catastrophic. What little help it gets from central Government will be taken away and the council will be destroyed as a force for doing good and making social changes in that part of London. While he reflects on that, will he tell us what he would do should he be faced with these problems if he were in control of Southwark town hall?
Mr. Hughes: The point that there has to be redistribution and equalisation through payments by the rich to the poor is a valid one. We would not take away the need for local authorities to have contributions from the taxpayer, but the folly of the present system is that the bulk of the money comes centrally from the taxpayer and then goes to meet the cost of all the services, not just redistributing money but serving the large part of the expenditure of local authorities as well. Boroughs such as Southwark that are poor and need central Government support should have it, but that should not be the principal source of support. Local communities should be that source of support and as far as it is possible the money should be raised there, so that it is in the control of local people and not of central Government.
Mr. Corbyn: That means that there will be higher rates in Southwark.
Mr. Hughes: No, that is not so.
There are lost millions, if only those who use the slogan would address their arguments in the proper direction. The lost millions are the millions of pounds that the Government have clawed back by way of penalty. In recent years, an increasing number of millions of pounds, under this bizarre and illogical system, has been lost for every pound that local authorities have spent over the target.
Mr. Straw: We know that.
Mr. Hughes: We know that, but those are the stolen millions — the money that local authorities properly should have in their kitties, but that central Government have taken away. The other money is the taxpayers' and central Government's in the first place, and one cannot validly criticise central Government—be it Labour or Tory, they have both done it equally—for interfering and reducing it over the years. Let us get the argument straight from this point, and we may be able to get some

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truth out of the murk and the confusion. In the last financial year, £455 million was "held back" by the Government under an unjustifiable system. Those are the missing millions and that is the money that local authorities should have and that central Government should never have taken.
Mr. Dobson: I find some difficulty in following the hon. Gentleman's argument. Is he saying that it is just the money that has been held back under the complexities of the recent scheme that can have been regarded as having been stolen? If he is, is he then saying that the fact that the Government have reduced the total handout to these authorities in the first place is of no relevance to their problems?
Mr. Hughes: It is of great relevance, but one cannot say that it is local authority money because it is not. Local authorities have never been able to lay a claim to that money. The Labour party was equally to be criticised because it refused money from central Government to local authorities and this Government have followed the lead of the previous Labour Administration. The hon. Member for Bootle (Mr. Roberts) appears not to understand, but the suggestion is that if one wants local autonomy and local democracy, one should give power both to raise revenue and spend it increasingly into the hands, as far as possible, of local authorities.
There is no doubt that savings can be made, and in some local authorities there is inefficiency and waste, which needs to be cut out. If and when the authority in Brent sets its rates in the coming weeks, it will do so without cutting any services. It may be that the level of rates will be at or below the rate-capped limit, but the vital issue, after leaving out waste and making sure that resources are conserved and used properly, is to ensure that one does not mortgage the future. Liverpool and Brent alike have had to sell their mortgages to banks, when they should not have had to. They have had to get rid of assets because the Government are raiding their reserves so much that the only way that they can keep alive this year is by reducing their assets, as long as they can do so legally, to the bare minimum.
Mr. Allan Roberts: The hon. Gentleman is giving the Liberal game away. He is being all things to all people and trying to claim that local authorities such as his own and Liverpool can manage without the Government rate support grant and can raise all their revenue locally, which is not true. However, he has not pointed out that in Brent the Liberals are to side with the Conservatives to cut services. The list of proposed cuts in Brent that will be carried out if the rate-capping order is accepted shows that the Liberals are behaving just as they did when they controlled Liverpool—cutting services, siding with the Tories and putting up council house rents.
Mr. Hughes: The hon. Gentleman knows that that is wrong. He and I were in Brent the other day and there was not one accusation that services will be cut. There will not be one redundancy, and there will be nothing that any responsible authority could not stand up and justify. All that Brent is doing are things about which the hon. Gentleman knows, such as rescheduling debts and so on. There will not be, and Liberals would not find it acceptable
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for there to be, cuts in services. That is the case in Brent, as it will be the case in some other Labour-controlled authorities as well.
Mr. Pavitt: I am sure that the hon. Gentleman must be aware that the present position means that £14 million will be cut. The Liberals in Brent are not accepting it publicly, but behind the scenes are prepared to cut, as I hope that I shall have the opportunity of explaining to the House. If I catch your eye, Mr. Deputy Speaker, I shall show where the council cuts services.
Mr. Hughes: This is the folly of the present debate. We cannot go into the debate that we should be having about Brent. Brent is managing to reschedule its debts and to deal with some of its capital problems by doing some creative accounting. But there will be no redundancies and no cuts in services. What is more, if Brent was obliged by the order to make such cuts, I am sure that my colleagues would make certain that they were imposed upon the Conservative areas of Brent so that it was they who suffered them.
The remaining issue in Brent is that it has arrears due to it of housing benefit moneys, and I hope that the Minister will reassure Brent councillors by telling them that they will get the £3 million owed to them in time for them to count that into the budget when they come to make it in a week or two. They are owed that money. It is Government money due to Brent. If they had the money, it might make all the difference to their ability to meet the rate-capped limit.
The issue for Brent, as for other councils such as Lambeth, Southwark, Greenwich and Lewisham, is not at its most acute this year. It is probable that in all the south London Labour boroughs the rate-capped limit can be met this year without cuts in services, and honest members of the Labour majority groups in those councils would admit that if they were asked. The problem lies in future years. Once they have raided their balances this year, there is no more money for future years. If the Secretary of State continues rate capping, tightens the screw and extends his grip on local authorities, they will be in severe difficulties and they will not be able to do other than what I presume he wishes, which is to cut the services that local people say in every opinion poll that they want to be sustained or increased.
If the Minister's policies require them, does he believe that reductions in real services are acceptable? Is he prepared to say to the electors of the rate-capped boroughs, "We honestly believe that you must have fewer day centres for the elderly, less sheltered accommodation for the elderly, fewer home helps and a less adequate standard of education"?
The Government have never revealed the amount of money that local authorities need to carry out their statutory responsibilities when, for example, in a borough such as Southwark it is clear that many old people need sheltered accommodation and need to be in proper homes for their old age and are not permitted that. What is the logic when rate capping is applied to such districts as Basildon and Thamesdown? They have one feature in common. They are expanding towns. They have grown because they have been successful. They have special needs, and the Government show no sign of having recognised those needs in what they have done.
Perhaps the borough that will suffer worst is Hackney. I do not think that anyone could say with logic that the

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borough of Hackney, even with the rate-capped figures adjusted, will be able to make ends meet. Will the Government have to come to its rescue with "funny" money? Will they increase its urban aid? They will have to do something. There is a limit beyond which no authority and no councillor of any party is prepared to go, as Conservative members of ILEA will tell the Minister. Of all the rate-capped authorities listed in the order, the borough of Hackney is the one that I hope the right hon. Gentleman will accept has a problem that his order will not begin to allow it to resolve.
Mr. Hayes: I accept some of what the hon. Gentleman says about the difficulties in Hackney, but I am sure that he is aware that during the last three years Hackney has increased its staff by 28 per cent. and that that compares with a national average fall of 2 per cent.
Mr. Hughes: I shall come to that in a moment. Hackney has needs, and that should be the assessment. Services and needs should be the criteria, and not arbitrary Government-imposed targets.
One issue arising in Hackney has a common and underlying thread. Hackney council was taken to the High Court by the leader of the Liberal group not long ago for being secretive about its affairs. The court declared that councillors in opposition parties had a right to know. At the moment Sheffield council, another Labour rate-capped council, is refusing to divulge its figures, calculations and documents to the opposition parties in Sheffield. There is a right to know. But if there is a right to know in local authorities, which 1 hope that the Government will accept should be the case because in all these, bar one, the Conservatives are the opposition, there has to be a right to know in central Government, too. It cannot be said that local authorities must give up their secrets while the Government conceal theirs. Secrecy centrally breeds secrecy locally, and both are equally unacceptable.
Mr. Robert Litherland: When the hon. Gentleman talks about having the right to know, will he say what Liberal policy would be in a similar situation?
Mr. Hughes rose—
Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. Interventions seem to be going rather wide of the subject of the debate. A great number of hon. Members are waiting to take part in the debate. We are dealing with a specific order, and the hon. Member for Southwark and Bermondsey (Mr. Hughes) must keep to that.
Mr. Hughes: The answer to the hon. Member for Manchester, Central (Mr. Litherland) is simple. Members of local authorities and the public need to know the figures—
Mr. Deputy Speaker: Order. The hon. Gentleman is getting away from the order. He should not be answering such interventions.
Mr. Hughes: They need to know the figures on which calculations are based.
I must warn the Labour party against its blustering dishonesty. It knows that in many cases Labour authorities could meet the rate limits, but it will not admit it. It also knows that it is completely divided. One has only to look at any number of journals to know that that is the case. A fortnight ago, Labour Weekly quoted the Birmingham conference. It said:
50
"Stay in office and fight is Kinnock's message."
Labour authorities were told by their leader to keep within the law. Last Saturday, however, we read that the deputy leader of the GLC had called on the 10 rate-capped Labour councils
" to throw themselves into the struggle against the Government by opening up a 'second front' in support of the miners,"
and regarded anyone who did not vote for a no-rate policy on 7 March as betraying the Labour cause.
Labour party members cannot have it both ways.
Mr. Brian Sedgemore: They would need to join the Liberals for that.
Mr. Corbyn: What is Liberal policy?
Mr. Hughes: The Liberals are consistent on this. It is the Labour party which, by its inconsistency and dishonesty, is doing local government a grave disservice. But it is the only way that it can see to respond to an increasingly dominant Government. For every step that the Government take to try to interfere in local authorities, they are encouraging local councils to try to get round the law. By every movement that they make, by every order that they table and every day that they come to the House, imposing central Government and their arithmetic on local councils, they are causing the problems of local democracy.
The ratepayers of many of the 13 authorities are being done a disservice by the dishonesty of their councillors. They are being done a greater disservice by the dishonesty and interference of the Government, who should never have got themselves engaged in this in the first place.
Mr. Corbyn: On a point of order, Mr. Deputy Speaker. Is it in order in a debate about rate capping for the hon. Member for Southwark and Bermondsey (Mr. Hughes) to claim that local councillors are dishonest?
Mr. Deputy Speaker: That is a matter for the hon. Member for Southwark and Bermondsey (Mr. Hughes). He is responsible for his own speech.
5.39 pm
Mr. William Shelton: I am sorry that my hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) is no longer in the Chamber because, unfortunately, I had to leave briefly during his speech, to most of which I listened with great interest. I respect his opinions, and I, too, regret that we still have rates, which I agree are unjust and unfair. However, I do not agree with my hon. Friend's conclusions, because we live with rates, and my constituents in Streatham have to live with rates in Lambeth.
Rate capping was one of the planks of my election addresses during the general election in 1983. At all the public meetings that I held I spoke about rate capping and the abolition of the Greater London council. Despite redistribution which introduced a largely Labour ward—Brixton, which I value greatly, although not many people in Brixton, I suspect, vote for me—I obtained the largest majority ever in Streatham. Therefore, although the hon. Member for Blackburn (Mr. Straw), who opened the debate for the Opposition, spoke with much fire and great verbiage, he does not know my part of the world.
Lambeth ratepayers widely, deeply and strongly welcome this rate-capping order. The reason is simple. The charge that I have previously laid against Lambeth, and which I lay again now, is that it is spendthrift and

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extravagant. Its management is plainly bad. I am referring not to the officials but to the elected representatives. They are plain bad managers. There is also a touch of the loony Left in Lambeth which costs so much and depresses most of us.
My first charge is that Lambeth is spendthrift and extravagant. Its current rate is 122p in the pound. By chance, a fine, Conservative borough, Wandsworth, lies alongside Lambeth. Wandsworth is similar to Lambeth in terms of population and deprivation. However, Wandsworth's rate is 26p in the pound. Rates in Lambeth during the last five years have increased by over 200 per cent.—in fact, by precisely 236 per cent., or four times the rate of inflation. Hon. Members may cry, "Ah, yes, but have not people flooded into this wonderful borough to enjoy the benefits of high rates?" In fact, the reverse is true. The population has decreased by about 10 per cent. in the last five years. So why does Lambeth have this extraordinarily high expenditure?
My second charge is that it is the result of plain bad management.
Mr. John Fraser: I hope that the hon. Member will agree that, perhaps unwittingly, he is confusing two issues. A few moments ago he referred to an increase in rates and then to an increase in expenditure. Does not the hon. Member recognise that the increase in rates is unrelated, or very little related, to the increase in expenditure? The increase in rates results partly from the withdrawal of rate support grant and very largely from the imposition of penalties. The hon. Member is simply not comparing like with like when he refers in the same breath to increased expenditure and increased rates.
Mr. Shelton: If the hon. Gentleman will be a little more patient, he will find that I am dealing basically with expenditure. However, I accept the point that he has made. Nevertheless, he will accept that during the last five years Lambeth rates have gone up in an extraordinary way. That was the case even before the Labour Government began to reduce the level of support from central Government.
I return to my second charge, that of plain bad management. Those who live in Lambeth expect the council to provide certain essential services — for example, street cleaning, refuse collection and street lighting. The amount of money spent by Lambeth upon these essential services has increased during the last few years but at less than the rate of inflation and at less than the level of rate increase. I have received a considerable number of letters from people in Lambeth, as no doubt has the hon. Member for Norwood (Mr. Fraser), complaining that, during the recent cold weather, no gritting took place. Therefore, the basic needs of those who live in Lambeth are not being especially well looked after.
To give a few random examples, in Lambeth there are many council properties and last year about £19 million was spent upon repairs to council properties. One could say that that is a great deal of money, but just over £10 million was spent on labour and materials while £8·3 million was spent on administration and overheads. In other words, 44 per cent. of the £19 million that was spent upon repairs to council properties was swallowed up by administration and overheads—plain bad management.
Lambeth employs over 9,000 people to collect refuse, or 40 employees per thousand population. Wandsworth
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employs just over 5,000 people to collect refuse, or 24 employees per thousand. The streets of Wandsworth are as clean as, if not cleaner than, the streets of Lambeth.
It is well known that there is a great need for housing in the inner cities. The waiting list in Lambeth is supposed to be 13,000 families, but Lambeth has 3,500 empty houses, of which nearly 1,000 have been empty for 12 months or more. Wandsworth has 87 houses that have been empty for 12 months of more. Those 3,500 empty houses in Lambeth could accommodate 8,000 to 10,000 people who would then pay rates. This would reduce the rate burden on the other ratepayers.
Rent arrears are a scandal in several inner London boroughs, not least in Lambeth. In Lambeth they amount to over £11 million, of which over £8 million is due from current tenants. In Wandsworth, just over £3 million is owing from current tenants. There are 2,700 tenants in Lambeth who owe £1,000 each or more. How could a well-managed housing department allow tenants to run up bills of over £1,000? It will be difficult for those tenants to pay off their rent arrears. I understand that in Lambeth rent arrears amount to over 17 per cent. of the total rent bill, whereas in Wandsworth they amount to just over 5 per cent.
I shall weary the House with only two more examples. Lambeth employs 10,000 people and Wandsworth 6,000. There has been a 60 per cent. increase in Lambeth's employees during the last 10 years, although the population fell by 20 per cent. during that period. A study has also been made of the take-up of library, swimming pool and day nursery services in Wandsworth and Lambeth. There is little difference in the services provided by the two boroughs, despite the fact that Wandsworth spends very much less per head of population, in real terms, on its amenities than Lambeth. On the whole, the take-up in Wandsworth is slightly higher. More books are borrowed in Wandsworth than in Lambeth, if that is any indication of anything other than that Wandsworth has libraries and that the people of Wandsworth borrow books from their libraries. Of course, the libraries are paid for out of the rates.
My third charge relates to the not very amiable aspect of what has come to be known as the hard Left. It can best be summed up as showing complete contempt for the ordinary citizen and for the voter, matched by a triviality of mind when one considers some of the extraordinary things that have occurred in Lambeth. But they are not all extraordinary.
One of the most damaging instances is the many thousands of pounds that Lambeth council has spent upon setting up a police monitoring unit. One might ask: why should Lambeth not have a police monitoring unit? I suppose Lambeth can have such a unit if the poor ratepayers pay for it, but I would remind the House that a police-community consultative committee was set up in Lambeth as a result of the recommendations of Lord Scarman. During the last two years it has been extraordinarily successful, although it has not found favour with the local council. I do not know why. I suspect that it is because it is not working towards the control of the police by the local council. Although this excellent consultative body exists in Lambeth, Lambeth goes off in a fit of pique, jealousy, stupidity or whatever it may be and spends many tens of thousands of pounds upon setting up its own police monitoring unit.

53
I said that the council showed a triviality of mind. It can perhaps spend £300 on anti-rate-capping tee shirts, but why should that £300 come out of the housing account when there is not enough money for housing anyway? I am told that Lambeth has sent out about 2,000 letters brusquely telling many of my constituents that their housing improvement grants have been denied them, despite the fact that they were applied for two or three years ago. They have been told that the Government have denied the council the additional £77 million that it needed. That £77 million is a figment of the council's imagination. Last year it received about £40 million and it put in a claim for well over £100 million. It got £34 million and then said that it had lost £77 million. I am surprised that it did not apply for £200 million and then say that it had lost £130 million. Yet out of that housing account £300 has been found for anti-rate-capping tee shirts. It is extraordinary, trivial and stupid. It shows the contempt that the council has for my unfortunate constituents who have the misfortune to live in what is a wonderful borough with a wretched council.
Mr. John Fraser: I hope, for the sake of accuracy, that the hon. Gentleman will concede that the reason why repair and improvement grants in Lambeth have been cut, to the immense distress of many residents there, is that the Government, on capital account, cut the housing investment programme from about £40 million to about £34 million. That is a £6 million cut in one year, which is completely unacceptable and has nothing whatever to do with rates. It has caused immense hardship to many owner-occupiers.
Mr. Shelton: Yes, those were the figures that I gave. There was a cut, but not a cut that would justify a letter going to over 2,000 of my constituents and those of the hon. Gentleman brusquely saying that a grant that they had applied for two or three years ago, which should have been granted one or two years ago, had been arbitrarily cut.
Let me look at Lambeth's expenditure over the years and relate it to the rate-capping proposals of this excellent Government. In 1981–82, Lambeth spent just over £100 million — £106 million. I am talking strictly about expenditure. In 1982–83, it spent £93 million. We ask ourselves what could have happened. The answer is that the Conservatives were in power for six months and cut the rate. Then the Labour administration returned. In 1983–84, Lambeth spent over £100 million — £104 million — and in 1984–85, £114 million. I understand that the budget that it has put in for next year is about £131 million.
After rate capping, instead of Lambeth getting the £130·8 million that it wants, it appears that it will receive £113·5 million — a cut of some £16·3 million. That would be a severe cut for an area such as Lambeth with so many problems. It would be for Wandsworth, too, which also has inner-city problems.
However, I can reassure the House that reality is not always what it immediately appears to be. In the 1984–85 budget of £114 million, some £17 million has been underspent. The rumour is going around that Lambeth council is looking for every way possible to spend that £17 million in these few weeks. Even so, it will probably fail to achieve that.
If the major part of that £17 million remains unspent, the rate-capped budget for next year of £113·5 million will
54
be just about the same in real terms as the budget for this year. I remind the House of the catalogue of extravagances that has been going on this year and in previous years.
Therefore, I tell the people of Lambeth and its council that there is no reason why any services should be cut or why any people should be fired. The council can continue as it has been doing. However, I hope that it does not. I hope that it gives much better value for money. I hope that the people of Lambeth will have what they deserve—good value for money and a council which thinks not of ideological advantage but of serving the ratepayers who pay the rates.
I support the order in full. I supported the Government's policy during the 1983 election and I have supported it ever since. To the best of my belief, the great majority of my constituents also support it strongly.
5.55 pm
Mr. A. E. P. Duffy: Sheffield city council rejects the Government's case put by the Secretary of State today. It believes that his guidelines are inaccurate, based on outdated information, unpredictable and inconsistent. Therefore, it regards tham as inadequate as a basis for deciding that a local authority should be deprived of so much of its financial and operational independence.
Is it not extraordinary and disturbing from the point of view of the constitution and local democracy that the councillors in the majority group in Sheffield and their colleagues in the district Labour party should be considering the budget today while the Secretary of State is determining the rate? Decisions that should be taken together, although the council will not formally consider the budget until 7 March, are being taken by different people in different places.
The Secretary of State has refused before today's debate to set out the assumptions that have been made in making the provisional rate limit. However, it is clear that he has taken no account of recent trends in pay negotiations and interest rates which, on the basis of Sheffield's forecast, would imply further savings of £3 million to keep within the limit that has been set. Alternatively, an adjustment to the rate limit to allow a higher level of expenditure would imply a rate increase of 5 to 10 per cent.
Within the overall reduction of the rate support grant, Sheffield has suffered disproportionately. Its entitlement for 1985–86 is £92·6 million, a reduction of £10 million in real terms on the 1984–85 entitlement. Moreover, Sheffield's grant-related expenditure assessment at £187·1 million leaves the city with a 3·5 per cent. increase compared with the national increase of 6·7 per cent.
Sheffield's designated rate limit for 1985–86 is 207·1p in the pound, a reduction of 1p or 0·5 per cent. on the 1984–85 rate. The expenditure limit, set at £218 million, will leave the city with an expenditure gap of at least £31 million on a standstill budget of £249 million for 1985–86. Allowing for the use of some reserves, say, £11·8 million, that figure could be reduced to £19·2 million, an amount which cannot be financed from further rate increases and which therefore implies large job losses and cuts in services.
Virtually no account has been taken by the Secretary of State of the fact that the same level of reserves will not be available to reduce spending next year. That disregard of the financial position of Sheffield city council doubles the amount of cuts required.

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Moreover, by forcing councils to exhaust their reserves to meet this year's limits, the Secretary of State will find that they have no rainy day savings left when he sets his second round of limits for 1986–87. At that point, he will either have to take personal responsibility for large and unpopular cuts in local government services or scrap the grant penalty system and increase the rate subsidy paid by the Government, which would defeat the whole point of rate capping.
Cuts of the magnitude that the Secretary of State is seeking are simply not achievable in a single year without decimating services in areas that are predominantly the responsibility of deprived, inner-city authorities. Those are areas in which the impact of the Government's policies, particularly on unemployment, is most deeply felt and where local authority services that are now under threat often provide the only safety net. Yet the Secretary of State ignored those implications and certain consequences of his policies in his opening speech.
Sheffield city council has recently conducted an exercise to estimate the sort of damage that will be done to services if no further financial concessions are given by the Government. It assumes a cut of 5 per cent. Let me offer some examples of the likely effect of such a cut on jobs and services.
A 5 per cent. cut in the education service would almost certainly mean a reduction in the number of teachers, on top of recent reductions, a reduction in the number of non-teaching staff and in the number of cleaning staff, and a reduction in the school meals service and in the library service.
The assessments have provided numbers for the city council, but I do not want to spell out those numbers, because I do not wish to cause unnecessary alarm. I think that I have shown what profound effect a 5 per cent. cut would have on the education service in Sheffield.
On recreation, a 5 per cent. cut would almost certainly mean the closure of all community-used buildings outside normal hours, the closure of sports halls for at least one day a week—and severely reduced weekend opening—a reduction in park maintenance and a loss of jobs.
A 5 per cent. reduction in family and community services would almost certainly mean a reduction in the capacity of old people's homes and day centres, a loss of home helps and home wardens, a severe reduction in the meals-on-wheels service and a reduction in provision of day centres for the disabled and day centres and residential care for the mentally handicapped. In contrast to such cuts in services, the "Community Inquiry" held recently in Sheffield received evidence from more than 300 voluntary groups about the need for increased spending and improvements to services.
More than 70 tenants' associations in the city put together a report whose main findings revealed that the city has suffered a real cut in its housing borrowing capacity from £49·4 million in 1977–78 to £19·1 million in 1985–86; that of the 85,000 households on some form of benefit in the city, 55,000 are council tenants; that more than 30,000 households and/or individuals are on the waiting list for council accommodation; and that in the council sector, 30,000 tenants live in inter-war houses needing modernisation. One tenants' association said:
"Old people are living and dying in damp, cold conditions worse than those their fore-fathers faced."
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The report concludes:
"It seems that only Government is blind to the Great British Housing Disaster that it is rapidly creating … All our services should be increased, not cut. We need a massive rebuilding, retraining and rehousing programme, not cuts."
The report presented by the Pensioners Action Group highlighted a declining standard of living for most pensioners. Its main findings were that 77·2 per cent. of respondents believed that their standard of living was worse than five years ago and that the most desperately needed services were the home help and home warden services, which are under-resourced.
Finally, in the area of established need, the Sheffield Advice Centres Group co-ordinated findings from the city's advice and community centres. Its main conclusions were that half of all Sheffield households already depend on some form of state benefit and as many as two thirds may be entitled to do so, that one third of all Sheffield households are living at or below supplementary benefit levels, that the city loses an average of £40 million from the Government in unpaid benefit and that the most effective way of reducing that figure would be to establish more neighbourhood advice centres and that, between them, unemployed and elderly people account for 80 per cent. of those seeking help from advice centres. Unemployment in the city has trebled since 1979 and one in five of the population is now a pensioner, one third of whom are over 75.
Clearly, the possible effects on services and jobs in Sheffield of the financial limitations and loss of democratic control that will result from the order that is being pushed through today are unprecedented. Yet the city of Sheffield, singled out for insult by the Secretary of State earlier today, has been singled out for praise by the Audit Commission.
Sheffield city council has no choice but to resist. Because it believes that the Secretary of State is using grant-related expenditure assessments that are based on
"completely wrong assumptions and data",
it is considering challenging the "reasonableness" of the assessment in court. It is also considering taking further legal action over the way in which the Government are seeking to push the draft order through Parliament.
6.7 pm
Mr. Derek Spencer: When I arrive at the gates in the next world and am asked what burdens I bore in this world, I shall be able to say that I paid rates not only in Camden, but in Leicester. Therefore, I declare not one interest, but two. However, my support for the order rests not on the effect that it might have on my pocket, but on my belief that it is unequivocally in the interests of my constituents.
I speak as a former councillor of the London borough of Camden who reported 26 Labour councillors to the district auditor and set in train the case of Pickwell v. London borough of Camden, which is to be found in the law reports. I give Labour councillors on Leicester city council who are minded to act unlawfully fair warning that I know the ropes when dealing with the district auditor and that I am in daily contact with him.
I believe that when the history of the last 10 or 15 years of local government is written, commentators will say that the Government have acted not only reasonably, but with great caution, and that if there is any criticism it is perhaps that they might have acted sooner.

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It is interesting to note the response from various councils throughout the country. Recently, Councillor Phil Turner, who was leader of the Labour group when I served on Camden council, was asked about his new group's view on a civil defence circular sent to the council. In those well-chosen words for which he is so well known, he said,
"Well the group hasn't discussed it yet, but I'm quite confident that when we get round to it, our response to the Government will be 'get stuffed'."
There are many adherents of the "get stuffed" school of local government, and they have their supporters on the Opposition Benches.
If we travel up the M1 to Councillor Turner's counterpart on Leicester city council, we find the bewhiskered figure of Councillor Peter Soulsby. According to the Labour Herald of 1 February, he said:
"The group is firmly committed to non-compliance".
Time alone will tell whether that firm commitment to noncompliance is as strong now, after taking a short trip to Birmingham a few days later, and listening to the Leader of the Opposition, as it was on 1 February. But my experience of five years on Camden council and two years in Leicester tells me that rate-capping is an absolute necessity.
The local government beast will not respond to sticks and carrots. If it did, its response to the system of targets and penalties would have been much more effective than it has been. But over the past four years, Leicester has forfeited about £5 million in grant because it has knowingly and wilfully spent over target. No sane council would indulge in such activity. The lesson is plain. If the local government beast will not respond to sticks and carrots, it must be tethered, otherwise it will run amok.
One need look only at Leicester's spending over the past few years to find ample justification for its inclusion in the order. Let us compare its rate poundage with that of similar cities in the midlands. In Derby the rate in the pound stands at 21p, in Nottingham at 23p and in Leicester at 37·5p. Yet Leicester is a second tier district council that has none of the big spending departments of local government. It is not an education, social services or police authority, and it does not have to finance a fire brigade.
When I went to a council meeting in Leicester as a spectator, the first thing that I noticed was its comparatively exiguous commitments compared with those of Camden. The meeting was over in about an hour and a half and we were out in the bright evening sunlight of Leicester. Yet as the hon. Member for Holborn and St. Pancras (Mr. Dobson) will confirm, Camden could continue its meetings until 2am or 3am. Indeed, that was nothing out of the ordinary for it, and it gave us a very suitable training for the House.
Therefore, given Leicester's commitments, there is no justification for the spending that it has indulged in during the past few years. In the current year, its gross expenditure is £99 million. That is almost one tenth of £1 billion for a place like Leicester. Its income is £38 million. That leaves about £60 million to be found from other sources. It obtains about £38 million of that from rate support grant and from specific Government grants. It gets about £2·5 million from its very ample reserves, £4·7 million from agency reimbursements and £14·6 million from ratepayers. Those figures demonstrate the sort of problems facing local government.
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First, the taxpayer makes a massive contribution to the council's budget, which amounts this year to about £38·8 million. Secondly, hon. Members should bear in mind the massive amount that was taken this year from Leicester's reserves. Did that deplete its reserves? Not at all. Its reserves on the general rate fund for this year are £5·5 million. It has five other accounts in which there are reserves. My right hon. Friend the Secretary of State would have been failing in his duty if he had not had regard to the quite disproportionate figures that are unashamedly shown in the city council's annual reports and budgets. They are there for all to see, and there is no mystery about them. If the hon. Member for Blackburn, (Mr. Straw) is flummoxed about where the figures come from, I should be only too happy to supply him with copies of the relevent documents so that he can see for himself.
Mr. Greville Janner: If the figures are so readily available, why does the Secretary of State refuse to give the basis upon which he has made, and then reduced, his assessments?
Mr. Spencer: There is no point in my right hon. Friend the Secretary of State repeating something that the hon. and learned Member for Leicester, West (Mr. Janner) will know, if he has taken the trouble to open the annual reports and budgets. The figures are there in black and white. There is no point in involving my right hon. friend in this toing and froing, and in what Councillor Soulsby says is a game. Councillor Soulsby may think that it is a game, but the ratepayers of Leicester, South who pay the unconscionable rates levied by Leicester city council do not think that it is much of one. As far as they are concerned, it has gone on for far too long and must come to a halt.
Therefore, Leicester's excessive spending certainly qualifies it for rate capping at the level included in the order. If one looks at the budget accounts a little more closely—since my hon. and learned Friend the Member for Leicester, West asked how the figures are reached—
Mr. Janner: I am not the hon. and learned Gentleman's friend but his opponent.
Mr. Spencer: The planning committee in Leicester will spend £3·2 million in the current year. That is twice the expenditure of the planning committees in Nottingham and Derby. Leicester's expenditure on play centres, leisure and swimming pools is about three times that of any comparable city.
Mr. Janner: Why?
Mr. Spencer: The hon. and learned Gentleman can always look at the Audit Commission's profile on Leicester. If he is not satisfied with the figures in the budget, he can go somewhere else, but he will find that the figures are confirmed.
Thus it is not surprising that, if left to its own devices, the city council would have gone on to even greater excesses next year. A draft budget was handed to me only a short time ago showing that it was contemplating a net expenditure of £32 million in the coming year. If that had been allowed to go through, the rates for next year would have been doubled to approximately 70p in the pound. When people in Leicester ask, "What is this order saving us from?" the answer in a sentence is, "It is saving you from having your rates doubled".

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The most recent draft budget that has fallen into my hands shows that Leicester is planning to spend, if left to its own devices, about £30·2 million. That would give rise to an increase of approximately 70 per cent. in the rate next year. We are very grateful that we shall be saved from that fate.
The rate support grant for Leicester is being put up from £10 million this year to £12·4 million next year—a £2·4 million increase. That completely lays to rest the bogus argument that has been peddled by Opposition Members that somehow the rate support grant will force rates up. It is very generous to Leicester, having regard to its absurdly high expenditure in the past. It is very generous in regard to the gross expenditure of £99·1 million and the amount that Leicester has in its reserves.
The effect of the order, if it goes through the House, will be to reduce the rates next year from the current £14·6 million to £10 million—a £4·6 million reduction, as against a £2·4 million increase in the rate support grant. Against that background, the city council still has over £5·5 million in the reserves, so what is the problem? This is not, as the rate-capping campaign would have the citizens of Leicester believe, an attack upon everybody who takes advantage of the city's services. It does not mean, as the rate-capping campaign shamefacedly contends, that everybody will be hurt if the order goes through. As seen by any fair-minded person, the figures clearly demonstrate that we are trimming budgets back by a sensible and realistic margin; we are not in the business of destroying services.
Recently there arrived in my postbag, in a buff envelope, an enclosure from some well-wisher in the council. The envelope contained a single document—the first report of the officer implementation group of the rate-capping campaign. It was dated 8 October 1984 and paragraph 3 said:
"The campaign will have no credibility without support of council work force and the voluntary bodies the council finance to provide services and employ people".
So that internal report was admitting that, without the support of the voluntary sector and the staff that it employs, the anti-rate-capping campaign would be seen by the public as the confidence trick that it obviously is.
The report goes on to say that there had been set up a joint union co-ordinating committee, and that
"the city council has agreed full-time secondment for certain trade union representatives to work on this".
The report further says that
"This aspect is working well".
It is hardly surprising that it is working well if staffs are being seconded to do the work.
The report goes on to speak of the voluntary sector in not quite such complimentary terms. It says:
"The voluntary sector have been more difficult to contact. 'Get going'."
More work to be done.
We now see what lies at the back of the scaremongering campaign. It has not brought to my surgery many members of the public. The two principal classes of people who have come are staff and those associated with the voluntary groups. They have come as a result of the campaign set up by the city council.
The voluntary sector has been manipulated in the most disgraceful way. Its fears have been stirred up without the slightest justification. I will tell the hon. and learned
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Member for Leicester, West why there is not the slightest need for what has been done. The expenditure on the anti-rate-capping campaign is being provided by the 2p rate — the section 137 expenditure. In Leicester that amounts to £800,000.
A few days ago I received from the chief executive a copy of a letter which he had sent to the permanent secretary at the Department of the Environment complaining that the city's section 137 resources were inadequate to fund the inner area programme, which is the jewel of our crown in Leicester, paid for by the taxpayer as to three quarters and by the council as to one quarter. Last year it totalled about £5·4 million. Therefore, of that sum three quarters was paid by the taxpayer and one quarter—£1·8 million—by the council. Taking away the 2p rate, it means that not much more than £1 million is Leicester's contribution to the inner area programme. That is very modest expenditure. Yet the chief executive told the Department of the Environment that the whole of the inner area programme was being threatened because of the effect of rate capping, and especially the effect of section 137 expenditure.
If the city council can spend its money under section 137 on the anti-rate-capping campaign, it follows as night follows day that it will not have available the same money to spend on the inner area programme. The budget for the anti-rate-capping campaign is £45,000 but, as the district auditor has pointed out to the city council, he is not letting the council get away with that. He will take into account the amount of officer time which, as the officer implementation group report shows, is considerable.
The cost of the anti-rate capping campaign has not been worked out. I should not be surprised if it is well over £100,000. If the city council is sincere about subscribing to and promoting the welfare of the city in the inner area programme, how much better occupied it would have been had it ensured that the section 137 contribution to the programme was maintained and not diverted into that absurd campaign.
I wish to say a few words about the effect that the order will have on jobs. The Opposition argue that rates have no effect on jobs. That is much like saying that there is no such thing as an uneconomic pit. If hon. Members go to those sectors that have been especially hard hit in Leicester by Third world imports such as textiles, footwear and knitwear, where some companies have found it difficult to keep their heads above water, and where profit margins have virtually disappeared, they will understand that 0·5 per cent. may mean the difference between survival and extinction. There are unemployed people in my constituency who have learned that lesson only too well. The blame for that occurring rests squarely on the shoulders of those in the town hall. If we pass this order tonight, which I hope we will, that state of affairs—thank goodness—will come to an end.
6.32 pm
Mr. Guy Barnett: I must leave my hon. Friends who represent constituencies in Leicester and Camden to respond to the incredible speech of the hon. and learned Member for Leicester, South (Mr. Spencer). I do not feel competent to comment on the figures that he produced, but if there were time to do so and if I would not bore the House, I could comment on his attitude to local government. His idea of local government being tethered is in direct opposition to the plea of his hon.

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Friend the Member for Hornsey and Wood Green (Sir H. Rossi) who spoke in favour of the principle of local government, which has been eaten away by Government legislation since 1981.
Last week I suggested to the Leader of the House that it might make more sense to have a separate order for each local authority that the Government proposed to rate-cap. As I have listened to the debate, I have become persuaded that that might have been the sensible way to handle matters. This debate will, inevitably, be bitty. It is impossible to give due or proper attention to the problems of each local authority unless they are considered and debated separately.
During Second Reading of the Local Government, Planning and Land (No. 2) Bill I said that as a consequence of the interference in the activities of local councils, the House would find itself debating the minutiae of local council decisions. That is something on which the speech of the hon. and learned Member for Leicester, South concentrated to some degree. It is profoundly disturbing that this House should find itself debating bits of expenditure—for example, £300 relating to teeshirts—which are more properly of local concern.
On 14 December I presented a petition to the House on behalf of more than 30,000 people of the London borough of Greenwich, objecting to the proposed rate capping of their council. Given more time, many more signatures could have been obtained. The proof of that lies in the findings of a MORI poll conducted last year, which showed that four out of five people in the borough were in favour of maintaining services at existing levels or improving them, even if that meant more rates and taxes. A more recent poll carried out by MORI in December 1984 showed that 70 per cent. in the borough thought that the Greenwich council should be responsible for deciding how much it should spend. The Government should be clear about one matter—what they are proposing in the order is in the teeth of the opposition of the great majority of people in Greenwich.
The Secretary of State responded to the petition on 28 January, justifying his decision to rate-cap Greenwich. He said:
"Some councils spend far more than others on providing the same services."
That might be his view of Greenwich, but it is not shared by his appointed Audit Commission. It refers to Greenwich as efficient and the council as providing a whole range of services at a smaller cost per head of the population than many non-rate-capped Tory London boroughs.
The right hon. Gentleman implied in his response that Greenwich should tackle waste and inefficiency, yet the Audit Commission says that it is an efficient council. Who is right? On what basis does the Secretary of State make his charge? Where is the evidence? Later in his response, the right hon. Gentleman describes Greenwich as:
"one of the highest spenders in the country."
He produces no evidence to support his claim, other than to say that in the current year Greenwich is planning to spend 4 per cent. above target and 20 per cent. above GREA. He says that GREAs take account of:
"the differing needs which councils have to meet in providing the services for which they are responsible."
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No one who has examined the figures can believe that that is so. I do not believe that even the officials in the Department believe that that is so. It is an inequitable and very unjust system.
GREA is used as a reference point for the distribution of block grant. As a result of the system, the Government have filched £94·7 million of block grant from the people of Greenwich. The council has been forced to put up its rates. In a parliamentary answer, the Secretary of State told me that the increase in the rates was 112 per cent.—he said 113 per cent. this afternoon—since 1981–82. What he did not say was that he forced the council to put up the rates so that it could maintain its services and carry out its promises to the electorate. To hear the Secretary of State talk, anyone would think that Greenwich rates were the highest in London. They are lower than Kensington and Chelsea, Camden, Islington and Westminster, all of which have an average weekly rate payment of more than £13. Greenwich is the fourth lowest in the size of rates payments per week in London, with an average of £9–57.
The Audit Commission singles out Greenwich as one of the councils that give good value for money in the provision of services. Yet in a parliamentary answer on 11 December, the right hon. Gentleman said that Greenwich should run its services effectively and economically. I ask the House why he persists in slandering Greenwich council. He produces no evidence, and the evidence of the Audit Commission points in the opposite direction.
The Secretary of State expresses concern from time to time about the effect of rates on businesses. The Secretary of State for Employment opened a new Asda store recently in Greenwich. Asda decided to locate there despite the apparently swingeing rate bills that it would have to pay. A recent report showed that the business rates on commercial property are lower in at least seven rate-capped local authority areas in London than they are in a number of so-called low-spending authorities, and one of the authorities concerned is Greenwich.
There is no fairness or justice in the right hon. Gentleman's system. Greenwich council has persistently asked the Secretary of State on what basis he has acted. He will not say. Instead, he poses as the champion of the ratepayers of Greenwich, from whom he has filched a cool £95 million.
The right hon. Gentleman prates on about expenditure on police committees and so on and calls it nonsensical spending—as though it had anything to do with him—when the activities to which he objects constitute a minimal part of the budget of Greenwich. The right hon. Gentleman told me on 11 December that the Government would watch carefully where Greenwich made its savings. If Greenwich were to obey his diktat, it would have to sack 1,000 council employees, increase delays in all council services, increase council house rents, cut down on council house repairs, increase charges for the elderly and handicapped, reduce nursery places for the under-fives, cut back on home helps, provide fewer books in libraries, close swimming pools and sports centres, cut down on cleaning and refuse collection, cut grants to voluntary groups and small businesses and end training and apprenticeship schemes for school leavers.
That is what the Secretary of State is demanding, and he is demanding it of a borough in which a quarter of the population live in poverty, one in six cannot afford adequate heating, one in eight cannot afford new clothes, one in six are pensioners and one in 10 live with disabled

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or infirm people. No wonder the majority of people in the borough regard the right hon. Gentleman's behaviour as totally unreasonable.
The Secretary of State will not say on what basis he is acting. Is it any wonder that many councillors are deeply distrustful of him and his motives? They will not seek determination for the reasons which the leader of Portsmouth city council has given and which have been quoted today. If that is the way in which a Tory local authority leader thinks, can the House wonder at the suspicion and distrust of Greenwich council, which is Labour-controlled?
As I said on 11 December, when the RSG was announced, the Secretary of State's attitude is nothing short of unjust and vindictive. I go further. His behaviour is shameful because he is demanding that my council cuts its services and provision for the weakest, most disadvantaged and poverty-stricken members of the community. That has provoked the anger of thousands of people in my constituency and in the borough of Greenwich.
6.47 pm
Mr. Gerald Bowden: If there was one issue beyond all others which dominated the 1983 general election in the Dulwich constituency, it was the high burden of rates imposed on the residents there by the GLC, ILEA and Southwark council. Today's measure will be welcomed by the ratepayers of Southwark.
It is worth analysing the payments that are made. Only 28 per cent. of the residents of Southwark pay full rates. The remaining 72 per cent. are on some form of rent or rate or rent and rate rebate. It is the duty of every local authority to make sure that it is accountable to those who pay for its services and that the services it provides for all its residents are the best possible. Southwark council has singularly failed to do either.
Mr. Dobson: We have for long heard of the American concept of no taxation without representation. Does the Tory party have a variation—that of no representation without taxation?
Mr. Bowden: It is in fact taxation without representation because two thirds of the rates paid in Southwark are paid by commercial ratepayers. Although they pay two thirds of the total rates, they have no representation, and that is where the problem lies.
Our view is that the best possible services should be provided. Rate capping has provided a discipline which could and would work in Southwark if those who control the council had the will to make it work. The gap between the capped expenditure level and the proposed base budget is about £22 million.
The minority group on Southwark council has produced an alternative budget demonstrating the way in which that gap could be closed, and that scheme has been checked and discussed with officers of the council. The officers agree that, in the current year, the £22 million could be reduced by £10 million to £12 million by creative accounting. That could be done now. There would be opportunity in future to reduce that £12 million to £7 million on an ongoing basis.
A rent increase of around 7 per cent. would reduce that to £4 million and would, at the same time, reduce the rate
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burden on those paying rates in council accommodation by more than the rent increase, a point which has not previously been taken on board. If we wiped out the political boost which has been put into the housing maintenance account, of about £6 million, we could reach the rate-capped expenditure level this year without great hardship. I readily acknowledge that this year is one thing and the future is another. In the long term, we could have the opportunity to reduce expenditure.
My hon. Friend the Member for Streatham (Mr. Shelton) spoke by way of comparison between the London borough of Wandsworth and Lambeth, and I will draw a similar comparison. In 1977–78, the rates in Wandsworth were greater than those in Southwark. However, let us consider what has occurred in the intervening eight years, when Wandsworth has had a Conservative cost-conscious council.
Today, the total rate payable in Southwark is 260p. The total rate payable in Wandsworth is 137p. The borough rate in Southwark is 149p, whereas in Wandsworth it is 26p.
Wandsworth has 1,688 empty dwellings, while Southwark has 4,281. Wandsworth has 24 dwellings containing squatters, whereas in Southwark there are 1,104 such dwellings. Wandsworth is £3 million in rent arrears whereas Southwark has arrears of £17 million. Wandsworth has 5,766 staff, while in Southwark the staffing is up to 8,988, and 1,000 new members of staff have been taken on since 1982.
Let us compare the delivery of services. The cost of refuse collection in Southwark is £21·16 per head, whereas in Wandsworth it is £8·71 per head. The cost of maintaining highways in Southwark—the roads are not noticeably better in Southwark than in Wandsworth—is £36 per head, whereas in Wandsworth it is £15 per head.
Across the whole range of services, there is an opportunity for cost-effective improvements to be made in the way in which those services are delivered. There is no doubt in the minds of most people that the extremely high cost of services in Southwark is not reflected in the services that are being delivered. It is evident that the amenities that are being provided in Wandsworth are as good as, if not better than, those provided by Southwark. There is clear evidence that Southwark is not delivering the goods and services that it should be delivering to its ratepayers at a cost they can afford.
The Labour administration of Southwark council opposes rate capping for political rather than financial reasons. When it initiated its rate-capping opposition last year, Southwark council obligingly displayed posters in the borough bearing my name and photograph along with my telephone number. It suggested that any ratepayers who were troubled by rate-capping should telephone me. The House will be interested to know that I did not receive one call from anyone concerned about rate-capping.
It is interesting also to note the attitude of political opposition and the turn that it is taking. Some of my constituents attend my advice surgeries with problems that are more properly dealt with by their borough councilor. I follow the procedure which is usually adopted by all hon. Members. I take the details and if it is a housing matter I write to the director of housing about it. I refer the matter also to the ward councillor concerned. I write to the effect that I am sure the ward councillor will want to follow up

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the matter. This has been a reasonably satisfactory arrangement, inasmuch as something is sometimes done. More often than not, unfortunately, nothing is done.
Last week I wrote to the director of housing and referred the papers to the ward councillor. She replied to me in this tone:
"Dear Mr. Bowden, I am returning the information which you sent me. I cannot possibly act for a client who has contacted you, given that the policies of the Conservative Government are causing such havoc in Southwark. Our chronic housing shortage and inability to maintain our properties is directly due to the reduction in our HIP allowance, and withdrawal of rate support grant, as well as the abolition of the GLC, has made our job as councillors impossible. I suggest you explain this to people who contact you."
Indeed, I am explaining this to those who contact me. I am explaining that this councillor is, disgracefully, unwilling to do her job. I shall refer the letter of Councillor Helen Penn to the Committee of Privileges. I think that there is an intrusion in what Councillor Penn is doing—
Mr. Dobson: Do the job that you are paid to do.
Mr. Bowden: That advice is exactly that which I suggest Councillor Penn should take.
The capping of rates will improve services, or give the opportunity for services to be improved, for many of the organisations and businesses which pay heavy and high rates. It will increase the opportunity for employment. It will encourage those who are thinking of leaving the borough to remain. It will have an effect on Health Service provision. Excessive rates are being paid by Guy's hospital, King's College hospital and Dulwich hospital. The excessive rates that these hospitals pay should not be made available to Southwark council wantonly to squander. The moneys should be more properly used to provide acute medical services.
I support the order because I think that it will introduce a right and proper discipline and focus for Southwark council. At the same time, it will give the opportunity to deploy resources and improve services generally for all who live in Southwark.
6.54 pm
Mr. Greville Janner: It will be more appropriate for me to leave London Members to wipe the floor with the hon. Member for Dulwich (Mr. Bowden). But as he has seen fit to associate himself, most dangerously, with the hon. and learned Member for Leicester, South (Mr. Spencer) in suggesting that only those who pay rates should be entitled to accountability, it is right to say that I have always believed that councillors and Members of Parliament should be responsible and accountable to the electorate, and not merely those who have money.
The hon. Member for Dulwich said that in Southwark only about 32 per cent. of those living in the borough pay full rates. The obvious question is "Why?". The answer is that so many in the borough in which his constituency lies are not well enough off to be able to afford to pay full rates. Even under this Government's rules, they do not have to pay them. He should be ashamed of trying to take away still more of the resources that are needed by so many. His justification for wishing to do so was the same as that of the hon. and learned Member for Leicester, South. His argument is that those engaged in business and commerce would pay less rates.
The hon. and learned Member for Leicester, South understands so little about Leicester, Leicester people and
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the way of life in the city. Even those engaged in commerce want to have their businesses in a city that is solvent. They do not want the city's reserves to be eaten up in the way that the Government require but which no sound business would tolerate. When I asked the Secretary of State on what he based his figures, his answer was pathetic. Now we are told by the hon. and learned member for Leicester, South that this has nothing to do with the Secretary of State. It is the Secretary of State who is responsible for these matters and he will bear the responsibility. The hon. and learned Member for Leicester, South argued that there was no point in involving the Secretary of State in the dispute. Let it be remembered that the Secretary of State created the dispute and has been personally involved in it from the start.
The hon. and learned Member for Leicester, South said that he represented his constituents in supporting rate capping. He does not. It is obvious that he does not know the feelings of his own constituents. I shall speak for my constituents. They are the people who need the services which Leicester city council, which the hon. and learned Gentleman deplores, was elected and re-elected by ever growing majorities to provide. The hon. and learned Gentleman calls for reduced expenditure. Which expenditure? He has not answered that question. When he talks about the anti-rate-capping campaign and describes it as "absurd", he should realise that there is nothing absurd in providing the people with information about what the Government are doing. It is right that they should know what is to happen.
The hon. and learned Member for Leicester, South talked about the profile of Leicester. He should understand that it includes almost 20 per cent. of the population who want jobs and are unable to find them. In one estate in my constituency about 60 per cent. of the residents are unemployed and looking for jobs. That is the profile of the city that matters to me. In that estate the council has been running a housing improvement programme so that people can have decent homes and the dignity of living in them. Unfortunately, that programme is now hit by cuts.
The hon. and learned Gentleman did not mention—perhaps he does not know—that about 20 per cent. of Leicester's population is Asian. Most of the Asians live in private housing. Much of that housing, whoever lives in it, is subject to improvement grants and they will he cut as well. The private sector will suffer along with the public sector.
Perhaps the hon. and learned Member for Leicester, South does not appreciate the consequences of that for which he is arguing. Between 800 and 1,000 employees will be sacked by the council. When that happens they will ask, "What did you do to protect us or defend us?" The hon. and learned Gentleman will have to say, "I supported that which the Government are doing."
People are entitled to have homes and it is a fact that the construction industry is on its knees in Leicester. There are construction businesses in the hon. and learned Gentleman's constituency and they provide work as well as houses. They are being ruined by what is happening. The hon. and learned Gentleman should understand that both the private and public sectors are involved.
The hon. and learned Member for Leicester, South talked about recreational facilities and asked why more money was being spent on them. In my constituency there is a new and vast estate called Beaumont Leys. It comprises private and public housing. It has been built by

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Conservative administrations as well as Labour ones and now it is being ruined by this Conservative Government. A great effort is being made to build and pay for a leisure centre so that the estate is not a desert as some of the old fashioned estates used to be.
When the time comes for swimming pools to be closed the hon. and learned Gentleman's constituents will ask, "Why?" He will have to tell them that he supported the Government in a policy that led to the closing of pools. Swimming pools are used by the well-off as well as the disadvantaged.
I deplore the dividing of Leicester into the better off and the worse off. All citizens are entitled to local government services. They will all complain if refuse is not collected. Probably the first ones to complain will be those engaged in commerce. There will be general complaints that the streets are not lighted. The first to complain will be the articulate. We in this House should speak for the articulate but especially for those who are not able to speak for themselves.
Local government provides services from rat-catching and environmental health to planning, which the hon. and learned Member for Leicester, South deplores. When cuts take place the disadvantaged will suffer, but the suffering will not be confined to them. Of course, they will suffer the most—they always do.
How can the hon. and learned Gentleman talk in such terms about "a place like Leicester" with gross expenditure of £99 million. Does he really care about the city and those who live in it? It is not "a place like Leicester". It is a city which the hon. and learned Gentleman and I represent in part, and he should be advancing its interests in this place. It is those interests that are being damaged.
Of course the city council does not have to pay for education and social services because only a fraction of the rate collected is for the city. The rest is for the county. A Liberal Member who is no longer here saw fit to attack the Labour party. I say in his absence what I would have said in his presence. If his people had not put the Labour party out of office in the county, the county council might have been able to make good some of the damage to the city. By uniting with the Tories they showed what they really are—nothing more than Tories under another name.
On behalf of the people of Leicester—south, north, east and west — I suggest that the anti-rate-capping campaign is far from a confidence trick. The confidence trick is much more subtle. It is that this year the city council will be forced not just to take money from reserves and to keep the rates down, but just before the elections next year it will have to put the rates up even to meet the rate-capped limit. That is the confidence trick and it must be revealed now and at all times in the future.
As for "tethering the beast of democracy", anyone who has been a local authority councillor should defend the freedom of the local authorities of this country. They should not be tethered by the present movement of non-enlightened, non-benevolent central Government dictatorship which is taking over the powers, duties and moneys of local authorities. All who care about our cities and the people who live in them should oppose that.
The Secretary of State made petty, pathetic debating points, showing no understanding of the problems of the people of Leicester. His proposals are merely a continuation of swingeing cuts and wicked bungling.
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Since 1979 the people of Leicester have continued to elect the city council because it has done a first class, efficient and excellent job for the people of the city. It continues to employ people. The hon. and learned Member for Leicester, South talks about what is "uneconomic". Perhaps in his view it is uneconomic to provide services paid for by central Government and from rates.
Expenditure from rates has risen because central Government grant has been removed. The money has to come from somewhere. The inner area programme is desperately needed, but 25 per cent. of the cost will have to come from the city and with rate capping that will simply not be possible.
It is not just a matter of housing, roads, and lights or even of parks, the advice centres or of play centres, which the hon. and learned Member for Leicester, South recently said were not really necessary and for which he was rightly accused of heartlessness. There are also other civilised aspects of life which make a city sparkle, such as the marvellous efforts of the Haymarket and Phoenix theatres, both of which are now at risk. But for the Phoenix, Adrian Mole would never have emerged into the West End. I give an advance trailer that the cast will be coming to see the Minister for the Arts on Wednesday, when there will be a small performance at which all hon. Members will be welcome. It will be a matter of grim seriousness because we do not want to lose the theatre from which that play emerged, but I do not suppose that the Government will listen.
Hundreds of voluntary and statutory bodies, advice services, play groups, race relations bodies, street cleaning and refuse collection services, lighting, environmental health services, planning departments and concessionary fares for the elderly and disabled are now at risk. They will not all go, of course, because the council will fight to keep what it can. I should point out to the hon. and learned Member for Leicester, South, however, that even the well off if they are lucky get elderly and if they are not so lucky they get disabled. Those problems and the need for concessionary fares are shared by us all.
I do not intend to take even half the time that the hon. and learned Member for Leicester, South took as so many other hon. Members wish to speak. I merely make this plea to the Government, although they are no more listening in reality than they do in theory. Not one Minister is applying an ear to this. The radio station Leicester Sound asked me today by telephone whether I thought that the Government would listen to me. I said, "They may listen but they will not hear." I beg the Minister to understand that his proposals will cut away the rights, the services and the civilised decencies not just of the disadvantaged but of all citizens of a great city which was once so dignified and well off and is now being tethered by this awful Government.
7.5 pm
Mr. K. Harvey Proctor: In the battle of the Leicesters, I believe that the cool logic of my hon. and learned Friend the Member for Leicester, South (Mr. Spencer) carried the day against the rather emotional rhetoric of the hon. and learned Member for Leicester, West (Mr. Janner), but I can scarcely be regarded as a neutral umpire.
The hon. Member for Blackburn (Mr. Straw), opening for the Opposition, said that these local authorities were important because, among other reasons, they spent

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£1,200 million per year, and so they do. The basis for the order and for rate capping is that local authorities spend so much of our money. Control of inflation was the prime economic policy on which the Government were elected in 1979 and 1983, and the nub of that is the control of public expenditure, which must include local authority expenditure.
The rest of my remarks relate exclusively to the constituency of Billericay, two thirds of which is in the Basildon district council area. Rate limitation applies to councils which are budgeting to spend in the present financial year more than 20 per cent. above grant-related expenditure assessment, and more than 4 per cent. above target. The figures for Basildon are more than 70 per cent. and more than 17 per cent., so it is not a marginal case.
At the outset, I appeal to Labour councillors in Basildon to abide by the law—to seek to change it if they dislike it, but not to breach it. In the past three years the Labour-controlled council has increased its spending by almost a quarter—more than twice as much as prices have risen. The local rate has risen by one third, from 32·4p in the pound to 42·8p in the pound. In the same period, the average increase for district councils was less than 10 per cent.—from 19·5p in the pound to 21·3p in the pound.
Under the Government's proposals, the estimated net expenditure limit for the financial year 1985–86 is to be £13,662,000, equivalent to a 53·7p in the pound rate, allowing a block grant contribution of £878,000, equivalent to 3·46p in the pound. Thus the rate levy required would be about £12,784,000, equivalent to 50·33p in the pound, assuming nil balances, and that figure appears in the order today. If, however, net expenditure was fixed at £13,447,000, Basildon district council would attract an increase in Government grant of £390,000 — a total of £1,268,000 or a 4·99p in the pound. The rate levy would be £12,179,000, or 47·95p in the pound. Therefore, a further cut in expenditure of £215,000 compared with that required by this order would attract additional Government grant of £390,000 and a saving of £600,000 to the ratepayers of the district. That is what the Conservative group on Basildon district council proposes, and that can be achieved without detriment to essential services. The limits in this order are maximums, not minimums.
Basildon district council estimates that it is being asked to save in the order of £1·5 million. That is not so. The total is about £600,000. The hon. Member for Blackburn mentioned the Audit Commission report, which clearly states that just on the administration of housing Basildon spends £600,000 more than any other comparable authority — £100 more on each house than the average council. The council also spends £180,000 on public relations and £120,000 on subsidising heating, which is not normally a local authority responsibility. It spends five times as much as its neighbours on concessionary fares, including cash grants for non-users, and way above the average on sport and recreation, even though its charges to users are way below average. All these points arise from the Audit Commission's report which the hon. Member for Blackburn was so keen to quote. That report identified expenditure totalling £4·7 million in areas in which Basildon district council spends more than the average council.
I do not believe that the savings which the Government are asking of that council are difficult to achieve. I would like to give the House an example of how it could save
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£100,000. It so happens that at present there are four vacancies on Basildon district council—public relations officer, political officer, deputy town manager and neighbourhood support services officer. The work done by those people could be spread among the other staff, and the saving on salaries and overheads would be of the order of £100,000. Instead, the council's Labour leadership has given the staff unions a pledge that there will be no redundancies from now until April 1986.
The House may also be aware that Basildon district council has been spending a lot of ratepayers' money on propaganda, some of which has no doubt landed in the waste paper baskets of hon. Members. A MORI public opinion poll was commissioned in Basildon, and with great glee the result was sent to my hon. Friend the Member for Basildon (Mr. Amess) and myself. It was discussed at the council meeting on 14 February and a press conference was held on 11 February. Up to now, the district's Conservative councillors have not received a full copy of the report. This propaganda exercise was commissioned from part of a budget to Union Communications, to which Basildon district council has paid £60,000 to promote its view on rate capping.
That opinion poll was conducted between November and December 1984 and is, therefore, already out of date. A total of 689 people in Basildon were interviewed, of whom 106 were under the age of 25. I do not quibble about that at all, but I do quibble about the fact that some of there were aged 15, 16 and 17. This marvellous opinion poll did not ask a number of questions. For example, it did not ask whether any of these people interviewed was a ratepayer. In fact, the word "rates" is not mentioned in any of the questions. Those interviewed were not asked the obvious question—relevant to our debate—about whether they believe Basildon's rates to be too high, too low or just about right. That question was never put, because the council knew what the answer would be. Nothing was said about the rate level being so much in the pound or that the cost to ratepayers would be so much, whereas this order will limit the rates to 50·33p in the pound.
The leader of Basildon district council said in a letter to me dated 13 February:
"You will see from the enclosed summary that the overwhelming majority (81 per cent.) of Basildon residents believe that Council, not the Government, should be responsible for determining levels of local spending".
However, he got the question wrong. The opinion poll asked who should be "mainly" responsible for deciding the level of spending on local authority services. In my view, the local authority should be mainly responsible, but there are overriding cases—the control of inflation is one—which allow Parliament and Government to act in the way that they have.
In the past, there was always a concordat between Government, Labour or Conservative, and local authorities, Labour or Conservative, on expenditure levels. That was broken by a few local authorities, which is why we are discussing this order tonight.
Despite this MORI poll and the propaganda exercise carried out in Basildon, Billericay and Wickford, the voting intentions of those who were interviewed showed that the Conservatives would get 30 per cent., Labour 27 per cent. and the Alliance 16 per cent. That clearly means that my hon. Friend the Member for Basildon and I would be re-elected at the next general election. I did not need an opinion poll on the rates to prove that.

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The local Labour leader is so happy with the state of affairs in the Basildon district council area that he is now pushing the local government Boundary Commission to consider a split whereby my constituents in Billericay and Wickford would separate from Basildon. Setting aside this opinion poll, he says that the majority of representations which he has received on the proposed split are overwhelmingly in favour of a division. One reason must be the high rates which Basildon levies and the fact that services are not good value for money.
Basildon district council assiduously propagates the psychological conditioning factor on my constituents that it is a "caring" council. It does not care for domestic ratepayers in Basildon, Billericay or Wickford, for the chap in business and industry who has to pay rates, for the wealth producers or the job producers. It does not care about the results of parliamentary elections when they go against its political colouring or about the truth, as the propaganda that it spreads shows.
I am delighted that my right hon. Friend the Secretary of State and my right hon. and hon. Friends who are Ministers in the Department of the Environment care about election pledges and are prepared to honour them. On that basis I am prepared to support the order.
7.20 pm
Mr. Laurie Pavitt: The hon. Member for Billericay (Mr. Proctor) will not expect me to follow him into the wilds of Essex. Like him, I wish to concentrate my contribution on my constituents. I have listened to every speech, and the only hon. Gentleman who pontificated in an instant do-it-yourself way about the constituencies of other hon. Members was the hon. Member for Southwark and Bermondsey (Mr. Hughes). When he talked to the three Liberals who sustain the Conservatives in my area, he took from them a great deal of erroneous information.
I am sorry that the Secretary of State is not present, but I welcome the Minister for Local Government. Although he is a little bit of a Left-winger, his star is rising, while that of the Secretary of State is sinking in the west. I am rarely unkind, but I accuse the Secretary of State of being absolutely callous towards the personal tragedies that this obnoxious, unjust order will cause to hundreds of my constituents in Brent.
Many hon. Members have spoken about their surgeries. In my surgery I see family life shattered by inner city deprivation. There is homelessness, and we face housing problems. I have to refer to the Marriage Guidance Council young couples whose marriages are breaking up because of homelessness or a lack of a place of their own. First, they move in with mother or mother-in-law and after a time they cannot hold the marriage together.
The proposals facing the social services department mean that the elderly will face death in a geriatric ward. There are inadequate social services to maintain them with dignity in their own homes. In Harlesden, 80 per cent. of the people have a Caribbean origin and in Alperton 56 per cent. are Asian. The Brent council must maintain its first -class record on racialism throughout its social services, educational and other provisions, and build a successful multiracial community, as it has been doing during the past three decades.
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For 26 years I have dealt with housing problems at my surgery. At present, more than 1,000 people are in temporary accommodation. This week, 670 people are in bed-and-breakfast accommodation. A visit was paid recently to three hotels, the Princes Square, Conway Court and Lion Court hotels, which we must use. The report lists the problems to be

"—Overcrowded and dangerous kitchen facilities

—Children climbing 5 flights of stairs to take the family meal to their parents' room

—Bitterly cold communal areas

—Dangerous electrical connections

—No taps in communal bathrooms or showers

—Damp conditions in shower units

—Fire doors jammed open and no clear Fire Exit markings."

It is an insult to a civilised society that 670 families are living in those conditions. The order will mean that the council will have to deal with more and more people in an inhumane and uncivilised way. At present, each family costs £1,800. At the present rate, we shall have bed-and breakfast accommodation for those people for at least the next three years. If this rate cut is persisted with, they may be there for much longer.
The tragedy of 20 years ago was the building of high-rise blocks. We call them concrete jungles. Six council estates in Brent urgently need to be refurbished. Security is needed. There is constant vandalism, harassment, and sexual assaults in the walkways, which need to be blocked off. Brent had to stop that programme because of lack of cash. There is a need for security at the entry to each of the blocks on the Stonebridge estate, where there is a large proportion of people from ethnic minorities. Assaults are not necessarily carried out on whites by blacks or vice versa, but often Asians are attacked by other minorities. Racial harassment is a problem, and many homeless families will be scared to return to places such as Chalkhill and Stonebridge, and will prefer the indignity of bed-and-breakfast accommodation. The present wave of violence is there but the council's lack of money makes it unable to deal with the problems.
There are 16,000 names on the council waiting list—that is a crisis—and 4,000 applicants for transfers from high-rise blocks. Yet there were only six new housing starts in January 1985. With rate capping, there will be even fewer. Rate capping means that 20 per cent. of our present rate will be cut. Councillor Tom Bryson says:
"The Brent part of the total rate has been fixed by Patrick Jenkin at 196·42p (up by 1·5 per cent. only towards inflation, etc.) which means that even if Brent Council levied the maximum permitted rate, and precepting authorities acted as anticipated, we would have a 6 per cent. rise in rates but still only raise less than £100m towards a standstill budget figure of £174m."
He concludes by saying that the council will have an expenditure gap of about £30 million.
The position is aggravated by unemployment. Since 1979, the dole queue in Brent has increased fourfold. It was 4 per cent. and it is now 16 per cent. of the population. The consequence of unemployment is rent arrears, and the consequence of rent arrears is the council's difficulty to meet housing needs.
There has been increased pressure on social services. The straitjacket of this order is that social services must cut one area of responsibility to maintain the others.
I received an interesting letter from the Minister for Health about social services in Brent. In it he makes it absolutely clear that to contain expenditure in one area means to cut services in another. I received a letter

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recently from one of the best general practitioners in my area, Dr. Ronald Law of Wrottesley road. He is in difficulties because his elderly geriatric patients whom he does not want to send to a geriatric ward cannot get adequate meals-on-wheels and home-help services. The council has had to trim those services during the past two years because of the cut in the rate support grant. Under the order, the rate support grant will be further cut and the elderly who depend on community services will suffer. The order cannot be passed without services to the elderly, the disabled and the needy being cut.
Mr. Richard Holt: I have listened to the siren voices saying what will happen in my home town, but I must tell the hon. Gentleman that this evening I spoke to the leader and the deputy leader of Brent council, both of whom assure me that all services will be maintained without a rates increase. There will be no cuts such as the hon. Gentleman described.
Mr. Pavitt: The hon. Gentleman served on Brent council and, as he says, it is his home town. However, I could give him chapter and verse of the figures. He will know that the budgets have been put forward at three public meetings. Despite what Councillor Lacey says, it is obvious that £30 million must be found. Mr. Lacey believes that he can find £16 million without much difficulty, but that still leaves £14 million to be found in the existing system. That was the point I made to the hon. Member for Southwark and Bermondsey.
Mr. Simon Hughes: The officers clearly believe that, although there may be problems next year—I do not doubt that—this year, provided that the housing benefit grant of between £2 million and £3 million is repaid, they can produce a budget with no cuts. Obviously, that does not apply to next year.
Mr. Pavitt: Needless to say, I have had long conversations with Mr. Steed, the director of finance of Brent council. I also have the figures. The hon. Gentleman is right to say that the council will be able to find some money, but there will still be cuts in housing and social services. A major disaster will occur next year when capital expenditure is cut. The Minister for Local Government gave me the figures. As Brent will pay 0·5 per cent. more for its capital borrowing, and as 75 per cent. of capital expenditure goes on housing, the taxpayers will have to pay an extra 0.5 per cent. I do not know whether the Minister intervened in the matter, but instead of having to wait until July, Brent will be able to borrow again in April. However, that does not alter the fact that rate capping will force the ratepayers to pay more.
The director of social services of Brent council states:
"Both our home care and meals on wheels have been reviewed in the last two years and both show serious deficiencies."
That is even before rate capping. She continues:
"The demand for social services provision continues to increase as a result of population, economic and social changes. At the same time there are cuts in related services such as the Health Authority. Due to increasing numbers, there is a need to give higher priority to services for both the elderly and the under-fives."
Last week, I received a deputation from the Treetops centre for the under-fives, which is likely to close in the near future.
The director of social services said that the council will
"continue to pursue a variety of approaches to enable community care to be developed in place of institutional treatment. Within
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the department, the impact of a community care approach continues to involve changes in use of establishments, and a switch away from residential care towards community care."
As I told the House previously, the council propose to remove 60 people from Shenley hospital for the mentally ill and place them back into the community. This will prove extremely expensive for the community care services.
The director mentions the social implications of homelessness, and states:
"The department places a high priority on the need to ensure a more diversified service which is accessible and relevant to all ethnic groups."
I have studied carefully two recent reports on the needs of the elderly, and I shall quote from a letter about them:
"The conclusion of the first report concerned with Meals Services in Brent speaks for itself. To keep an ever-increasing number of elderly people in the community requires greater input. I am also attaching our October report, which implemented budget proposals for 1983–84, but still leaves us with a shortfall on outdated yardsticks for 1984–85. Next year I can see only a minimum being available."
May I ask the Minister to deal with two matters when he replies? First, what conversations took place between the officials of his Department and the leaders of Brent council, Bob Lacey, about the way in which the rate-capping limits were fixed? Was there any contact between his officials and Conservative party central office, which the right hon. Gentleman knows has been much involved in the affairs of Brent since 1983? Secondly, the Secretary of State talked about the help given to Lewisham by creative accounting. As the Minister knows, Brent also has a fine record of creative accounting. In fixing the rate, was consideration given to what has been done in that respect?
It is nonsense for the Secretary of State to grant urban aid status to the London borough of Brent with one hand and to rate-cap it with the other. The Tory and Liberal-controlled council has made drastic cuts today which are seed corn for tomorrow. The hon. Member for Southwark and Bermondsey was interested in the three Liberals who are prepared to sustain Conservative control of the council, despite the fact that the Conservative party has one seat fewer than the Labour party. I do not believe that the Liberals will break with the Tories, but they must face the fact that they must find £14 million in addition to the £16 million which the Conservative leader believes that he can find without redundancies. If the council manages to do that, the public should know that the behind-the-scenes work of the Liberals will be sustaining this order.
The good news is that last week there was a by-election in a solid Tory ward, which produced a 15 per cent. swing to Labour. That means that Labour will take control at the next council election and that the three Liberals will lose their seats. At least we shall not have to listen to them in the council chamber, although we have no choice but to do so in the Chamber of the House of Commons.
7.35 pm
Mr. David Amess: I am proud and privileged to represent Basildon, which is in every sense a fine town. I greatly enjoy living there. I try to represent my constituents to the best of my ability, taking an interest in all matters and doing my best to promote the town. Alas, there is a thorn in my side—Labour-controlled Basildon district council. Since I made my maiden speech during the Second Reading debate on the Rates Act 1984, the council has accused me of stabbing the town and my constituents in the back. Far from that being the case, my

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wife has to examine my back every night for knife wounds inflicted by some Labour councillors' words of abuse. My Labour opponents locally have dubbed me a "yes man" and say that I spend all my time creeping and crawling round Westminster trying to get a job. If that was my motive, I have failed miserably.
I stand by the speech that I made during that Second Reading debate and by my suggestions for saving money without affecting services. I served on the Committee stage of the Rates Bill, and I believe that Ministers clearly won the argument for the principle of rates limitation, emphasising as they did the changing relationship between local and central government and the amount of money contributed by businesses and by the Government.
It came as no surprise to anyone when the Secretary of State, after drawing up the selection of criteria for limiting rates, found that Basildon district council—by anyone's standards a high-spending authority—met all of them. The local Labour party refused to accept that decision and launched what it described as a campaign to defend Basildon from the attacks made upon it by the Government. Yes, Basildonians, like the good eastenders they are, immediately barricaded their homes and began to build air raid shelters. Of course, the Labour authority did not help itself in readiness for the attack by having declared Basildon a nuclear-free zone.
In reality, the council's excitable reaction related to this rate limitation order. However, the Labour-controlled council launched the ultimate in a political propaganda war — not I might add that it was paid for through jumble sales or whist drives, but through sections 137 and 142. A public relations company called Union Communications was instructed to join the battle and to spend in so doing £146,000 of ratepayers' money. The political propaganda campaign has produced one almighty fiasco after another. Public meetings were held, supposedly to give information, but they were clearly biased. The only people attracted to those meetings were political activists and, at one meeting, the majority of the audience left after being informed, wrongly, that the meeting was to discuss the conservation of an open space.
Then the council asked for an Audit Commission report on the efficiency of its services. This well and truly backfired, having been launched in a blaze of expensive publicity, as it clearly showed that considerable savings could be made.
But the most remarkable piece of propaganda was produced by the council when it asked MORI to conduct an opinion poll on the provision of council services. I had no idea that this was being conducted, and I am sure that the Government did not either. Surprise, surprise, the findings of the poll arrived on my desk the Friday before last—of course the press had received copies already. The opinion poll is nearly three months old but had been sat on to try to embarrass us during today's debate.
This extraordinary opinion poll asked people whether they were satisfied with the provision of various services. It did not ask them whether they paid rates, whether they would be prepared to pay extra rates for the provision of services, or whether they voted in local elections. It did not ask them whether they understood which services were provided by the Government, which by Essex county council, which by the Basildon district council and which by the development corporation. It is a little surprising that
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an opinion poll comes to the conclusion that Basildon district council is the most popular district council in the country when the turnout in local elections is only 30 to 40 per cent.
It is a brave man who places credence upon opinion polls in Basildon. Not many people were predicting that a Conservative Member would be returned for the seat of Basildon in 1983. Four weeks before the general election, the local Labour party got 52 per cent. of the votes cast, and I lost my one and only Conservative district councillor. That left me without any Conservative district councillors or county councillors. The constituency was rated as 112th of the Labour seats that could be won by the Conservatives. However, when the count took place, it was found that I had achieved the biggest swing to the Conservative party in the country, and had become a Conservative Member of Parliament. Throughout the general election campaign, I constantly referred to the high spending of Basildon district council and to my support for rate-capping measures.
I am proud of the services in Basildon. People from all over the country write to me saying that they wish to settle in my constituency. However, through such magazines as the Basildon Link, many of my constituents have been deceived into believing that the council provides all these services. The truth is that by far and away the majority are provided by the Essex county council or the Government. The Labour-controlled council is expert at taking credit for things that it has not funded or initiated. For example, the Basildon Link constantly refers to home support services and home help services, but these services are provided by Essex county council. Basildon district council is publicity-mad. Unfortunately, Essex county council is publicity shy.
One of the most compelling arguments for supporting rates limitation in Basildon must be the present level of unemployment. There are far too many people without jobs. High rates destroy jobs. It is a pity that the MORI opinion poll did not ask the business community to comment on rates in Basildon. If it had, the clear response would have been that they are too high and that they destroy jobs. Only yesterday, one local business man urged me to support tonight's order, and called my right hon. Friend the Secretary of State for the Environment St. Patrick.
The council had planned to spend £15·7 million in 1985–86, which would have meant a rate increase of 36·33 per cent., instead of the rate limitation being set at 17·59 per cent. Some of my constituents were a little surprised with even this high limit, but I appreciate that the council kept its rate artificially low last year—election year—by running down its rate fund balances.
I have received a letter from the leader of the council which informs me that the order will result in cuts in Basildon of £1·5 million. This is yet another in the long line of myths perpetuated by the propaganda machine. The truth is that my right hon. Friend the Secretary of State for the Environment is asking for only the relatively modest saving of £600,000. Many sensible sectors for savings can be found, and many of them are contained in the Audit Commission report.
The cut for which my right hon. Friend the Secretary of State has asked represents exactly the amount above other comparable authorities that Basildon spends on the administration of housing. In Basildon, £100 more is being spent on the administration of each council house. The

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ridiculous amount of money being spent on public relations could be cut without affecting the provision of services. It is unjustifiable to be spending £150,000 on the Wat Tyler park, organising the countryside, when it has existed perfectly well for decades without being organised. Some £125,050 was lost by a golf course and a bowling alley run by the council and there are other obvious sectors for privatisation.
Vast sums of money are being spent to give advice as part of the "caring council" strategy, but not all of this advice is accurate or even necessary. An experiment monitored by my hon. Friend the Member for Braintree (Mr. Newton) during 1982–83 showed that seconding two members of the DHSS staff to train social services staff was a cost-effective means of providing knowledge about financial benefits. This arrangement cost local government nothing and provided an increased level of advice through professional staff.
Mr. Corbyn rose—
Mr. Amess: I have only a little more to say and those hon. Members waiting to speak may be annoyed if I give way to the hon. Gentleman.
Perhaps the most disgraceful thing that the council has done in response to rate limitation concerned the letter that the leader of the authority sent to every one of my constituents just before Christmas. Hon. Members can guess what it was about. It told them that they were yet again under attack. The letter said that the Government would cut five key services affecting in particular pensioners, the young unemployed, senior citizens and all those without jobs. I would have welcomed it if my constituents had received a Christmas card with good wishes from the council, but to alarm and frighten people in this fashion is absolutely disgraceful.
It is not the Government's job to decide how the council should spend the money available to it on the provision of services. It is a matter for the local authority. It is about time that it accepted responsibility for its actions. A Government who seek to put flesh on the bones of Tony Crosland's classic phrase, "The party's over" deserve our support. In view of that remark, the Government deserve the support of the whole House. In defence of jobs, in defence of the wealth creation needed to run efficient social services and of the whole of the community of Basildon, I support the order.
7.47 pm
Mr. Brian Sedgemore: The hon. Member for Basildon (Mr. Amess) claims that he speaks on behalf of those who have left the east end. I speak on behalf of those who, like myself, still live in the east end. The House will be sorry that the Secretary of State saw fit to open the debate with vulgar invective and uncontrolled abuse directed at the rate capped authorities in general and Hackney in particular. I simply do not understand why he sneered when he referred to Hackney being Britain's poorest borough. That is not a label that it put on itself—it comes from the inner cities urban directive from his Department. I am amazed that he does not read his own documents. As several hon. Members have said, the ground rules between local government and central Government have changed. Undoubtedly they have changed since I worked as a civil servant in the Ministry of Housing and Local Government.
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I cannot conceive of any Secretary of State or other Minister coming before the House and using the insulting and contemptible language that the Secretary of State for the Environment used about local authorities. It is an extraordinary turn of events.
It is difficult to use exciting or poetic language when talking about local government, but although our words are bound to be prosaic, the consequences of what we decide can only be momentous. I am one of those who believe that few people realise either the scale or the nature of the constitutional crisis on which we are about to embark. If we pass the order, not only shall we end local government as an independent democratic force; we shall have defied that integrity which is essential to the survival of parliamentary democracy, and I intend to devote my speech to explaining that.
We all know that the Ministers and civil servants at the Department of the Environment have on the shelf emergency legislation to deal with what will happen if any local authorities defy this rate-capping order. The basis of that legislation is that commissioners will take over the running of local authorities. The day that a commissioner walks up the steps of the town hall in Hackney representing, as he does, de facto rule from Whitehall will be a day of failure for the people of Hackney, for the Department of the Environment and policies that it has long held dear, for this Government and for parliamentary democracy itself. Government by commissioners acting autocratically and inevitably arbitrarily in the face of legislation that wil be rushed through the House ought to play no part in our constitution.
We must ask ourselves who is to blame. The Government will say that it is Hackney council, and they will expect Labour politicians to say that it is the Government. I suggest that the Government are placing Hackney council in an impossible position, and I ask right hon. and hon. Members to bear with me if I bore them with two vital sets of statistics. I want to compare what the Government are ordering Hackney council to do with what the council wants to do, and I shall suggest that each of those positions and every position between them is impossible.
There are no circumstances in which Hackney borough council can achieve what the Government want it to do or what it wants to do within the context of the law. That is the gravity of this situation. If the motion is passed, the Government, civil servants—I have talked privately to a number of them—and every expert in local government know that Hackney borough council is being ordered by Parliament to defy the law. That is an extraordinary state of affairs, and that is the challenge that I ask the Minister to answer.
Let us consider the expenditure implied by the Government's maximum rate. It is £92 million. From that, we have to take the block grant of £38 million. Then we have to take account of the rate equalisation grant and the recovery of the deficit which Hackney council will have. We find that the rate requirement is £50 million, or a rate of 141·18p. That is what the Government say that Hackney council has to do.
Then let us consider what Hackney council wants to do. If we take the expenditure at its budget level based on a standstill budget with no growth, we find that it wants to spend £120 million. The block grant then becomes £9 million. If we then take account of the rate equalisation

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grant and the recovery of the deficit, the net resources required are £107 million. Instead of a rate of 141·18p, that is equivalent to a local rate of 312·20p.
Two astonishing figures emerge from those two different approaches by the Government and by Hackney borough council. The first figure, which makes almost everything that every hon. Member has said seem trivial, is that the total shortfall in resources for Hackney borough council is no less than £56 million. The gap between the budget and the implied budget is £27 million.
Everyone knows how the figures have come about, and it is no good the Secretary of State saying, as he did, that it has something to do with employing a lot of staff, with there being a lot of empty houses and with the direct labour force losing money. The enormous difference between the two figures comes from the change in the block grant as a result of the penalty system. On the Government's scenario, the block grant is £38 million. On Hackney council's scenario, as a result of the penalty system, it falls to £9 million.
I can remember when Governments paid between 61 per cent. and 64 per cent. of local authority expenditure. If Hackney council sought to carry out its standstill budget, the Government would be paying not 61 per cent., not the average of about 38 per cent., but 7·5 per cent. It is because they are asked to pay 7·5 per cent. that Britain's poorest borough will not be able to cope in any conceivable circumstances.
Let us consider what Hackney council might have done in the past and what some other councils are doing and see whether it is feasible. I have also discussed this privately with some of those involved. First of all, there is the question of balances. There are no balances. The figures that I have just given are based on a deficit of £1·1 million. The Ministers have received a letter from the district auditor saying that in his view the deficit is likely to be £6 million. In my view, the district auditor's figure is wrong and exaggerated. It is an old figure. The deficit is more likely to be nearer the £1·1 million than the £6 million.
It was as a result of that that the Ministers suggested that Hackney council might raise its rates by 22 per cent. and, therefore, its revenue by £11·5 million, and then they would penalise it to the extent of £5 million. I can assure Ministers that Hackney council will not apply for an offer which is too easy to refuse.
Then there is the possibility of creative accounting. I am so worried about what is happening that I have been seeing the director of finance regularly. I saw him last on Saturday, but I had a major meeting with him on Friday, when I asked him what was the scope for creative accounting in these impossible figures. He replied that there was no scope for creative accounting and that now there was scope only for fraudulent accounting. He added that if he embarked on fraudulent accounting, he would take Hackney council into a New York-type of financial collapse. He said that he and the district auditor would not be prepared to do that and that the Government should not ask him to do it.
I then looked to see whether there could be any transfers from capital. However, first it is necessary to get permission from the Secretary of State to make transfers from capital to revenue account. Secondly, Hackney's capital account has been cut so much that it only means that next year there will be increasing revenue problems
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which again will take the council towards bankruptcy. Thirdly, Hackney council will simply not ask the Secretary of State whether it can use those capital accounts.
That being so, we reach the position where one borough council is being asked to cut its services, depending on the size of its deficit, by between 28 and 32 per cent. in one year. It is my submission that it is impossible for any major organisation, let alone a local authority, to cut its operation by between 28 and 32 per cent. in one year.
The director of finance has written a note referring to the fact that the Secretary of State has been taken to court. The basis of the council's legal action against the Secretary of State for the Environment is that cuts of more than 6 per cent. to 7 per cent. in one year are unachievable.
That, broadly, remains the position. The director of finance says that, very shortly after the cuts increase from 7 per cent. over one year, the council will move into a grey area where it is not possible to say whether it is in breach of its statutory obligations and its common law obligations. However, once it starts to move much above that and gets to between 10 per cent. and 12 per cent., the council will unmistakably move into a breach of both its statutory obligations and its common law obligations. Ministers know this, and I am quite certain that the civil servants sitting in that box up there know this. The Minister must tell Hackney council what it has got to do.
The director of finance has assured me, and he has assured the council in writing, that it is inevitable that there will be breaches of the law. I said that we should cut out the politics and the rhetoric, that as some local authority functions are discretionary while others are obligatory we should leave aside the discretionary functions and deal with the obligatory functions. The director of finance told me that if these cuts have to be made we shall be in breach of our statutory obligations. I have noticed that many hon. Members have referred not to the statutory obligations but to the discretionary obligations.
Although it may be possible for every other local authority to cope, the Minister, his civil servants and all the local government experts know that it will be impossible for Hackney borough council to cope. The only question is which laws it will break. It can be directly confronted by its ratepayers, or by the district auditor or by its ratepayers in respect of specific Acts of Parliament.
In order to illustrate this impossible position, the director of finance has tried to work out what would happen if there were a 28 per cent. cut in each service provided by the local authority. Only three main services are involved. The Minister cannot maintain that the Hackney borough council can wind up its women's committee and its police committee and that it could sack the person it has just employed to deal with the blind and the mentally handicapped. There are only three services where any significant impact can be made: housing, social services and general public services, which include refuse collection.
Ministers know that all of Hackney's problems have been caused by housing. Hackney has some of the worst housing in Britain. It is in housing that the cuts will have to be made, but it is in housing that the cuts cannot be made. Hackney council would have to cut its housing services by £9 million. How could it do that? Ministers say that Hackney should raise rents. The district auditor is conducting an inquiry into Hackney's housing revenue account. In April he is to issue a statutory statement. In

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it, the district auditor will almost certainly invite Hackney borough council to raise its rent by £1·50 per week. That would bring in £3 million, but Hackney council would still be short of between £24 million and £29 million, depending on the size of the deficit.
In order to demonstrate the scale of the problem the director of finance set out what would happen if Hackney borough council raised rents by 33 per cent. It would probably produce social unrest and even riots in the streets. I presume that not even Ministers would invite Hackney borough council to raise rents in one year by 33 per cent. However, even if Hackney borough council did so, it would still be faced with the prospect that not one person in Hackney would get a transfer, other than on very peculiar management grounds. Repairs would be drastically reduced, routine maintenance would not be carried out, home owners would get no improvement grants and the direct labour force would be abolished. I told the director of finance that he could not do this and that he had a statutory obligation under the Housing Act 1957 and subsequent Acts, and also under the common law, to carry out repairs and maintenance. The Secretary of State for the Environment must know that recently more than 1,000 tenants took Hackney borough council to the courts and that they have been awarded substantial damages.
If this order is passed, the result will be local government through the courts. Thousands of tenants will take Hackney borough council to the courts for breach of its statutory obligations. I never heard of anything so absurd as the suggestion that judges will decide which repairs can be carried out and that they will award compensation against a borough that is already massively under threat from the courts. It is not possible. It is manic, stupid local government and the Minister knows that it will not happen. If the Minister sends a commissioner to Hackney it will still not happen. There is no way in which Hackney borough council will be allowed to get into that position and no way in which the Government will allow local government to be made more expensive by injunctions and mandatory orders being obtained from the courts obliging the council to carry out repairs, together with the added burden of compensation being imposed by the law courts. A local authority cannot function in that way.
There is the same problem with social services. Hackney borough council has to save £7 million. That would mean sacking tomorrow 70 workers, shutting down five day nurseries and five old people's homes, a cut of 50 per cent. in the allowances for foster parents, a cut of 50 per cent. in the grants to voluntary play groups, the imposition of substantial charges for home helps and meals on wheels and a reduction in the services for the physically and mentally handicapped. Some of those services have to be provided by law. Hackney borough council cannot avoid carrying them out.
Therefore, the Government are saying to Parliament that this order will oblige Hackney borough council to breach its statutory obligations under the law. I never thought that I would ever hear a Minister make a statement of that kind. I defy any Minister, with the best advice that he can get from his civil servants, to deny that that is the case. The director of finance is caught in a box and Hackney borough council is caught in a box. It was all very well for hon. Members to stand up and sneer at Hilda Keene. I support the stand that she has taken. There is no
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rhetoric in Hackney. Nobody is jumping up and down and shouting about the Conservative Government. People are desperately worried about what will happen.
The Hackney Gazette is really a 50-page advertisement about rate-capping meetings. At those meetings, nobody gets excited and there is no rabble rousing. One tries patiently to explain the facts. I thought that people would not be very interested in the facts and that they would not believe that this impossible position could come about, but they are slowly beginning to believe it and to understand that this will come about. My complaint about the Secretary of State is that he is creating a tragedy and a constitutional crisis that he, this Government and the Department of the Environment will live to regret until the end of time.
8.6 pm
Mr. Robert Key: My hon. Friend the Member for Swindon (Mr. Coombs) is by convention, as a Parliamentary Private Secretary, required to restrain himself from taking part in the debate, but I believe that he and I see eye to eye on this matter. It was clearly a matter of amusement to the hon. Member for Holborn and St. Pancras (Mr. Dobson) that a Wiltshire moonraker should be taking part in the debate, but perhaps the hon. Member forgets that he and I fought our first parliamentary election together in Camden in 1979. During my years in Camden I learned a good deal about council overspending, an art which was later described vividly by my hon. and learned Friend the Member for Leicester, South (Mr. Spencer), a former Camden councillor.
My own district council in Salisbury is justly proud of its modest rate, and impeccably managed finances. It resents being told how and when it should spend its money, but that is a debate for another time. Salisbury citizens desire and deserve an improved local infrastructure and improved amenities — from roads to sports centres and cinemas, not to mention a coach park outside the cathedral close. However, what our councillors want for the district often involves the consent of or contributions from the county council. But the county council has within its boundaries a town called Swindon, which is embraced by a rate-capped borough called Thamesdown.
In many ways, Thamesdown is unremarkable. It has the national average birth and death rates. It has the national average household size. It has a higher than average percentage of owner-occupiers. It has an average socio-economic grouping and below average unemployment. And 70 per cent. of its population have one or more cars, compared with the national average of 60 per cent., while 15 per cent. of its population have two or more cars. However, the number of full-time employees in Thamesdown has risen by 4·8 per cent. in the last year and part-time employment is up by 3·6 per cent. As for the planning department, the local authority family average is £6·7 per head, but Thamesdown manages to spend £24·3 per head. If Thamesdown had spent at just the average level, it could have saved £2·7 million.
Mr. Corbyn: Will the hon. Gentleman give way?
Mr. Key: No.
The total debt per head for the family of local authorities is £519, but for Thamesdown it is £970, The debt charge per family of local authorities is £17·7 per

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head, but for Thamesdown it is £47·5 per head. The rent arrears of the local authority family are 2·8 per cent. of rent collectable, but for Thamesdown the figure is 3·9 per cent. The average spend per head of population in the local authority family of similar authorities is £61 but in Thamesdown it is £81. Thamesdown's budget is 90·26 per cent. over GREA and 5 per cent. over target. If it objected to the Department of the Environment's figures which were were announced last December, why did not it come and talk to the Secretary of State?
Some reasons have been put forward. It can be argued that Swindon is a booming new town and therefore needs economic expansion wherever it can get it so that it is not surprising that Thamesdown's budget is running away. It could also be argued that Thamesdown is, in effect, a new town without the status of a new town development corporation. But my right hon. Friend the Secretary of State takes account of that in the calculation of GREA. It is certainly possible to make a strong case for Thamesdown selling off some of its capital assets such as the Brunel shopping centre.
But none of that detracts from the strong feelings that are aroused elsewhere in Wiltshire at Thamesdown's profligacy and the effect of that on the rest of the county. The hon. Member for Blackburn (Mr. Straw), who refused to give way to me earlier, should note that, contrary to what he said, Swindon, alias Thamesdown, has developed on the back of the rest of the districts of Wiltshire.
I read in the latest edition of the Wiltshire County Council News that the council is about to spend £360,000 on adapting a Swindon building for its social services department and that £525,000 will be spent knocking down and rebuilding a mini county hall in Swindon. In a recent letter from the social services department in Trowbridge, the county town, Salisbury was characterised as a sleepy little market town which should not be disturbed too much. I know that most county social services activity is required in Thamesdown, but I much regret that the eyes of the county have been turned away from us towards the infidel Mecca of Thamesdown when our social service department and others are crying out for more resources.
It is bad enough for those of us south of Salisbury Plain being governed from somewhere call Trowbridge. But now the centre of gravity is moving along the M4 towards Swindon. At last I understand what Wiltshire county council planners mean by the M4 corridor. It will become the longest county hall corridor in Britain.
But I cannot blame the county council for all that. The attention that it pays to Thamesdown is inevitably forced on it by that town's expenditure and expansion. The county council bears the initial infrastructure costs of development, such as roads, and finances the schools and social services, and so on.
My constituents are crying out for improved amenities. The county tells us that we must not build any more houses or develop any more industrial sites to provide jobs in Salisbury. Regrettably, the county has found it necessary to go back on a pledge that it made, as the highway authority, to finance a bridge which would link the Churchfields industrial estate to the ring road, relieving Salisbury of environmental damage and enhancing employment.
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At meeting after meeting and in the structure plan the county is forced to concentrate its efforts and resources on the infamous M4 corridor. In the circumstances it is surprising that the county manages to provide the services that it does, for which I congratulate it.
But be it in the provision of school buses, school books or jobs, Wiltshire county council is forced to squeeze and penny-pinch and one of the main reasons for that is the spend, spend, spend that is going on in Thamesdown at the other end of the county, over the hill and far away with the fairies as far as finance is concerned. That is reason enough for me to vote in favour of the order tonight.
8.13 pm
Ms. Harriet Harman: It is hard to know where to begin to explain the problems that this rate-capping order will cause in Peckham. The problems are matched only by the enormity of the Government's ignorance of them. I shall try to do so, but without much hope, because if the Government and Conservative Members know little, it is clear that they care even less.
The Government's policies are already causing misery, family breakdown and illness. I see that in my surgery but Conservative Members do not know about it. Nearly 90 people came to see me at my last surgery. They did not come for the pure pleasure of waiting for hours in the queue with all the other people. They came because they were desperate. The Government are trying to make that situation worse.
The council is the biggest employer, landlord and provider of services in Southwark. There is no way that the private sector will provide the jobs, housing and services if the council is clobbered under this order.
One in five of the community of Southwark are already out of work and looking for a job. Unemployment is a particular problem for young people and there is a growing number of long-term unemployed. If Southwark is rate-capped, not only will council jobs be hit but jobs in the private sector too. Southwark council is a major buyer of goods and services.
Housing will be hit by the order. The council is by far the largest landlord. It is no good thinking that people in Peckham can buy their own homes. Housing in central London is extraordinarily expensive. Less than 2 per cent. of two-bedroomed dwellings for sale cost under £30,000 and that £30,000 is far beyond the reach of nearly everyone who lives in Peckham.
The local council should provide services according to need. It should not be for businesses to provide those services according to how much people can afford. Anyway, people in Peckham cannot afford to pay for services. The problems are growing and we need more spending. We cannot solve the problems by spending alone, but we cannot solve them without spending increases.
Let me give some examples. The Willowbrook estate was a nice place when it was built some 20 years ago. People were pleased to live and bring up their families there. Now the window frames are rotting and the panes are falling out. When the workmen went to repair the window frames they discovered that the estate was virtually made of asbestos. Therefore, they could not do the work while the tenants were still there. There is nowhere to move the tenants because the Government

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have more or less stopped housebuilding in the area and more homes cannot be built on the empty land in the borough.
The council has closed the public lavatory on the Willowbrook estate because it says that the asbestos makes it dangerous. What an irony that the public lavatory should be closed while people are still having to live in the estate and bring up their families surrounded by asbestos. When people move out of the flats the council is trying to leave them empty so that eventually the major work can be carried out. But with the ever-increasing waiting lists, people move in and squat in empty flats. There is a terrible circular problem.
Those Conservative Members who are girding up their loins to troop through the Lobby to vote about what should happen in Southwark would not be prepared to live surrounded by asbestos on the Willowbrook estate. They talk about peripheral savings and economies when we are concerned about the millions of pounds that need spending to meet the council's obligations to its tenants.
The Gloucester Grove estate has a design fault in the refuse system. Flies nest and breed in the brick. The rubbish warms up the brick and as soon as the rubbish doors are open the flies shoot out like something out of a Hitchcock film. Therefore, people do not want to open the doors to put their rubbish in, and leave it beside the chute. Dogs tear open the bags and the place looks like a tip. I hope that nobody will make any cheap political points about it being a Labour council because the two estates that I have just mentioned are former GLC estates and the GLC has been successively controlled by the Labour and Conservative parties.
The Sumner estate is another former GLC estate which is just getting too old. The lifts there keep breaking down. It is no joke to live on an estate where one either has to walk up five flights of stairs leaving the shopping at the bottom while taking a push chair and kid up, risking having the shopping nicked, or leave the push chair and kid at the bottom while taking the shopping up, worrying all the time that the kid will run off in the meantime. Those estates are getting old and need to be brought up to date.
The GLC built those estates and Southwark council is responsible for managing them. The estates have to be kept in good order. The Government call Southwark irresponsible, but it is the other way around. Responsible authorities want to carry out their obligations to their tenants, the elderly, the under-fives and the local work force and they want to spend money to meet the needs of the community. Irresponsible authorities say, "Cut services and let them stew behind their own doors. We shall carry on putting up rents and tough for them."
Last week I was in Love Walk day centre for the elderly. The increasing number of elderly people in the population will spend week after week isolated and miserable in their own homes unless they can get social services transport to local authority day centres. Why do we not have enough drivers to take elderly people to those day centres? Conservative Members talk about the efficient use of resources, but there is nothing efficient about leaving day centres half empty because there are not enough drivers to transport the many elderly people who want to go to the day centres.
It was said earlier that providing local authority services was expensive. We should remember that we are talking about people's wages. Council manual workers are already low paid for providing a valuable public service and for
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doing jobs that are sometimes dangerous and often dirty. They need an increase in wages and not the proposed cuts in the cost of services.
Most council manual workers live in their local borough and have seen their rent and rates forced up, their houses not being repaired quickly enough and services to their families coming under threat. It is an insult to people to talk about public services not being productive. How dare they say that work with under-fives in play schemes and nurseries is not productive?
Mr. Gerald Bowden: Will the hon. Lady explain why the cost of providing services in Southwark is in most cases twice that in neighbouring Wandsworth and in many cases three times as much?
Ms. Harman: Southwark council, to its eternal credit, is struggling to increase and improve its services to meet needs. It needs to do more of that and not less. I back the council and stand by it in that endeavour.
It is an insult to say that those who work in council services are not productive. It is productive to look after young children. How dare people claim that it is not productive to look after the elderly? Home helps do an important job trying to look after the elderly and to allow them to stay in their own homes. I thought that the Government favoured care in the community, but, it seems, far from it.
How dare people say that repairing houses, cleaning streets and collecting rubbish is not productive work? Of course it is. The Government want to substitute cut-throat entrepreneurship for care and compassion. The Government are offering worse or non-existent services and exploitative terms and conditions of employment or no job at all.
We cannot look at rate capping in isolation, because the people of Peckham are being hit from all directions. The health service locally is threatened with £1 million of cuts which will mean fewer jobs and services at a time when health problems are increasing and will increase even more if housing deteriorates because of the proposed cuts.
The Inner London education authority is also being threatened. The proposed millions of pounds of cuts will mean job cuts and cuts in school meals services and clothing allowances. Children's education will be undermined. If rate capping is implemented and the GLC is abolished, its former estates will be badly hit.
The Government are trying to divide and rule in Labour areas. They would like to see a low-paid work force get angry with the local council because it feels that it cannot increase their wages as much as they ought to be increased. The Government would like to see the work force get angry with the council because workers do not feel secure in their jobs. The Government would like tenants to get angry with the council because rents are being forced up and conditions are worsening. The Government would like to see tenants get angry with the work force because repairs are taking longer. However, the Government have not succeeded in their divide and rule strategy, because they have been rumbled. In Peckham and in Southwark they will face a united front of tenants, unions and councillors. As the hon. Member for Peckham, I will be standing alongside those groups.
Of course rates are too high. The Government should not have reduced the rate support grant. The council wants to provide the services and reduce the rates. That will

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require more help for a poor council in a poor area and the Government can well afford that help. We are a wealthy nation, not a Third world country struggling with the problems of drought and underdevelopment. We are certainly wealthy enough to ensure that we have decent employment and housing in Southwark.
A lot of rubbish is talked about ratepayers being wealthy business men. That is an insult to the ratepayers in my constituency, many of whom are low paid and have to struggle to pay their rates. The hon. Member for Dulwich (Mr. Bowden) should be ashamed of complaining that about one third of householders do not pay their rates. They would like to be in his position and be able to pay their rates. They cannot do so because they do not have enough money, not only for rates, but for anything else.
It is nonsense to say that high rates cause unemployment. The reverse is true. Where commercial rates are low, property owners put up rents so that businesses end up paying the same for their premises. They merely pay the money in rent rather than in rates. When money is paid in rates it is at least ploughed back into the community through local jobs and local services. That does not happen when the money is paid to property companies.
I find it sickening to have to debate what is happening in Southwark with Conservative Members from Wiltshire, Northamptonshire, Surrey and Sussex who know nothing about the situation in my constituency. They have no right to go through the Lobby and vote down services in my constituency. They are not elected to decide on services in Southwark. The House should mind its own business and let Southwark people decide about Southwark's services.
It is ironic that we are being asked to support the order, which centralises power, by a Government who were elected on a pledge to "bring power to the people."
8.27 pm
Mr. Jerry Hayes: What a remarkable little speech that was from the hon. Member from Peckham (Ms. Harman). I am sure that it will go down well with the Labour party's women's committee, but it will not cut much ice in the House or with her constituents who have been thrown out of work because of high rates.
The hon. Member asked for the evidence that people had been thrown out of work because of high rates. The Sheffield district chamber of trade has welcomed rates limitation and even gone so far—
Mr. Bill Michie: Will the hon. Gentleman give way? He has mentioned Sheffield.
Mr. Hayes: In a moment. Let me deal with this point and then I will give way.
Mr. Michie: I will see the hon. Gentleman outside.
Mr. Hayes: I shall be delighted to see the hon. Gentleman outside if he will buy me a drink.
The Sheffield district chamber of trade wrote to my right hon. Friend the Secretary of State for the Environment:
"The Chambers' Council welcomes the rate capping regulations which have been introduced and expresses its thanks to you for stabilising future rate demands."
The CBI said in February last year:
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"High rate increases raise costs, reduce competitiveness, discourage expansion and investment and harm job prospects.
It is time to halt the serious damage to business caused by a small minority of high spending councils. The selected rate limitation scheme is likely to do this while leaving the vast majority of local councils continuing to operate responsibly without any restraint on their freedom of action."
Is it not significant that the top 18 overspenders are responsible for three quarters of the £848 million overspend in local government? Is it not a coincidence that the top nine overspenders — some of which are now being dealt with—have increased their rates or precepts by 40 per cent. in the past three years? Of course it is.
Mr. John Fraser rose—
Mr. Michie rose—
Mr. Hayes: I shall give way to the hon. Gentleman.
Mr. Fraser: I think—
Mr. Hayes: I am sorry, but I wanted to give way to the hon. Member with a beard.
Mr. Dobson rose—
Mr. Corbyn rose—
Mr. Michie rose—
Mr. Hayes: I give way to the hon. Member for Sheffield, Heeley (Mr. Michie).
Mr. Michie: That is the first time that a Tory has given me precedence over privilege, and I appreciate that. However, the hon. Gentleman should not bother to read out stuff from the Sheffield chamber of trade. Can the hon. Gentleman give us some good examples of what he means? Incidentally, he should not use the example of steel, because half the steelworks in the Sheffield area are in Rotherham, which is low rated.
Mr. Hayes: The examples are obvious. The hon. Gentleman should ask himself why the people in his constituency are unemployed. It is not insignificant that between April 1979 and April 1984 prices have risen by 63 per cent., earnings have risen by 75 per cent. and rates have risen by 103 per cent.
I support the order with some sadness. But we have been forced into supporting it not by the Whipping system or by the Government's quite justifiable big majority, but by Labour-controlled authorities which have been flying in the face of economic reality for too long. It was made absolutely clear in the 1983 general election that the Conservative party would protect the ratepayer. The Labour party has not tried to do that.
I have two vested interests. In my constituency of Harlow the district council is deciding at this very moment what the rate is to be. I sincerely hope that it will sense and will recognise the needs and sensitivities of the people of Harlow and will not deliberately push up expenditure to the £10 million ceiling. That would be a disaster for the people of Harlow.
I see the hon. Member for Islington, North (Mr. Corbyn) in the Chamber, so I had better explain my other vested interest. I happen to rent a small flat in Islington, but not, I am happy to say, in his constituency. Islington council provides us with a classic example of flagrant overspending. Between 1981 and 1985 it increased its expenditure by 58 per cent., compared with a national increase of 23 per cent. and compared with an increase in prices—using the gross domestic product deflator—of

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17 per cent. That has been an unmitigated disaster for jobs. I know that it is terribly easy to talk about some of the lunatic things that Islington council does. For example, we could mention the Irish joke officer for £19,250. Perhaps midnight munchies will interest the hon. Member for Islington, North. The council invested about £7,000 in setting up a Dial-a-Meal service. Mr. Peter Gresham, who is, I think, the council's employment officer, said that this particular co-operative
"is made up predominantly of ethnic minorities and single-parent families who have found it difficult to obtain employment in other fields."
That is all well and good, but after spending about £7,000 of ratepayers' money, he warned that he could not claim to be
"entirely optimistic about the future of this project."
Then we have the disaster of the Islington News—the Labour party's propaganda sheet, which crashed at a cost of £100,000 to the ratepayers. My right hon. Friend the Secretary of State has already mentioned the £31,000 for aerobics on the rates, which was also — surprise, surprise—an unmitigated disaster.
Mr. Dobson: It would be quite wrong of me to mention the name of the person concerned, but the hon. and learned Member for Leicester, South (Mr. Spencer), who has been denouncing Leicester city council's expenditure, will recall that he referred someone to me who had a mentally-handicapped son, and who was having problems because Islington council was being prevented from spending money on providing special accommodation for the mentally handicapped. I find it rather odd that a Tory Member should need to refer that to me, and that I should have to listen tonight to someone denouncing Islington council.
Mr. Hayes: It is unfair of the hon. Gentleman to say that. In my brief time in the House I have always found him a fair-minded man, but that intervention was unworthy of him. If there is any difficulty in finding funds for proper projects, it is because the money for them has been frittered away on the very projects that I have outlined. As the hon. Member for Islington, North will know, an opinion poll was carried out. Some of the results are in his favour but some are not. It was a MORI poll, and it asked:
"Does the Islington council spend too much time on activities that do not benefit local residents?"
In reply, 52 per cent. said yes.
Mr. Corbyn: What else did it say?
Mr. Hayes: I am sure that the hon. Gentleman will have an opportunity later to talk about the poll. But that question and answer shows what a high proportion of the people in Islington think.
Mr. Corbyn: When the hon. Gentleman visits Islington perhaps he will look around him and notice the number of people in need of help from the council's social services, and in need of housing help. If the order goes through, they will not get any help in the coming year and many jobs will also be lost. How many jobs will be destroyed by rate capping and by the hon. Gentleman's Government, and how many more people will find themselves queuing up, unable to provide the services that they should be providing?
Mr. Hayes: I cannot tell the hon. Gentleman how many jobs will be lost as a result of rate capping any more than I can give the exact figure for the tremendous number of jobs that are being lost through overspending.
Mr. Corbyn: Where is the evidence?
Mr. Hayes: I have given way to the hon. Gentleman once, so I shall not give way again. He should realise that in Islington 35 per cent. of the rates come from domestic ratepayers and 56 per cent. of the rates come from commercial and industrial ratepayers. Surely that is indicative of the problems that exist.
But some of the lunatic schemes that I have mentioned do not lie at the heart of the problem. They are the irritants, but they do not add up to that much money. The problem lies in gross financial mismanagement and incompetence. Islington is a classic example, because in the past three years jobs for the boys have increased by 17 per cent. In the past three years the increase in Hackney has been 28 per cent. Yet the national average for local government employment has fallen by 2 per cent. Surely that is indicative of what is happening.
I will give some other examples of chronic mismanagement in London. Debts from arrears of rents for council houses London-wide at present are £111 million. In Southwark the debt is £20 million, in Islington £5·8 million, and in Hackney £6·7 million. Opposition Members may say that it is because people are unemployed. Nothing could be further from the truth. If people are unemployed and are in real difficulties in paying their rents, the social security services are only too eager to help them out. That should not be forgotten.
Mr. Corbyn: Will the hon. Gentleman give way?
Mr. Hayes: No, because many other Members wish to speak in the debate.
Several Opposition Members have gone as far as to say that if rate capping becomes the law of the land—as it will later this evening—there will be tremendous cuts in services. I urge the hon. Member for Peckham to study carefully the very interesting and worthwhile speech by my hon. Friend the Member for Dulwich (Mr. Bowden), who explained precisely how local services will be affected. Opposition Members laid great emphasis on their quotations from the Audit Commission. I refer to page 2 of the report, where it says:
"Based on its work so far, the Commission is also of the opinion that there are substantial opportunities to save money in local government without adversely affecting services."
Those are the words of the Audit Commission, whose reports Opposition Members quote against the Government on so many occasions.
Opposition Members have the nerve to say that this House is to be simply a rubber stamp for rate capping, without adequate and proper discussion of the issues involved. They do so with the eloquence of Satan denouncing sin.
A well-wisher was kind enough to send me, in a buff envelope, the minutes of a meeting held at county hall on 29 November last year. It was a meeting between Mr. Ted Knight, of whom one or two hon. Members may have heard, and Mrs. Hodge, of whom one or two hon. Members have also heard. [Interruption.] My hon. Friend the Member for Watford (Mr. Garel-Jones) is right: Mrs. Hodge could solve many problems if she resigned as leader of the Islington district council. Let us see what happened

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at that meeting. The hon. Member for Holborn and St. Pancras (Mr. Dobson) may gasp. At that meeting it was decided to spend £350,000 of the ratepayers' money on a propaganda campaign. As true democrats, they followed the traditions of the Labour party. The meeting started at 10.45 and finished at 10.50. There was all of five minutes in which to have a full, fair, free and in-depth discussion. The situation is absolutely nonsensical.
I hope that Opposition Members will take particular heed of the words of the Leader of the Opposition when he urges councils to comply with the law. I can assure this House that it is in the interests of the ratepayer that they do so.
8.43 pm
Mr. John Cartwright: I congratulate the hon. Member for Harlow (Mr. Hayes) on an entertaining although not terribly persuasive performance.
It has been an odd debate because we have been trying to fix the rates for 13 individual councils. Like other hon. Members, I have considerable experience of rate fixing. I thought that we had left that behind us when we gave up our seats on local authorities to come into this House.
My recollections of trying to fix a rate for the London borough of Greenwich, when I was its leader over 10 years ago, was that it was an extremely difficult operation. One had to choose between competing claims for very scarce resources, and try to balance the needs of the consumers of the service against the ability of the ratepayers to meet the cost. One was surrounded by masses of information. One cannot complain about that tonight. We have an impossible task, with no information provided to us other than one piece of paper which gives us, in one case in handwritten form, the Secretary of State's decisions as to what the rate limits shall be.
There is a take-it-or-leave-it attitude about the approach that I find singularly unattractive. We are fixing the rates of 13 individual authorities in a sort of conveyor belt, mass production, cheaper-by-the-dozen operation which, with all respect to the hon. Member for Harlow, makes it an absolute pretence to suggest that the House of Commons is exercising any judgment here tonight. We have no information on which to make a balanced judgment.
The hon. Member for Blackburn (Mr. Straw) reminded us that during the long Committee stage of the Rates Bill we had firm assurances from the Government Front Bench that parliamentary scrutiny would be an effective safeguard against the unreasonable use of the Secretary of State's powers to designate authorities and fix their rates. As we have seen tonight, effective scrutiny is impossible. We have just the one set of figures before us.
The Secretary of State said earlier in the debate that it did not matter how we got the figures; that how they are arrived at is not for the House of Commons to know. The important question is: are they reasonable? With all respect to the Secretary of State, it is important to know how the figures were arrived at. In trying to fix a rate, the elements that go into it are a very important part of the calculation. Are the rate limits reasonable? It is impossible for hon. Members to answer that question. We have not the information to enable us to make that sort of judgment.
I have some information, knowledge and experience of the position in Greenwich, my own local authority, but I know nothing whatever about the situation in the other 12
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authorities. I agree with the hon. Member for Peckham (Ms. Harman). It is not my business to fix rates in Sheffield, Southwark, Haringey and other parts of the country. I did not come here to fix rates for other local authorities or, indeed, for my own.
What we are engaged in tonight is not parliamentary scrutiny; it is a rubber-stamping charade. That sort of thing brings Parliament into disrepute. That is ample ground, if there were no other, for voting against the order.
I have some information about the London borough of Greenwich. It came to me in the shape of a rather large tome, running to 300 pages, dealing with the council's spending plans for 1985–86. I thought that the compliments slip at the front was revealing. It came not with the compliments of the chief executive or of the borough treasurer but with the compliments of the campaign manager. That tells us something about who is important in local authorities these days.
The document starts from a position of total unreality. It tells us that this year the council spent an estimated £68 million. We are told that under the Rates Act the council has been given a maximum spending limit for 1985–86 of £66·5 million. I concede, without any question at all, that it would have been difficult for Greenwich, allowing for inflation, to get down from spending in the current financial year to £66·5 million next year.
The statement goes on to say that the draft budget agreed by the policy and resources committee is £78·3 million. So Greenwich is budgeting to spend an extra £10 million—an increase of 15 per cent. in one year. Some of us with experience of local government know that it is not easy to increase spending at that speed. One has the feeling that Greenwich was determined to make a difficult position absolutely impossible by increasing spending to that extraordinary figure.
I understand the reaction that I get from many of my constituents about the council's sense of priorities, because I note that the police adviser and his department will absorb £33,000 next year; the women's department another £39,000; and that the press and public relations department, which provides ever more free newspapers to jam our letter boxes, will absorb £151,000. There is something called the campaign unit. In my days, the political parties ran campaigns, yet Greenwich ratepayers must next year provide £139,000 for campaigns. We all know who will benefit from that sort of campaigning. Grants administration next year—the giving away of the money — will cost £25,000. Grants as a whole are budgeted at £848,000—an increase over the current year of £330,000. Therefore, I find it hard to believe that Greenwich cannot make cuts in spending.
I understand the point made by the council and Labour Members that if all the Socialist candyfloss could be removed it would still not be possible to get down to the rate set by the Government. However, it should be possible for Greenwich not to make matters as difficult as it is by spending on a number of services that ordinary people do not regard as having a high priority in this difficult economic climate.
Greenwich and other Labour authorities are threatening not to levy a rate. Greenwich has a ceremonial meeting on 7 March. I believe that to be a suicidal policy. If the rate is not levied, sooner or later—no doubt sooner—the money will run out and the jobs and the services that we are told the argument is about will be at risk.

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If there is no money, people in local authorities cannot be paid and services cannot be provided. Refusing to levy a rate is a recipe for chaos and confusion on a grand scale. Worse than that, it is a gamble — and when Labour Members are honest, they must agree with that. The gamble is that that somehow, magically, the Government will be persuaded to back down because of the threat of confusion and chaos in the rate-capped authorities. That is an extremely dangerous gamble. Those at risk will not be the councillors but the council employees. Their jobs will be on the line because they depend on council services. If councillors want to gamble, let them gamble with their futures — they should not gamble with the futures of others who elected them to look after and administer local services. That is why I regard the decision not to levy a rate as wholly nonsensical. It lets down those who elected the councillors.
It has been argued on the Government Benches that rate capping provides protection for local people. I suspect that that may not he the position. At least some of the rate-capped authorities will be tempted to cut absolutely essential services rather than the Socialist flim-flam and candyfloss. They will cut the essential services for ordinary people and seek to put the blame on the Government. The long list of possible economies that we have heard read out time and again tonight suggest that that will be the tactic. The cuts will hit not the police advisers, the nuclear-free zone co-ordinators and so on, but the home helps and the essential social services. That is why I believe rate capping to be politically inept, constitutionally absurd and a bureaucratic nightmare.
8.53 pm
Mr. Peter Bruinvels: Although I follow the hon. Member for Woolwich (Mr. Cartwright), I cannot agree with his conclusions. I believe that rate capping is absolutely essential for the future of this country and all its councils that are crying out for help because they want real jobs in the cities rather than the phoney jobs created by Labour-controlled councils trying to buy votes.
We know why Leicester is to be rate-capped. Overall, rates in Leicester have risen by 66·7 per cent. since 1981–82, and since 1983–84 they have risen by a further 4·7 per cent; from 35·8p to 37·5p in the pound. Yet the national average for a similar-sized city is 23 per cent.
I represent the people of Leicester and I do not take kindly to hon. Members—especially those from another part of the city—claiming to represent and speak for the people of Leicester, East. They do not; I do, and I know what they want.
Leicester's current spending has risen by 46·1 per cent. since 1981–82. Its rate limit for 1985–86 is based on a spending level that is really a cash freeze on the 1984–85 budget. Why cannot the council carry inflation for a change? The expenditure of Leicester since 1978 has risen by 134 per cent., which is scandalous. The people of Leicester are entitled to something better.
There have been tremendous allegations that Leicester will not receive any more grants when capping comes into operation. Yet Leicester has received £35·9 million of rate support grant over four years. In 1984–85, it received £9·7 million. That is one heck of a lot of money. Other grants, Government grants and allocations total £5·4 million towards the urban programme and the inner area programme has received £20 million since 1978. That is not small fry to me, and Leicester has a lot to answer for.
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On 13 February my right hon. Friend announced the revised figures for Leicester. It means that the city will levy an additional £3·5 million, although the budget limit remains the same. That limit has been raised from 16·27p in the pound to 25·22p in the pound. The only reason for the change is the further information that the Government have finally received about the council's financial reserves. Leicester city council, controlled by the Labour party, has griped, griped and griped and taken no notice of the day of execution that had to come. When it arrived, it challenged the figure and said, "We was robbed." If it had co-operated with my right hon. Friend, there would have been a different figure originally. It has abused its position. It should have provided the information. I applaud the leader of the Conservative party on the city council, Terence Harris, for coming to London to discuss the matter and putting the case clearly.
Is it fair that 60 per cent. of the rates are paid by local industries—yet none of them has a vote? The businesses do not have any say, yet they sweat time after time as the council levies appalling rates and pays blatant disregard to the wishes of the businesses—which are the job creators and providers for the city.
Opposition Members argue that the Leicester Labour party has been returned three times in the elections, which shows that the people of Leicester have voted for more of the same. Yet less than 40 per cent. of the people voted, and those who did voted for more of the same, not for massively increased public expenditure.
I warn the Leicester city council Labour party that if the businesses in the city had a vote, there would never be another Labour-controlled city council in Leicester. That day must come. I can say that with certainty because, for example, the CBI in Leicester, which represents businesses there, does not like rate capping or the way in which its members have been forgotten by Leicester city council. The Leicester chamber of commerce and industry is hopping mad over the current situation.
Each year there is supposed to be consultation between the city council and local businesses. That consultation now takes the form of the city council simply saying, "This is the new rate. You have no choice in the matter." I would not describe that as consultation. If the Conservatives were in power, there would be real consultation.
On 14 December 1984—his words appear in the Official Report at column 656—my right hon. Friend made it clear that Leicester's budget of £24·6 million was 4·9 per cent. above target and 27·7 per cent. above GREA. The troubles in Leicester date back to 1979 and the arrival of the red peril—the Labour-controlled city council—and since I came on the scene in 1981 I have witnessed that body inventing functions, preparing a no-sacking policy for all its staff, forming a mammoth public relations department and introducing a strange equal opportunities policy which makes some people more equal than others.
It has established a race relations and racial awareness unit, a nuclear free zone which is supposed to scare everybody who does not live in the area—as I live in the city, I am not confident that we will not be attacked, simply because it is a nuclear-free zone — and a mammoth campaign, of which I am extremely suspicious, on behalf of the low paid.
Leicester should have used some of its £5·5 million reserves to hold down the rates. If that had been done, the present situation would not be so bad. That cannot be done now because Leicester city council lends money to other

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local authorities. It is clear that Leicester had it coming. We warned the city council what would happen, but it disregarded our warnings.
I will give the House some rating facts. We are the third largest non-metropolitan district council in the country. We have a population of nearly 280,000. The amount spent on public relations has risen to £45,000. the public relations unit is anti-rate-capping, and in its publication entitled "Leicester Link" it said:
"Rate-capping. Here's what you lose: your services, your job, your rights—all for the price of a pint of beer a week."
Even if the cost is a pint a week, let us save that money.
The nuclear-free zone signs have cost £1,000; the racial awareness training course for staff, whatever that involves, has cost £15,000; the low pay campaign, £25,000; employment and economic development activities, £10,000; video advice units, £25,000; and ethnic minority consultations, £10,000. Leicester City council does not even charge for the rent and provision of an office and free telephone to striking miners—striking miners who do not come from Leicestershire because 98 per cent. of Leicestershire miners have gone back to work —[Interruption.]—and a large number of them have been working the whole time.
The leader of the Conservative group in Leicester has asked for a cut of £2 million, which is not too much to ask. He has asked for no more recruitment to take place and for there not to be a PR unit. I support his aims.
I appeal especially on behalf of the businesses of Leicester because they pay the rates and do not receive value for money. The trouble is that the Labour-controlled council members love spending everybody else's money. That is a typical Labour ploy; they are trying to buy respectability which they cannot obtain because their manifestos do not deserve the credit of people voting for them.
The leader of the Conservative group was reported in the Daily Telegraph of Friday 14 December as having said:
"'In the manner of classic bureaucracies, the council sat down and invented a lot of new functions for itself'. He said the entire tier of local government represented by the council was unnecessary."
Not one of my hon. Friends would disagree with that.
The hon. Member for Blackburn (Mr. Straw) said that there was no guarantee for the future. He was wrong, as we shall hear later. He said that a deterioration in services was coming. He was wrong about that, because too much was being spent to begin with. He said that community projects would suffer. He was wrong on that, too, as I shall prove shortly. He said that the parks were under threat.
Bearing those statements by the hon. Member for Blackburn in mind, let us consider how many people are employed by this so-called wonderful Leicester city council. I hasten to state that I admire a large number of the council's employees—
Mr. Janner: The hon. Gentleman does not want to sack them all, then?
Mr. Bruinvels: They have been sending me brown envelopes containing some interesting information. The majority of them are sick about the way in which they have been told what to do.
Non-manual staff employed by the city total 1,757, and there are 2,129 manual workers. In transport, there are 127
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non-manual and 637 manual employees. In recreation, there are 185 non-manual and 396 manual workers. In the refuse department there are 17 non-manual employees and 159 manual.
Mr. Janner: Disgraceful.
Mr. Bruinvels: I am worried especially about manning levels in the chief executive's legal secretariat department, which employs 144. I should like to know what they are all doing for the city and the citizens. I suppose those in the finance department are trying to work out an alternative policy to rate capping. I understand that 182 work in the finance department. In the engineering department there are 215 non-manual employees and 257 manual. There has been a 5 per cent. increase in non-manual staff this year.
I shall give some examples of planned expenditure for 1984–85. Expenditure on parks, planning, refuse, highways, transport and environmental health amounts to £31,769,000, which is £111·60 per head. The average spending for any local authority similar to Leicester is £78·90 per head. It is clear that the savings could be immense. About £9·3 million could be saved immediately.
Spending per head on refuse collection and associated activities is £9·60, while the national average is £8·50. Rate collection in Leicester costs £4 a head while the national average is £3. Expenditure on concessionary bus fares amounts to £6·20 per head, and the national average is £4·80. A heck of a lot of money seems to be being spent above the national average and I should like to know what is going on. Why should the Leicester council spend this extra money?
Mr. John Fraser: Will the hon. Gentleman give way?
Mr. Bruinvels: No, I will not.
Spending in Leicester on sport, swimming pools and recreation is £17·50 per head.
Mr. Janner: String up the Leicester council.
Mr. Bruinvels: The noise that is being made by the hon. and learned Member for Leicester, West (Mr. Janner) is interesting. We do not hear much noise normally from him in this place, and the noise that we hear from him in Leicester is becoming less and less. It will be reduced even further after the next general election.
I was explaining that the spending per head in Leicester on sport, swimming pools and recreation is £17·50 per head, while the national average is £9·80. If expenditure on recreational facilities were reduced, there would be a saving of about £2·2 million. A great deal of money could be saved.
Mr. John Fraser rose—
Mr. Bruinvels: There are 18 authorities that are to be rate capped and their combined overspending amounts to £600 million, which is a tremendous sum. I give a warning to the Leicester Labour group that its refusal to levy a rate will render it liable for immediate disqualification from office and the imposition of surcharges. On that score I agree with the hon. Member for Woolwich (Mr. Cartwright). Whatever the leader of the Labour group is reported to have said in the Labour Herald, I assure him that he should be careful.
We must cut out all unnecessary spending. I hope very much that Leicester city council will co-operate and follow the Government's recommendations. The council could

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use at least £2 million of its reserves of £5·5 million and it could freeze its spending. As the Leicester Mercury stated—
Mr. D. N. Campbell-Savours: This speech was written by someone in Tory Central Office.
Mr. Bruinvels: I write my own speeches, incidentally. On Wednesday 12 December 1984, the editorial in the Leicester Mercury stated:
"The party is over … The local administration … do not want to understand that it is no good Government being mean with money if councils go on spending sprees. To hell with the businessmen trying to keep people in work, or householders working to balance the domestic books. Let Labour fight some by-elections on this issue if they feel so strongly."
I want to see an end to extravagance in Leicester. I want to see a lower level of expenditure that will be fair and give all people in Leicester a chance.
Labour's reaction in Leicester to rate capping has been to establish an anti-rate-capping unit. It has copied GLC literature—for example, "Your city council works for you: keep it local." Every council envelope is over-printed with the slogan "Save your services, say No to rate-capping." It has set up anti-rate-capping stalls at the city of Leicester Show and at Leicester city market. It has done so as well at various shows throughout the city.
The council has plastered the whole city with posters. City buses and other vehicles are covered with posters of skeletons so that one can no longer see out of them. It is bad enough when they are not kept clean but putting posters on them is the pits. According to the News of the World, Leicester city council engineer's department issued a memorandum on 4 December ordering the placing on all council vehicles of posters supporting its political campaign against rate capping and stated:
"Removing or defacing a poster will lead to disciplinary action against any employee found doing this".
That is disgraceful. Some council employees support the Government's policy of keeping rates down and they have made that clear to me, but there is the city council yet again acting illegally!
That is not the end of the council's anti-rate-capping campaign. The Leicester Mercury of 22 February carried the news that a record had been made in which I featured. It is produced by the Irators and is called "The Ratecapping Blues". The reader is told:
"the villain of the piece is East Leicester MP Mr. Peter Bruinvels, the man who 'nominated' Leicester for Environment Secretary Patrick Jenkin's axe.
The group's latest song is all about Mr. Bruinvels. Its title: Getting my name in the Papers."
It continues:
"Our music is in a fairly light vein … we are not ranting and raving—at least, not until we get to Mr. Bruinvels."
Leicester is now a poster-infested hotbed of extreme Socialism. The Labour group has excelled itself in pressuring council employees. Time off was given only to those who wanted to hear about the evils of rate capping. The interests of ratepayers were forgotten. I thought that people went to the New Walk centre headquarters to do a job, not to go out striking and attending special meetings.
Many extra staff have been taken on since July 1984—
Mr. Janner: Disgraceful.
Mr. Bruinvels: I am glad to hear that the hon. and learned Gentleman finds that disgraceful and I know that
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Hansard will minute his comment. I agree that taking on those extra staff is wrong because, as the hon. and learned Gentleman knows, there is a no-redundancy policy in Leicester.
Mr. Janner: Will the hon. Gentleman give way?
Mr. Bruinvels: All staff receive anti-Government propaganda in their pay packets. Staff were asked to wear anti-rate-capping badges and they were all told to write to their Member of Parliament. I received 161 letters in favour of rate capping and 21 against, 11 of whom were not even my constituents, which is perhaps not surprising.
I quote just a few extracts. Mr. R writes:
"It would be very interesting to know just how many people in this City pay their own full rate demand."
Mrs. A writes:
"Our rates are being squandered quite blatantly where they are not altogether noticed."
Mr. B W writes:
"May I say that I fully support any Government moves to restrict the empire building of Soulsby, Livingstone etc. I also resent being bombarded by anti-rate-capping literature, stickers etc."
Mrs. SF writes:
"On the back page of this publication it urges me to write to my MP and voice my objection. I felt I must write in full support of ratecapping".
Miss R—
Mr. Dobson: This must be Mr. R's sister.
Mr. Bruinvels: Miss R writes:
"I can't think I am the only one asking for rate-capping for Leicester. Not before time."
Mr. C writes:
"No to rate capping is a farce—especially the door to door canvassing asking people to put their names on a petition. The canvassers are putting names and addresses to the petition of people we don't even know."
Finally, the Leicester Mercury published the following comment from an "Irate Ratepayer"—
Mr. Dobson: This must be Mr. B.
Mr. Bruinvels: He says:
"Fewer and fewer people these days pay the full rates. It is easy to vote for a high-spending council when one is on the receiving end — far more difficult to find the money to cover this ever-increasing cost."
Another writes:
"How they love to spend other people's money.
The council always seems to get their priorities back to front. If only they played the game they wouldn't be rate-capped."
Tremendous scare tactics have been used. On 25 January more than 30 mothers and their children came to my surgery. Many of the children were under 10. Those mothers claimed that Leicester's children would lose their play areas, but there was no proof. Last Thursday, on 21 February, there was a day of action in Leicester followed by a lobby of Members of Parliament. I met more than 60 people from the voluntary group sector, who were full of fears for the future. Those fears were engendered by Labour. There may be too many voluntary groups in Leicester, but to withdraw for the day, which is what these people intended to do, is no way of winning friends.
On 20 February, no rate had still been set. Leicester city council has grossly mismanaged public money and has put enormous sums into projects which are of no benefit to the majority of ratepayers. I have already given some examples. No incentive or encouragement is given by the city council so that people can help themselves. Despite all the money that has been spent, there is no

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encouragement to help people stand on their own two feet. In my opinion, ratepayers would prefer more choice over how their rates are spent. They do not want their money to go in handouts to a party political PR exercise. When the money has run out as a result of these pathetic PR schemes, the council will no doubt claim that they have a frightful, uncaring Government simply because there is no money left in the coffers to fund its play groups.
Although children have no votes, it is clear that the council is trying to buy votes, particularly the ethnic vote. When no money is left, it will tell old people, "Of course, the city council wants more money," when it really wants to control and manage people's lives, but only in a way which suits it, and that will cost money.
I shall support the order. That will come as no surprise, because I want to see a reduction in rates in that city. I want the public to have the right to choose how they spend their money.
9.17 pm
Mr. Bill Michie: I have changed my speech about four times in the past five hours, but even so I could still speak at length. I have been appalled at some of the comments that have been made by Conservative Members. Instead of justifying cuts in the rates, they have made it clear that in their opinion there are too many voluntary services and too many people looking after those in need. They suggest that ratepayers would like to get rid of most services, but by no stretch of the imagination is that the view in my constituency.
The hon. Member for Harlow (Mr. Hayes) suggested that some people could not understand economic realities. Is he suggesting that I should tell an old man who has suffered three strokes that he cannot remain in hospital because of NHS cuts? Is he suggesting that I tell that person that he cannot have an old people's home because of cuts in social services? Am I supposed to say, "You must understand, old man, that this is economic reality"? Will that old person go away and die happy in his bed in the knowledge that someone knows what economic realities are all about? Do I blame economic realities when I speak to a single parent with no accommodation or to council house tenants whose repairs have not been carried out because of the revenue consequences of cuts in housing grant?
At the same time as I am told to speak of economic realities, the Government can blandly invest millions of pounds in weapons of destruction. There is no way in which I can meet people at my surgeries and speak of economic realities as though their lives are not as important as some of the Government's policies. If the Government cannot run the economy and look after those in need, instead of those who have greed, they should not be in office.
I have been a Sheffield ratepayer for many years. I have never grumbled about that, even when I was unemployed for a considerable time. I know that rates in Sheffield are used to care for people in need.
I was appalled by the Secretary of State, who during his speech did not try to justify rate capping but made snide remarks about city councils that are doing their best to resist this pernicious legislation. He never once justified the assumptions on which rate capping is based, or the levels that he has set for places such as Sheffield. He said
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that if the Government did not act, the rates were likely to soar. Some hon. Members said that they would go sky high. The Government should have made that point when we talked about the rates that we are now experiencing in the industrial urban areas. The rates would not be at this high level if the Government had not inflicted tremendous penalties during the past few years.
Local authorities have been robbed to pay for the mismanagement of the national economy. The House spends more time interfering with local government than dealing with the real issues of unemployment, the falling pound, our dying industry and our crumbling infrastructure. We shall have another debate this week about local government when, instead, the Government should be getting down to the job for which they were elected and which they promised to do, that is, of putting the country back on its feet.
It has been said that high rates have caused unemployment and job losses, yet plenty of proof has been sent to the Government that that is not the case, and my right hon. and hon. Friends have already made it clear that if industry goes to areas of low rates, rents are increased and the industries are no better off. Industrial decline and the national illness that we have experienced since the Government came to power have nothing to do with rates. They are caused by a general malaise and a lack of confidence in the administration of the nation.
Labour local authorities provide good services and create wealth. In Sheffield the city council employs 32,000 people, that is, it provides more than 20 per cent. of all jobs in Sheffield. Moreover, the council employees and families spend much of their income in Sheffield, which provides a further 5,500 jobs. The city council spends more than £24 million on purchases and services from local companies, which preserve at least 1,200 jobs in the city. The council's capital programme for Sheffield is £34 million and, therefore, provides jobs and profits for local building and civil engineering firms.
To cut rates and supposedly remove a few jobs in Sheffield will not cure the problem. The Secretary of State will make matters worse. He will merely put more people on the dole. Rate capping will stop councils, such as Sheffield, helping local industries with grants and investments, and providing business libraries, public health facilities and advice. It will stop the city council giving information to women and ethnic minorities. From what Conservative Members have said, it seems that they believe that women and ethnic minorities should not be helped and encouraged. I hope that the city council will continue to do its best for women and ethnic minorities, especially those in the lower paid sector whose livelihoods depend on the city council, not on private business.
The council's spending has not risen. Some hon. Members said that council house spending has continued to rise totally unchecked, but that is not true. The Government's penalties have caused great problems for rates. In Sheffield, spending has not increased in real terms during the past four years, yet we still have high rates. Despite the threat of rate capping, the city council must spend more on those services, because it has 2,000 acres of derelict industrial land and 2,000 pre-1939 houses that need substantial improvement. The family and clinical service must give much more help to people in need, and we need 8,000 new houses in the area.
We do not need the reduction of the rate support grant to local authorities with which we are presented today.

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Sheffield has already suffered disproportionately. Its grant entitlement for 1985–86 is £92·6 million, which is a reduction of £10 million in real terms from 1984–85. As I said in an earlier debate on the grant-related expenditure assessment, Sheffield has suffered tremendously as a result of legislation introduced by the Government.
Mr. Geoffrey Dickens: Does the hon. Gentleman accept that the local authority in Sheffield has made the biggest shambles of any city in the United Kingdom? I was a resident of Sheffield, and for many years I have been appalled by what the local authority has done. I cannot understand his singing the praises of Sheffield when all that commends it are two good football teams.
Mr. Michie: I do not believe that the Sheffield authority has made a shambles of anything. One of its successes was when the hon. Gentleman left the area.
We are debating a serious matter. It is not just a political argument; the Opposition have genuine fears about the problems that will be caused if the legislation is enacted. Massive inroads will be made into services, and in Sheffield the education budget will be cut by about £6·68 million in a full year. That is a tremendous burden for any local authority. More than £300,000 will be cut from recreation services at a time of high unemployment, when recreation is the only thing that the city can offer to the unemployed. The order will have a drastic effect upon services to the elderly. The city cannot place old people in proper accommodation because of the economic restraints upon it.
The most desperately needed services are those of home help and home wardens, which are under-resourced. In 1983–84, 37 extra home helps were appointed; in 1984–85, only 16 were appointed, against a background of an increasing elderly population. By 1995, there will be a 75 per cent. increase in Sheffield of people aged more than 85. Those services must be paid for, and it is no good talking about economic reality. The reality is that those people have worked all their lives and now expect some love, care and accommodation in return. We cannot provide that if we are to be penalised every time we provide the services that they request. I say, "request" because they are gentle folk who do not demand services. However, they have a fundamental right to those services, which the city council would give them if only the Government would get off its back.
The hon. Member for Leicester, East (Mr. Bruinvels) said that he had received only 15 letters against rate capping. I have not counted all the letters that I have received from my constituents, including school children, the elderly—
Mrs. Elaine Kellett-Bowman: And from ratepayers.
Mr. Michie: Most of my constituents who live in their own houses are ratepayers.
Mr. Dickens: Very few.
Mr. Michie: I am sure you know more about the constituency of Sheffield, Heeley than I do. It seems that you know more about everything than anyone else does.
Mr. Speaker: Order.
Mr. Michie: I am sorry, Mr. Speaker.
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I have had one letter from a ratepayer who is a business man, and I know that the Conservative party is always impressed by business men. It says:
"I am a Sheffield business man. I am happy to pay my rates since I see the tax, combined with the diminishing Central Government Support Grant, put to use. The schools, the care for the elderly, the subsidised public transport, the industrial endeavours of the City Council and the attempts to provide adequate housing to our citizens all get my approval and elicit my gratitude … My rates are high"—
Mr. Dickens: What is his company?
Mr. Michie: He is in new technology, one of your favourites.
Mr. Speaker: Order. The hon. Gentleman must not keep bringing the Chair into all this.
Mr. Michie: The letter continues:
"My rates are high—and it seems to me that there is wealth creation in their expenditure."
That is the city council.
"That makes the rate bill one of my most cost effective items of annual expenditure. I do not want it removed."
He gave me permission to broadcast that where I think fit.
Mr. James Hill: He is hoodwinking the hon. Gentleman.
Mr. Michie: The hon. Gentleman may say that, but he does not believe anything if he does not like the end product.
This order is another retrograde step for democracy, and I have no doubt, when people suggest that we have a little by-election to test the water, that any such by-election would be welcome in Sheffield. In the next district election, whatever the district council does with rates, I can expect that, as we do not have many more seats to win from the Conservatives, we may get the last one or two.
9.31 pm
Mr. Norman Atkinson: The Secretary of State criticised the London borough of Haringey and I wish to answer him. Before I do that, I shall answer some of the points made by Conservative Members about what they call an astronomical increase in the level of rates. They then go on to mention the authorities that they represent. Of all the figures that have been mentioned so far in the debate, none shows an increase as great as the Government's increased spending on social services, on their welfare aggregates. As the numbers of unemployed involved who are entitled to social security benefit of one kind or another, and particularly unemployment benefit have increased so the aggregates have increased. They have increased at a far greater rate than any of the figures quoted by Conservative Members about local authorities.
One criticism that has been made two or three times concerns the schedule. Hon. Members have made comparisons between the poundage rates for each local authority set out in the order, but there is no relationship between those rate poundages. They do not show the level of services provided by each authority. The Secretary of State criticised the rate poundage of 268p permitted for the London borough of Haringey. The criticism is that that is an astronomical multiple of the 25p for the city of Leicester. However, there is no relationship between these figures because the rating values are so different. One of the historical problems suffered by Haringey, as it established its identity following the removal of the

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London county council, is the high rating base and low rating values set in that borough. That means that, of necessity, there must be a higher rate poundage and that is the reason for these figures.
It is quite wrong to refer to the borough of Haringey as the highest-rated borough in the country when it is not. Certainly its expenditure is not the highest, although it has a proud record of providing a first-class service to a borough which experiences many problems and suffers a great deal of deprivation. I hope that we shall not have repeated references to rate poundages, because it is wrong to make comparisons on that basis.
The Secretary of State referred directly to the borough of Haringey and talked about the millions of pounds overspend which, he said, the borough drifted into erroneously and that it was not until the district auditor pointed out that the overspend was occurring that the borough tried to remedy it. That is not true.
I refer the House to the correspondence about the overspend. The history is quite different. According to his own Department, on Tuesday 19 February the Secretary of State announced the revised rate for Haringey of 268p. That represented a rise of 16·5 per cent. in place of what was then to be a cut of 3·5 per cent. The basis on which that figure of 268p was arrived at related to a grant loss in penalty in respect of the 1984–85 overspend of £6·9 million. The reason why that overspend occurred is that a broad assessment made by the district auditor was that the borough had overclaimed a housing subsidy of £3·6 million over three and a half years.
It was curious that the Secretary of State referred to that because, over those three and a half years, there was an audited account with the district auditor approving each claim. It is only now that that overclaimed housing subsidy has been discovered. But, having discovered that there was an overclaim of £3·6 million, the Minister said that there was a grant loss and penalty on the repayment of that £6·9 million overspend of about £11·5 million.
That is a breathtaking revelation. First, there was the complaint that the authority overspent £6·9 million. Then the Minister complained that that amounted to £18·4 million which must be a first charge on next year's rate. Then he said that he had to alter his own figures to accommodate that statutory obligation. That is an astounding sequence of events.
To compound that libel against the authority, the right hon. Gentleman comes to the House and tries to justify his criticism. The first charge which is now £18·4 million less a rate fund balance of £2 million, making a net increase to be found of £16·4 million, is recognised by the Minister as resulting from past errors now discovered by an auditor—errors which the local authority had no knowledge of half-way through this financial year.
The Minister said that Haringey authority had been absolutely incompetent in not remedying the fault, although it had no knowledge of it. Previously, at the beginning of each financial year the auditors authorised the claims for housing subsidy. Haringey authority had assumed that everything was in order. It was not until half way through the financial year that this over claim came to light. That is why the Secretary of State has had to revise the original figures. He knows that the over claim becomes
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the first charge upon next year's rate. The Secretary of State owes an apology both to the House and to Haringey authority for his criticism of alleged incompetence.
The Secretary of State referred also to the alleged cuts that had been made. However, it is interesting to look at the figures. The Secretary of State says that we ought not to be too obsessed with percentages because they do not mean much to most people; why not, therefore, talk about money? I shall answer his point by talking about money. In 1979–80, Haringey authority received £41 million in rate support grant. If that figure were to be indexed, the rate support grant for this year should be £76 million. However, all that Haringey is being offered is about £52 million, which represents a shortfall in cash terms, not in percentage terms, of £24 million. That is the amount of money that the Government will not make available to Haringey.
The Government deny that they are trying to cut local authority services but their claim is answered by the fact that they are paying much less towards the cost of those services. Put another way, in 1979–80 each resident in the borough of Haringey received £201 in rate support grant from the Government. If that sum were to be indexed at today's prices, it would amount to £305. However, Haringey will not receive anything like that amount of money. I am told that on the 1979–80 figure there will be a shortfall for the coming year of about £118 per head. In order for services to attract subsidies equivalent to those received in 1979–80, every resident in the borough ought to receive £373. That is not juggling with percentages or attempting to deceive with fictitious figures. The money that the Government have taken away from the authority has of necessity resulted in the rate increase to which the Secretary of State referred.
We can assume that there are now 204,000 people in Haringey, as there were in 1979–80. I have made my calculations on that basis. The Government are now paying much less money in real terms. That is the measure of the cuts that they are imposing upon the services to be provided by Haringey
Because of what is happening elsewhere in the economy there is deprivation, and unemployment is now above 17 per cent. That is a tremendous figure when one thinks of the wealthy people who live at one end of the borough. There is an enormous difference between the income and job opportunities of those who live at the western end of Haringey compared with the eastern end. Highgate and parts of Green lanes have 100 per cent. employment. That is a big difference from the situation in Tottenham at the east end of the borough.
I hope that the Secretary of State will withdraw some of his allegations against the authority. I hope that he will apologise for talking about incompetence. I hope that he will recognise that it is his Department and the district auditor who made all the mistakes in the past. Their incompetence caused the deficit in the first place. I hope that there will be some recognition of that fact when the Minister replies.
9.46 pm
Mr. Jeremy Corbyn: The issue at stake in the rate order that we are debating is fundamental to the future of many things in Britain. What we are really debating is the arrogance of Government and the Secretary of State in their treatment of local authorities.

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Ever since the Government came to power in 1979 they have been obsessed with attacking local authorities, local authority workers and, through them, those who receive local authority services. At every turn they have refused to recognise the needs of people in poor areas.
It is no accident that the rate-capping order that we shall vote on tonight will affect the poorest parts of Britain. It will not affect the wealthy home counties, south coast towns or county towns. It will affect the poorest inner city areas of Britain and is a direct attack on the poorest people.
When Conservative Members make their litany of criticism of local government, most of it inaccurate, culled from the pages of local newspapers and based on secondhand ignorance, they demonstrate their contempt for the very people who depend and rely on local authority services. How many of them care about whether elderly people will have warden-assisted flats to move into should they become disabled? How many of them, despite their lectures to local authorities on abiding by the law and to everybody else on law and order, will do anything about local authorities that are forced to break the law when they are unable to fulfil their obligations under the Chronically Sick and Disabled Persons Act or the statutory provisions for the homeless?
That is the degree of contempt that Conservative Members are showing to the House tonight. They are showing in a most contemptible way a long process that has developed since 1979, first, of admonishing local authorities, secondly, of cutting rate support grant to local authorities, thirdly, of penalising kcal authorities for attempting to spend money at the level that is required, and, fourthly, of taking statutory action against local authorities. They are, in effect, destroying the effect of elections that took place in 1982 and the basis of local government legislation.
The hon. Members for Bury, North (Mr. Burt) and for South Ribble (Mr. Atkins) who, from a sedentary position, are mouthing rubbish, are both failed ex-members of Haringey council. The hon. Member for Bury, North spent a short time on the council before resigning reluctantly, having been elected to the House. We later found out that he resigned reluctantly because the seat that he vacated, causing a by-election, was won by the Labour party, never having been won by Labour before in the 90 years of its existence. That reflects great credit on the work done by the hon. Member for Bury, North on Haringey council.
I have spent nine years on a local authority and I am proud to be sponsored in the House by the National Union of Public Employees, which represents several hundred thousand local authority employees.
Mr. Robert Atkins: Does NUPE pay the hon. Gentleman?
Mr. Corbyn: No, NUPE does not pay me. It sponsors me in the House and I am proud to be sponsored by the union, because of the work done by its members in vital social services. The order is a threat to their jobs.
I ask Conservative Members to put themselves in the shoes of a local councillor. Tory Members mouth platitudes about efficiency, privatisation and what they would do, but they know that every councillor in a rate-capped authority faces the choice of standing by the people who elected him and by what he said at the 1982 elections or bowing down to the arrogance of the Secretary of State and the Government.
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If Islington council had its rate support grant restored to the level that existed when the Labour Government went out of office—a level which I thought was inadequate—and the council put forward the budget that it intends to propose on 7 March there would be a 40 per cent. cut in rates for the people of Islington. The Government refuse to discuss that figure because they know that the real cause of the problems of Islington, Haringey and all the other rate capped authorities is the Government's stealing of money from the poorest people in inner city areas. [Interruption.]
Mr. Speaker: Order. I am having some difficulty in hearing the hon. Gentleman because of the chatter across the Chamber.
Mr. Alistair Burt: Protected by the establishment.
Mr. Corbyn: If the hon. Member for Bury, North has anything useful to say from his long experience of one year in local government, I shall be happy to give way to him.
Islington council will be proposing a budget of about £94 million on 7 March. It might be asked how the council arrived at that figure. The budget reflects the needs of a poor borough with an ever-increasing number of elderly people and increasing demands for pre-school play provision and for simple, basic services that many people desperately need.
The Government have decreed that Islington's budget should be £85·6 million—a cut of £8·4 million. Did they arrive at that figure because the Secretary of State has an intimate knowledge of the Finsbury Park area, the Mayville estate, the Bemerton estate, life around the Angel, the need for housing repairs, the waiting lists for day centres for the elderly, the needs of the handicapped and disabled and the needs of women in the borough? Or is that £85·6 million an arbitrary figure, based on an arbitrary assessment, as a means of attacking a Labour-controlled council?
Many people in my borough and others believe that the Secretary of State has done nothing less than pursue a vendetta against a number of local authorities — a vendetta in the House and in the national press that has often been parroted by the local press. When the budget is discussed by Islington council on 7 March, many people will be inside and outside the town hall, and taking part in meetings, rallies, marches and demonstrations. They will show that the people of the borough have rumbled the Secretary of State, and that they understand that the purpose of the legislation is quite simply to destroy many of the services, and the jobs that go with them.
The right hon. Gentleman has succeeded in creating an alliance between those who rely on council services, those who are employed by the council and those who work in local industry. They are all quite capable of seeing that if £8·4 million is taken out of the local economy it will have a devastating effect. The Government propose effectively to dismiss almost 1,000 council employees in order that the services so desperately needed are not provided.
Will the Secretary of State think for one second about the logic of sacking someone who is employed as a home help and of sending her to queue up at the DHSS, while the person who relied on that home help lives alone and in fear? That will be the result of cuts in social service budgets. In putting forward and debating that budget on 7 March, many local people, including councillors,

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myself, and I am sure my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) will be saying that inadequate provision is made even now for many things in the borough. By 1993 there will be a 20 per cent. increase in the number of people aged over 75 living in the borough. At present, 10 per cent. of all households consist of single elderly people.
There are five day centres providing important facilities and lunches. In addition to the 285 people who use the day centres, there are a further 500 who drop in. Just as there are many people who rely on meals on wheels, many rely on the dial-a-ride service. Conservative Members might find all that rather funny, but the disabled people who rely on the dial-a-ride service to get around know that they will be prisoners in their own homes if it disappears. They will be confined to their homes without any chance of getting out and with no support from the social services. They will be assigned to a life of misery and solitude by Government action and decision.
Let us look at the other end of the scale and at the provision for the under-fives in the borough. Between 1971 and 1981 there was a 22 per cent. increase in demand for under-five provision. There are 630 children in the borough who use under-five day centres. There are a further 500 on the waiting list. Indeed, it is not even easy to get on the waiting list. Conservative Members might not understand that if the council closed any of the day centres or lost any of that nursery provision it would be mainly the women who suffered. They would not be able to go out to work, to look for a job, to pursue other interests or to fulfil themselves in any way, because they would be stuck at home — often in high-rise flats — looking after their small children. That would be the effect of cutting under-five provision, as Conservative Members know very well.
In 1982 the people of Islington voted on a very carefully prepared, worked-out and costed manifesto. That manifesto was put to the people of the borough and the Labour party gained 51 out of 52 seats on Islington council. The very large mandate thus secured demonstrated that the people of Islington strongly supported that manifesto. We now have a Government who are hell-bent on a strategy of destroying the democracy that elected that council and of attacking democracy in every other local authority. But the Government have created a unity of opposition to them which is very powerful and will ultimately defeat them.
Recently, the London Labour party held a special policy conference to discuss the issues of rate capping and its effects on local government. Among the decisions taken was a call on Labour councils to
"construct their budgets for 1985–86 in accordance with local wishes, but ensuring the maintenance of existing services and jobs and recognising the growing needs of their communities, and more particularly of those sections of the community worst hit by Tory economic and social policy. In particular, there should be a rent freeze for 1985–86."
Conservative Members must recognise that there is tremendous support for the policies of opposition to rate capping. The people who oppose rate capping realise that it is a fundamental nail in the structure of local government democracy. All we hear from Conservative Members is, "Give the business men the vote". They have the vote wherever they happen to live. Are the Conservatives prepared to take the logic of their argument a step further and say that those who do not pay taxes are not entitled
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to a vote in parliamentary elections? Are they really saying that the only people who should have a say in democracy are those with money and those who pay for particular things? That is the prospect held out by the order. We are witnessing tonight an attempt by the Tory party to destroy local democracy, but I repeat that they have only succeeded in building up the most enormous opposition to their policies.
On 7 March, when the budgets go through the local authorities that have been rate capped, they will put the seal on the alliance of local people, local authority workers and Labour councils in opposing the Government. They will also be joining with the miners—[Interruption.]—and other people who have stood out against Tory economic policy and economic doctrine. The only policy and doctrine of Tory Members is that of destroying jobs, communities and livelihoods on the altar of efficiency and competition, to make money out of people.
Labour Members stand for a society that cares for all its people—its old, its sick and its young; a society that recognises that local authorities have a particularly important role to play in removing some of the inequalities in our present society. I speak tonight with tremendous support for the views put forward by the Labour party and by the council in my constituency. They have created an alliance of support that will not only defeat the proposals in the order but destroy the Tories.
10.3 pm
Mr. Frank Dobson: The debate has been graced by two speeches from Conservative Members—and the intermittent presence of a Tory Whip—who have something in common. The hon. Member for Salisbury (Mr. Key), the hon. Member for Leicester, East (Mr. Bruinvels) and the hon. Member for Huntingdon (Mr. Major) have connections with the borough of Camden. When they stood for election there they were defeated.
The hon. Member for Salisbury stood for Parliament against me in 1979 and lost. The hon. Member for Huntingdon stood against my hon. Friend, who is now Lord Stallard, in St. Pancras, North and lost. The hon. Member for Leicester, East stood against me at a council election, when I was leader of the council, and lost. They now seem to be saying that, because they were elected to this House by electors in other areas, they can tell the people of Camden and the Camden council what that council should do.
We have now moved to an entirely new Tory approach to democracy. The Secretary of State, who does not deign to be present at the moment, appeared on ITN about 18 months ago and spoke about the wicked councils who were wasting money all the time. The interviewer said to him:
"If they do not like it surely the people can vote them out."
The Secretary of State replied:
"Yes but that has not been working very well recently."
The Tory party's approach to local government is dominated by two alien concepts put forward by two aliens—one of them being Molotov, not usually a hero of the Tory party, who said that the problem with free elections was that one could not be sure who would win. The Tories are unwilling to allow the electors in any area to determine the policy of their area because they cannot be sure that the Conservatives would win.
To match the Russian Molotov, the Tories support Henry Ford who, when he was the great dictator of the

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motor industry in the United States and was asked whether he could produce coloured motor cars, said, "Yes, they can have any colour they like provided it is black." The Tories are saying, "You can vote in local elections for whatever party you want, but central Government will impose Tory policies on the council that you elect, no matter how few votes Tories have in your area."
The Tory party is telling the potential rate capped authorities that when the new financial year begins all the Labour policies will be cast aside and Tory policies will be introduced without the benefit of an election. In my constituency that will mean that Camden council will not be able to provide the services that it has promised but will have to reduce them to the standards provided by the neighbouring boroughs of Barnet and Westminster. That is not good enough.
When I go around my constituency and visit luncheon clubs and meet disabled groups and elderly people living in sheltered housing, I do not hear anyone asking for a reduction in the standard of services. With the increased impoverishment in the inner city brought about by the Government, our people are looking for improvements in the standard of public services not reductions.
The much-maligned Camden council is currently providing 950 places for the elderly in residential homes, support in their homes for 4,238 elderly, 416 home helps working for 3,870 people and 5,169 meals-on-wheels every week — which is a great deal more than was previously provided by the Westminster council when the right hon. Member for Mole Valley (Mr. Baker), the Minister for Local Government, represented a seat in Westminster before he did a bunk because there was reselection in the Tory party.
The council also provides 19 luncheon clubs that are used by 825 people. It provides—and I am glad—3,000 subsidised holidays for pensioners and the disabled. What I know of the people who elect me—and even some of those who vote for the other parties — is that they are glad that their rates are spent on free and subsidised holidays for old, poor and disabled people.
This Government despise the idealism and decency of the British people — they always have. They try to appeal to the worst element in our society whom, of course, they represent. Most of the people in inner London and those living in the rate-capped authorities think that council services could be improved, that there should be a decent approach to the old and disabled, that there should be decent schools for our children and that we should be trying to look after one another, not trying to sacrifice one another on the altar of monetarism.
The Government believe that they can cast aside the views of those who live in the rate-capped areas, that they have no voice, that their elected councils were not really elected by them, that they do not represent them, that their Members of Parliament do not represent them and that some tinpot idiots in the Department of the Environment—officials and Ministers—know better than the people of Camden, Islington or Lambeth what they want. The motto of the Tories today is that they know better than everyone else. That has always been a bad motto, and in the end it will drag them down.
I am convinced, however, that those who live in rate-capped areas will join their councillors in resisting the threat to their standard of living. The living standards of
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the poorer people in the worse off areas are dependent largely on public spending, and that has always been the case.
The market place did not provide clean water, sewage systems, decent housing for ordinary people and a proper education for all children. Those services were made possible by public provision, and the people who wanted them were prepared to pay for them and to vote for them, and they will not be denied.
10.11 pm
Mr. John Fraser: I rise in two capacities. The first is to wind up the debate on behalf of the Opposition. The second—for which I make no apology—is to speak about by borough of Lambeth, and in that context I noted the remarks of the hon. Member for Streatham (Mr. Shelton).
I hope that hon. Members will not accuse me of being parochial, because the problems that face my constituents and fellow citizens of Lambeth are similar to those that face the constituents of many hon. Members who have spoken in the debate.
We in Lambeth are being rate-capped not once but three times. Although ILEA does not receive a penny from central Government, we are being rate-capped in such a way that the choice, in terms of the decision we make about how much we spend on educating our children and on further education, is being removed from us.
We are being rate-capped a second time in respect of the GLC, although, again, not a penny of Government money goes to the GLC. The rate-capping of the GLC, and its eventual abolition, will add even further to the problems of stress areas such as Lambeth, Hackney, Islington, Brent and the rest.
Thirdly, we are being rate-capped despite the fact that in the last five years the Government have taken £113 million in grants from Lambeth. Indeed, they have taken in grants from Lambeth the equivalent of an entire year's expenditure on current services, all because the Government think that they know better than the electors and councillors of Lambeth how the borough should be run.
Mr. Marlow: The hon. Gentleman is talking about Lambeth and ILEA. He may know that the cost of providing a primary school place for a child within ILEA is twice that of the cost in my constituency, and we provide better primary education than that provided by ILEA. The hon. Gentleman might also know—if he does not know, he should because it has been publicised by Lambeth—that Lambeth takes £37 million a year in rents from its houses but that it costs Lambeth £134 million a year to manage and maintain those houses. It is a tragedy that Lambeth was not rate-capped before.
Mr. Fraser: If the hon. Gentleman wishes to make a contribution to Lambeth, I can suggest two actions to him. First, he should repay the grant that he had from Lambeth borough council for the improvements to his house. Secondly, he can remove his child from an ILEA subsidised nursery school. He can take his business elsewhere if he is so disgusted with the services that we provide.
Despite Lambeth's problems, the Government require the borough to cut its expenditure by £15 million in the next financial year, and that is on a no-growth budget. A

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borough such as Lambeth can save £15 million in the same way as boroughs such as Hackney or Islington, for example. Money can be saved in only two ways. The first way is by cutting services and the second is by making workers redundant.
The cuts in the amount that Lambeth is able to spend on its services flow in part from the cut in rate support grant. The cuts are not made in isolation. Redundancies of between 1,500 and 2,000 in local government are being thrust upon Lambeth. There have been compulsory cuts in employment at St. Thomas's hospital. They were imposed by the Secretrary of State for Social Services. They were made to such an extent that the governors of St. Thomas's hospital have said that the hospital is no longer able to meet its perceived obligations. Cuts have come on top of cuts at King's College hospital. The cuts have resulted in the closure of five hospitals in or about the borough of Lambeth. The Government's policy resulted in the announcement last week of the closure of a young person's skillcentre in Lambeth.
The cuts are part of a multiple assault on a borough that has multiple deprivation. Lambeth will be able to meet the target that the Government have imposed on it only by sacking employees. However, unemployment in Lambeth, as in many other rate-capped boroughs, is catastrophic. One in four men in Lambeth are out of work. At the last count, 3,000 male adults were unemployed. There were 3,500 unemployed school leavers and college leavers. About 68 per cent. of black children leaving school in the borough were without a job after many months, as were 50 per cent. of white children. Rate capping means the throwing of petrol upon the fire which has already consumed so many jobs. I have seen people throwing petrol on fires in Lambeth during riots which were caused in part by unemployment. Deprivation in the borough will become even worse and more widespread as a result of what the Government are proposing to do.
Mr. Proctor: Will the hon. Gentleman give way?
Mr. Fraser: Yes. It should be good for a laugh.
Mr. Proctor: Is the hon. Gentleman not saying that high rates mean unemployment? Surely he has proved that in his comments so far.
Mr. Fraser: If the hon. Gentleman thinks that high rates create unemployment, let him urge his Front Bench colleagues to publish the conclusions of the studies that have taken place to ascertain whether there is any evidence of that happening. The Labour party is not arguing that we should have a high-rates economy. That is why it has argued so strongly against the reduction in rate support grant from 61 per cent. in 1979 to 47·5 per cent. in the most recent settlement.
If the Government's proposals are followed through, they are bound to result in an increase in unemployment in all the rate-capped boroughs. That will not be their only effect. The Government's policy will have an especially adverse effect on the voluntary sector, which should be the darling of the Tory party. Local authorities do not have a statutory duty towards voluntary groups and so they are likely to suffer much more than even the statutory groups. As the House may know, this will have a knock-on effect. An example is given in the bulletin that is issued by
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Lambeth's community relations department. It states that there could well be a seven-fold consequence as a result of a cut of £1 in the scheme that is funded through the Lambeth inner city partnership programme and the European social fund. For every reduction of £1 in the local authority's contribution, £3 would be handed back to the Department of the Environment and a further £4 would be handed back to the European social fund. As I have said, the effect on voluntary groups of the Government's policy could well be even greater than that on statutory groups.
There is a detestable featuree of rate capping that will cause the policy to be resented and resisted. Its purpose is to try to compel councils and councillors to be the Secretary of State's slaughtermen while the Secretary of State takes no responsibility for any single consequence of his strategic decisions.
In Lambeth, as in every other rate-capped borough, there will be an effect on housing. We have already heard about the housing problems of Brent. In Lambeth, there are 28,000 families on the housing waiting list and 2,500 families per year apply to be treated as homeless and are accepted. In Brent, about 600 homeless people are in bed-and-breakfast accommodation. That is appalling. Since 1979—this is typical of rate-capped boroughs—Lambeth has lost about £200 million in housing investment programme allocations as the amount decreases inexorably year by year.
The effect of rate capping on housing will be greatly resented. We have figures on comparative costs, and I do not believe for a moment that the way in which housing is managed and repaired in Lambeth, Southwark, Brent, Islington, Camden, Leicester or any of these boroughs means that too much is spent on the services. Quite the reverse. At my advice bureau—I am sure that my hon. Friends have had the same experience—I face constant criticism that not enough is spent on the repair and maintenance of council accommodation. The reason for the discrepancies between boroughs in management cost per tenant is that the problems of many inner city areas bear no comparison with those of smaller towns and rural areas.
Mr. Richard Hickmet: The hon. Gentleman's argument does not stand up when one compares the rates in Lambeth with the infinitely lower rates in neighbouring Wandsworth. Unemployment is also infinitely lower in Wandsworth. As for housing maintenance, Lambeth has a grossly inadequate and inefficient direct labour organisation while Wandsworth applies its money efficiently by using independent contractors.
Mr. Fraser: That is just ignorant propaganda pumped out by Tory Central Office. Even the Parliamentary Under-Secretary of State will bear this out. When Rowton house was deprivatised, he was prepared to give Lambeth about £2 million if that accommodation could be brought back into use for the single homeless within two months. Using a judicious combination of private contractors and direct labour we managed to do that. We are a practical borough and we recognise that there is a place for private contractors as well as direct works. The figures for homelessness, deprivation and the rest show that there is no comparison between an area like Wandsworth and an area like Lambeth.

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All the rate-capped boroughs will also suffer in the way in which they deal with associated services. In my borough—I do not think this is unusual—more than 50 per cent. of the population receive housing benefit. By no means all of them are council tenants. Many are private tenants or owner-occupiers. I must admit that I have sometimes criticised the local authority's performance in this respect. Because of the numbers and the frequent changes in benefit regulations the administration, if not actually chaotic, has taken far too long.
If councils are to carry out the statutory duties forced upon them by central Government they must take on more employees. The Government are forcing authorities to break the law. In respect of their housing obligations, many authorities are becoming recidivist criminals. Questions to the Home Office and the Attorney-General will reveal the number of local authorities convicted in magistrates courts of criminal offences in terms of failure to carry out repair obligations. That criminal recidivism and neglect of duty will become even worse if rate capping is implemented.
The trouble is that we have rate capping without any Conservative Member being prepared to take any responsibility for any service. What will happen to my 40,000 pensioners, to the 5,000 people in Lambeth who have home helps, to the 1,500 people who receive meals on wheels or to the 1,700 who attend luncheon clubs and day centres? Conservative members are not prepared to take the responsibility. They want to force local councillors into taking the dirty end of the job.
One of the reasons for an expansion in expenditure in many Labour boroughs is that they have taken the Government's word seriously. They have taken the mentally ill and severely disabled out of institutions and put them back into the community. But that is not cheap. It costs a lot of money. Compassion does not come on the cheap, but the Secretary of State thinks that it does. When a person comes out of a mental institution, he sometimes needs family attention for 24 hours a day. Of course, we provide expensive facilities, such as a day centre or holiday centre, so that from time to time parents or relatives can have some relief. That costs money, but the Secretary of State, Minister of State and Parliamentary Under-Secretary are not prepared to say which of those services should be cut. They leave local authorities to take that responsibility within the general level of rate capping.
I understand that the Minister for Local Government will speak for about 15 minutes. He is prepared to devote 60 or 70 seconds to each local authority that is to be rate capped. He is prepared to spend about one minute per £100 million of the budgets that we are debating. That reveals the level of arrogance and dictatorship in which the Department of the Environment is prepared to indulge.
When the Secretary of State first entered the House of Commons, his hobby was to follow Lord Balogh around to see whether Lord Balogh used his public car for any private purpose. The right hon. Gentleman has come a long way since then. He has risen from being the school sneak to the sixth form bully. That is what rate capping is all about. It is not about increased efficiency or compassion. It is about bullying local authorities, councillors and opposite political parties into accepting decisions which have been taken in secret—
The Minister of State, Department of Transport (Mrs. Lynda Chalker): That is stupid.
Mr. Fraser: The hon. Lady says that that is stupid, but we have not even received the information about the last set of rate capping orders, let alone this one. In a glorified rate night in Parliament, we are being asked to fix the budgets for 13 local authorities in a debate lasting about seven or eight hours. Altogether we are devoting about half an hour per authority—60 seconds of Front Bench time per authority. That is dictatorship by the Secretary of State towards local authorities. If for no other reason, these orders should be rejected because of the time that has been devoted to each authority. The whole exercise is being carried out with unbelievable haste and incompetence.
Even Tory Members must be bemused. Can one imagine a Tory colonel returning to a constitutional club in Haringey, sitting down and saying, "Good chap, this Jenkin"—[HON. MEMBERS: "Hear, hear."]—"He is cutting the rates by 3 per cent., good thing too." Can one imagine what that colonel will say when he is told, "Haven't you heard the news? They are not going down by 3 per cent., but are going up by 46p in the pound " He will be in for a surprise, as well as the Tory—
Mr. Hayes: That is stupid.
Mr. Fraser: The hon. Gentleman says that is stupid. Did the Secretary of State put the rate up by 46p in the pound within a week, or not? Even Tory ratepayers will be surprised to know that we have government by Tippex.
There is a further contradiction of local democracy. Many hon. Members have said that decisions will be taken or rubber stamped by hon. Members who have nothing to do with the area affected, and know nothing of its problems. I would be resentful normally if people north of the river interfered with the affairs of Lewisham, Southwark, Lambeth and Greenwich. The decisions about our levels of spending and local services will be taken not by councillors elected to represent the boroughs, nor by the hon. Members who have been elected to represent them, but by those with no association with the boroughs.
Mr. Kenneth Hind: Does the hon. Gentleman agree that his argument is too completely ludicrous? It means that if we were dealing with matters relating to Scotland, only Scottish hon. Members could vote, that on Welsh affairs only Welsh hon. Members would vote, and that on north of England matters, only north of England hon. Members. In effect he undermines the basis of parliamentary democracy and argues that only those in an area can have anything to do with it. That is ludicrous.
Mr Fraser: The hon. Gentleman is confusing national Government with local government. The definition of a cocaine dealer is someone who puts his business up other people's noses. That is what the hardline addicts on the Conservative Benches want to do. They are addicted to cutting meals on wheels and school meals in their constituencies and boroughs and want to put their business up my nose, the nose of my council and the noses of my right hon. and hon. Friends. It is none of their business. These matters should be decided by locally elected representatives, and not by representatives from elsewhere. The irony is that if the rate-capped authorities comply, rates will rise, even in Tory areas. The orders should be rejected considering the time, injustice and lack of material for the debate—no background information was laid on the Table.

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There are other reasons to reject the orders. One is that the orders are only the beginning of a process of rate capping and interference in local democracy. Even if the orders are passed and councillors renege on their commitments and revolt on their consciences, the councils are likely to be exactly the same victims next year, when balances are lower or new and unexpected commitments have arisen. Already no provision is being made for the additional commitments which will arise for many local authorities, especially those in London, because of the severe winter. Therefore, already the possibilities of rate capping in the next financial year are beginning to build up. No provision has been made for rising interest rates, which are at record levels in real terms. No provision has been made for the rising rate of inflation caused by the fall in value of the pound. Therefore, there will be new candidates. Hon. Gentlemen can take not only my word for that but that of The Times of 19 February. The headline,
"Jenkin expects bigger list for rate capping next year",
shows that this is only a rehearsal for what will happen next year. The article states:
"Mr. Jenkin told The Times it was possible that most of this year's rate-capped councils, which include Lambeth, Hackney and Camden in London, Sheffield and other inner city Labour authorities, will again be controlled. The rate-capping power is likely to be used next year against Manchester, Newcastle upon Tyne, Liverpool, all under Labour control."
But there may be other candidates. I have figures for how expenditure has increased from 1978–79 to 1984–85. Top of the list of examples is Lambeth, whose expenditure increased by 100 per cent., Haringey, whose spending increased by 88 per cent., Sheffield, whose spending increased by 88 per cent., and Portsmouth, whose expenditure increased by 83 per cent. Three of those four authorities increased expenditure at a lower rate than the Government increased public expenditure. We should compare them with other authorities, which have not been rate capped, but which may be candidates for next year. Buckinghamshire's spending increased by 113 per cent. — that is much more extravagant than Lambeth. Northamptonshire's expenditure increased by 101 per cent., so the hon. Member for Northampton, North (Mr. Marlow) will be able to swop sides next year. Expenditure in Somerset increased by 95·8 per cent., and in Cambridgeshire by 95·7 per cent. This is not the end of the debate; it is only the beginning, and Parliament will be sucked more and more in the process of trying to dictate the way in which local government is run.
An extraordinary feature of the debate is that it has not dealt with — certainly no Minister has dealt with—the fundamental problem of rates. I do not believe in high rates, and can see no benefit from them. They are regressive, and have a much worse effect upon those with middle incomes than almost any other tax. The Government have gone into a municipal everglades where they are lost in their own mist. They spend time with the Rates Act and penalties, which have failed. Penalties have not made local authorities more efficient. The fact is that we must have these rate capping orders is a condemnation of the penalties with which we have lived for the past couple of years. The Rates Act has done nothing to increase efficiency, nor has it had any effect on manpower. As the hon. Member for Hornsey and Wood
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Green (Sir H. Rossi) said, the Government should be dealing with the fundamental problems of rates and rate support.
The answer to the Secretary of State's niggling criticisms about local authorities is, do not let the Government or Parliament decide; let these matters be decided by the electors. If the hon. Member for Billericay (Mr. Proctor) and for Leicester, East (Mr. Bruinvels) are so confident of their case, let them not put the case in secret to the Department of the Environment; let them put it to the electors of Billericay and Leicester, who can then decide the matter. Conservative Members want government by business men sending messages to Whitehall.
Mr. Dickens: They pay the rates.
Mr. Fraser: The hon. Gentleman confirms it. They want the decisions about spending to be made by Whitehall in response to the pressure of business men. It is the negation of democracy.
This is only the end of the debate, not the end of the struggle. The Secretary of State has sought to arrogate to himself the functions of democratically elected local authorities, but he is campaigning in the mud. He will get deeper and deeper into the quagmire of controlling local authorities and their expenditure.
The Secretary of State is like one of the generals who have haunted the politics of South America. He thinks he knows better than the people's elected representatives, and he behaves with similar secrecy, arrogance and, if I may say so, incompetence. As he continues to act as a dictator, he will discover that dictatorship feeds upon itself, and he will have more and more problems with which to deal. By these orders, the Government are doing what despots do: they are asking hundreds of councillors, many of whom have spent a lifetime in the service of the community, to choose between their principles, consciences and promises on the one hand, and their personal interests and those of their families on the other.
This order is part of a familiar process. For the miners, the policy is to starve them into submission. For GCHQ, it is to bully them into submission. For councillors, it is to order and bankrupt them into submission. I ask Conservative Members to do their Secretary of State a favour—vote against this order tonight, and help him off with his jackboots.
10.41 pm
The Minister for Local Government (Mr. Kenneth Baker): The debate has been interesting—rather more interesting than the annual rate support grant debate. One has heard more about the details of local government than in any rate support grant debate. All three hon. Members representing the city of Leicester have spoken, and more has been said about that city in today's debate than in the past 10 years.
Before I deal with the details, I shall set out the background against which we introduced rate capping. Local government expenditure amounts to about £31 billion or £32 billion a year. That is a vast amount of money, which represents about a quarter of public expenditure. No Government can be indifferent to it, and we as a Government are committed to reducing the share that public expenditure takes of the national income.
Local government income, which we have debated today, arises from three sources. It arises from fees and

117
charges, from rates, which this year will amount to about £11 billion, and from grants to local authorities, which will account for a further £11·5 billion. We are dealing with substantial sums.
Since 1979, rates have risen faster than the RPI. This is due in part to the reduction in grants from central Government, which have fallen from 61 per cent. to 48·7 per cent. The more important reason for rate rises is the overspending of some councils, which have consistently rejected the Government's request for restraint, and have suffered as a result. They knew what they were doing, and they knew what the consequences of their behaviour would be. Some councils have seen their grants fall, but have not had to raise their rates significantly. For example, the London borough of Hounslow, which is a Labour-controlled borough, has had a fall in grants of 25 per cent., but has needed to increase its revenue from rates by only 18 per cent.
Mr. Robert N. Wareing: What about services?
Mr. Baker: I shall come to services in a minute.
This year, local councils have in total budgeted to exceed their targets by £848 million. Some 75 per cent. of that overspend, £675 million, is due to the 18 rate-limited authorities. Today we are dealing with the rating authorities, and 10 days ago we dealt with the precepting authorities. We are dealing with only a small proportion of the generality of local authorities. Some 85 per cent. of all local authorities budget at, near or below target. We are dealing only with a small number. We are asking 15 of the 18 councils to keep their budgets for 1985–86 at the same level in cash terms as they have this year.
I know that some hon. Members who have spoken—I particularly remember the speech of the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore)—have claimed that larger cuts are needed. Those cuts would not have been needed if the councils had started putting their houses in order last July. Not only have they not cut their expenditure since then, but they have published budgets that show substantial increases, and it was that high level of increase with which the hon. Member for Hackney, South and Shoreditch was dealing.
The total level of expenditure limits for the 18 rate capped authorities is £3·2 billion. The so-called "present policies" budget that was delivered to us by Councillor Blunkett on 4 February, in which he listed all the increases that they would like to have, comes to some £3·7 billion. This measure is saving ratepayers more than £400 million, and I endorse the remarks of my hon. Friend the Member for Leicester, East (Mr. Bruinvels), my hon. and learned Friend the Member for Leicester, South (Mr. Spencer) and my hon. Friends the Members for Billericay (Mr. Proctor), for Harlow (Mr. Hayes) and for Salisbury (Mr. Key) that the Government had to act. If we had not brought in this measure and these authorities had implemented the Blunkett proposals of 4 February, there would have been massive rate increases. The rates for Greenwich would have gone up by 40 per cent. instead of being cut by 20 per cent., those for Lambeth would have gone up by half instead of a 12 per cent. fall, and Sheffield's would have had to rise by nearly three quarters instead of being the same.
It is clear from the figures that some councils are determined to make no savings. They are refusing to face
118
reality. The Conservative oppositions in several of these councils have already shown how savings can be made. In Haringey, the Conservative opposition have identified savings of £20 million. In Greenwich, the Conservative opposition have said that the savings can be made simply by stopping further recruitment. By setting these rate limits, we are not asking for the impossible.
I come now to jobs and the argument of the hon. Member for Blackburn (Mr. Straw) about the report from the Cambridge research project, which will be published shortly. The project attempted to measure the relationship between business rates and business jobs. That is the average effect across the country of rates on employment. It did not attempt to assess at a specific location whether excessive rates were a factor in business location. That is the down-to-earth measure which most business men will make.
Sheffield has been quoted, and I can tell hon. Members representing Sheffield constituencies that it is an absurd proposition that businesses do not mind paying rates and are indifferent to them. I quote from the Sheffield Star of last week the example of a firm called Arthur Lee and Son, based in Sheffield. Mr. Lee said in his annual report, having had to move his plant from Ecclesfield in Sheffield to Halifax, that Sheffield's high rates played "a significant part" in the decision to move the plant. The respective floor areas of Ecclesfield and Halifax were virtually identical, but the rate bill in Sheffield was £135,000, against £31,000 in Halifax. Such figures speak for themselves. What is important as regards the Cambridge report and that example is that this is a devastating indictment of the high-spending policy of Sheffield.
Mr. Straw: The Minister is inadvertently misleading the House about the conclusion of the Cambridge study. It was about the effect of differing rate levels on the location of employment. It found that not only was there no relationship between high rates and the location of employment in manufacturing but that there was a positive and beneficial effect of high rates where they led to increases in employment in the public sector. If the study is wrong, will the Minister explain why unemployment rose so fast and so far in Birmingham when the Conservative-controlled city council was reducing the rates?
Mr. Baker: In no way am I misleading the House, as the hon. Gentleman will see from the report when I publish it next week. The report does not attempt to assess at a specific local level whether excess rates were a factor. The example that I quoted has not increased the level of unemployment. It means that Sheffield has 100 fewer jobs and Halifax has 100 more jobs.
The level of rates is particularly acute in its effect on small companies. About a fortnight ago, I was sent a letter from Thistle Joinery, a very small company in Southwark. It employs from two to four people. It was a plea not to me but to the chairman of the Southwark finance committee saying that it was a small business, and that it had had to pay £2,500 on top of £1,600. That letter goes on:
"This demand and the future burden that the increased rates impose are going to be impossible for a firm of this size and, nature to bear … I am faced with repayments that this type of manufacturing business cannot afford."
He continued:

119
"Cannot the council and the Government help me? I would be most grateful for any help. I would hate to be driven out, like Hygiaphone Limited, from Lambeth to Bexhill."
I have good news for Thistle Joinery. As a result of this measure, there is to be a reduction in the borough rate from 149p last year to 112p this year.
Ms. Harman: Is not small demand the reason why small businesses stay small instead of becoming large? Furthermore, the cuts in the public sector which the Government are imposing will create further burdens for small businesses and turn large businesses into small businesses.
Mr. Baker: If the hon. Lady is trying to put forward the proposition that small businesses can only thrive as a result of public sector purchasing, it is an absurd proposition.
On the point raised by several Opposition Members, that this order will hit the poorest boroughs, may I first point out tha the grant-related expenditure assessments—I appreciate that the hon. Member for Hackney, South and Shoreditch said that he did not agree with the grant-related expenditure assessments—attempt to assess the expenditure needs of the inner London boroughs which work out at an average of about £286 per head, while those for the outer London boroughs work out at £148 per head. However, to recognise the particular social needs of three boroughs with the greatest social deprivation—Camden, Islington and Southwark—the GRE figures are much higher than the average: Camden £360 per head, Islington £352 per head and Southwark £334 per head. As for personal social services, the borough with the highest expenditure need in the country, which is recognised in the grant system, is Hackney, with £132 per head. This demonstrates that the system recognises special expenditure needs.
On the grants available to the inner city areas, the result of this order will be that rate capping will bring the spending of these 13 local authorities very close to their targets. Consequently, they will receive more grant this year than last year. The 13 rating authorities will receive extra grant in the next financial year of over £100 million. Islington, through its profligacy this year, has lost all its grant, but next year it will receive over £25 million. Greenwich, which this year had a grant of £21 million, could see its grant next year go over £30 million. Southwark, whose grant this year was £14 million, could see its grant go over £41 million.
The Government are often accused of taking grant from the poorest areas. This is manifestly untrue. The inner city areas that I have just mentioned will this year receive £61 million under the urban aid programme. Next year Hackney will receive £49 million in rate support grant, £10 million under the urban aid programme and £21 million in housing subsidies—that is, £80 million of taxpayers' money. Nobody can possibly claim that the Government are starving these areas of support.
In view of what has been said during the debate, it is important to place on record the legal position of councillors in the coming weeks. Councils had planned not to set a rate for next year, but they now plan to set a rate some time in March and then to embark upon a programme of deliberate overspending. In other words, they will move into deficit financing. I emphasise what was said earlier
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by my right hon. Friend the Secretary of State. Councillors should be very clear about their legal liabilities. All authorities have a clear duty under the General Rate Act 1967 to balance estimated income and expenditure. If they wilfully do not do so, I am in no doubt that an authority's auditors would be seriously concerned by such a move and about the attitude to financial management that was being applied.
As my right hon. Friend the Secretary of State said, he would expect the district auditor to draw the amount of any deficit to the attention of the authority at the earliest possible stage so that it could take urgent action to put the matter right. [Interruption.]
Local authorities cannot borrow in order to finance their revenue deficits. When a deficit appears, as it has done in the case of Haringey and Hackney, it must be recovered in the following year by a rate increase. If the district auditor came to believe that the build-up of a deficit had led to a loss and that that resulted from wilful misconduct, the loss would be surchargeable on the councillors responsible. Disqualification from office would follow automatically. [Interruption.]
The hon. Member for Newham, North-West (Mr. Banks) has been interrupting from a sedentary position. He is a member of the GLC and will soon be placed in that dilemma. He will have to decide whether he wants to embark upon the risk of moving into illegality and opening himself up to the liabilities. I understand that he is the chairman-elect of the GLC.
Mr. Tony Banks: No—wrong again.
Mr. Baker: That is good news. If the hon. Gentleman wants to go on serving the GLC as a councillor next year, he will have to consider his legal responsibilities very carefully if he is to endorse a policy which leads the GLC into deficit financing.
The hon. Member for Norwood (Mr. Fraser) spoke at length about Lambeth. Let me take Lambeth as an example to demonstrate the profligacy of an inner London borough. One should compare it with Wandsworth—red Lambeth and blue Wandsworth. This is the tale of two boroughs. In 1978, the rates for those two boroughs were exactly the same. Today, Lambeth's rates are 122p in the pound, and Wandsworth's are 26p in the pound. Those boroughs have roughly the same population and social needs.
Mr. Stuart Holland: Will the right hon. Gentleman give way?
Mr. Baker: No, because the hon. Gentleman did not attend the debate and did not speak. If he had wanted to speak he could have been here. He will have to listen to me now.
Why is there that difference? Lambeth employs 10,500 people on the payroll and Wandsworth employs roughly half that, 5,700. Lambeth has one employee for every 25 residents. What red Ted Knight has done in Lambeth is to make the streets of Lambeth safe for council employees.
Lambeth council staff has increased by over 60 per cent. in the past 10 years, while at the same time Lambeth's population has fallen by 20 per cent. If those two lines of declining population and increasing employment in the town hall were to be extrapolated on a graph, at one point they would cross and everybody

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living in Lambeth would work for the town hall. That, indeed, would be paradise in SW2 for Mr. Knight. At that stage, Ted Knight should be apotheosised.
But what sort of people has Mr. Knight been employing? He advertised for six public relations people earlier this month, at a cost of £85,000. If Lambeth is so marvellous, why has it 3,000 empty homes, of which 800 are occupied by squatters? Why has it 8,000 repairs not done? Its rent arrears are £12·2 million—
Mr. Stuart Holland rose—
Mr. Deputy Speaker (Mr. Harold Walker): Order. The hon. Gentleman must not persist. The Minister is clearly not giving way.
Mr. Baker: Lambeth's rent arrears ar £12·2 million and that alone is costing £90,000 a month in interest charges.
Mr. Holland: On a point of order, Mr. Deputy Speaker. Is it in order for the Minister to keep asking questions about Lambeth when he will not take points from hon. Members?
Mr. Baker: I am giving the facts. If the hon. Gentleman is so keen on Lambeth, why does he approve of that council spending over £330,000 on anti-Government propaganda?
Mr. Holland: I am grateful to the hon. Gentleman for giving way. While he is making his analysis of Wandsworth and Lambeth, will he admit that, although rates in Lambeth are higher than in Wandsworth, rents in Wandworth are far higher than in Lambeth and the services are far lower? When talking about GREA, will the right hon. Gentleman address himself to the desperate needs in Lambeth? The housing stock of the 1930s and 1940s needs major expenditure and many Tory Members will not face up to that.
Mr. Baker: The hon. Gentleman is not correct. The services in Wandsworth are not lower than those in Lambeth. I will gladly send him the Audit Commission profile of both areas to show him what is spent on first-line social services.
In my enthusiasm for the order and for the controls that are being placed on high-spending authorities. I admit that I have one scintilla of doubt. As a consequence of rate capping, one of the biggest beneficiaries south of the river—apart from the hon. Member for Blackburn who lives there—will be Labour party headquarters. As a result of the order, which all Labour Members will vote against, the rates for Labour party headquarters will come down by £67,825.
Mr. Dobson: Will the right hon. Gentleman give way?
Mr. Baker: No. The hon. Member must contain himself; he has a lot to contain.
Mr. Straw: Will the right hon. Gentleman give way?
Mr. Baker: No.
Two clearly opposing and strident views are heard in the Labour party about what should happen after the passing of the order—legality or illegality. Divided they stand and divided they will fall.
Clear demands are being made by the strident Left for a move into illegality. It is a credit to the Leader of the Opposition that he has not supported that view and has
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spoken against it. I praise him for that. Unfortunately, many siren voices in the Labour party are raised against him. The leader of Hackney council has said:
"Hackney is acting within the decisions of the Labour party conference in the autumn and we wish that Mr. Kinnock would do the same."
The deputy leader of Islington council said of the Leader of the Opposition:
"What he is doing is standing by and watching everything the movement has fought for in the past being taken away."
I do not agree with those views or with the advice given by Mr. Livingstone's deputy, Mr. John McDonnell, who was reported in The Guardian on Friday as saying:
"In two weeks, by opposing, by obstructing, by not setting rates, the Labour party in London could make its most vital contribution to the miners' dispute by opening up a second front against the Government on rate-capping."
That typifies the attitude of Labour Members. They are in favour of chaos, warfare and conflict. We are in favour of protecting the ratepayer. That is why I commend the order to the House.
Question put:—
The House divided: Ayes 267, Noes 184.

Division No. 124]

[11.03 pm

AYES

Adley, Robert

Clarke, Rt Hon K. (Rushcliffe)

Alexander, Richard

Clegg, Sir Walter

Alison, Rt Hon Michael

Colvin, Michael

Amery, Rt Hon Julian

Conway, Derek

Amess, David

Coombs, Simon

Ancram, Michael

Cope, John

Arnold, Tom

Corrie, John

Atkins, Rt Hon Sir H.

Couchman, James

Atkins, Robert (South Ribble)

Crouch, David

Atkinson, David (B'm'th E)

Currie, Mrs Edwina

Baker, Rt Hon K. (Mole Vall'y)

Dickens, Geoffrey

Baker, Nicholas (N Dorset)

Dorrell, Stephen

Batiste, Spencer

Douglas-Hamilton, Lord J.

Bellingham, Henry

Dover, Den

Bennett, Rt Hon Sir Frederic

du Cann, Rt Hon Sir Edward

Best, Keith

Dunn, Robert

Bevan, David Gilroy

Durant, Tony

Biffen, Rt Hon John

Dykes, Hugh

Biggs-Davison, Sir John

Eggar, Tim

Blackburn, John

Evennett, David

Body, Richard

Eyre, Sir Reginald

Bonsor, Sir Nicholas

Fairbairn, Nicholas

Boscawen, Hon Robert

Fallon, Michael

Bottomley, Mrs Virginia

Farr, Sir John

Bowden, Gerald (Dulwich)

Finsberg, Sir Geoffrey

Boyson, Dr Rhodes

Fletcher, Alexander

Braine, Rt Hon Sir Bernard

Fookes, Miss Janet

Brandon-Bravo, Martin

Forman, Nigel

Bright, Graham

Forsyth, Michael (Stirling)

Brinton, Tim

Forth, Eric

Brooke, Hon Peter

Fowler, Rt Hon Norman

Brown, M. (Brigg & Cl'thpes)

Fox, Marcus

Browne, John

Franks, Cecil

Bruinvels, Peter

Freeman, Roger

Bryan, Sir Paul

Fry, Peter

Buchanan-Smith, Rt Hon A.

Gale, Roger

Budgen, Nick

Galley, Roy

Burt, Alistair

Glyn, Dr Alan

Butterfill, John

Goodhart, Sir Philip

Carlisle, John (N Luton)

Gow, Ian

Carlisle, Kenneth (Lincoln)

Gower, Sir Raymond

Carlisle, Rt Hon M. (W'ton S)

Greenway, Harry

Carttiss, Michael

Gregory, Conal

Cash, William

Griffiths, E. (B'y St Edm'ds)

Chalker, Mrs Lynda

Griffiths, Peter (Portsm'th N)

Channon, Rt Hon Paul

Grist, Ian

Chapman, Sydney

Ground, Patrick

Chope, Christopher

Grylls, Michael

Clark, Hon A. (Plym'th S'n)

Gummer, John Selwyn

Clark, Dr Michael (Rochford)

Hampson, Dr Keith

Clark, Sir W. (Croydon S)

Hanley, Jeremy

123

Hannam, John

Mayhew, Sir Patrick

Hargreaves, Kenneth

Mellor, David

Harris, David

Miller, Hal (B'grove)

Harvey, Robert

Mills, Iain (Meriden)

Haselhurst, Alan

Mills, Sir Peter (West Devon)

Havers, Rt Hon Sir Michael

Miscampbell, Norman

Hawkins, C. (High Peak)

Mitchell, David (NW Hants)

Hawkins, Sir Paul (SW N'folk)

Moate, Roger

Hawksley, Warren

Monro, Sir Hector

Hayes, J.

Montgomery, Sir Fergus

Hayhoe, Barney

Moore, John

Hayward, Robert

Morris, M. (N'hampton, S)

Heathcoat-Amory, David

Morrison, Hon P. (Chester)

Heddle, John

Moynihan, Hon C.

Henderson, Barry

Murphy, Christopher

Heseltine, Rt Hon Michael

Neale, Gerrard

Hickmet, Richard

Needham, Richard

Higgins, Rt Hon Terence L.

Nelson, Anthony

Hill, James

Neubert, Michael

Hind, Kenneth

Newton, Tony

Holt, Richard

Nicholls, Patrick

Hordern, Peter

Normanton, Tom

Howard, Michael

Norris, Steven

Howarth, Alan (Stratf'd-on-A)

Onslow, Cranley

Howell, Rt Hon D. (G'ldford)

Oppenheim, Rt Hon Mrs S.

Howell, Ralph (N Norfolk)

Ottaway, Richard

Hubbard-Miles, Peter

Page, Sir John (Harrow W)

Hunt, John (Ravensbourne)

Page, Richard (Herts SW)

Hunter, Andrew

Parkinson, Rt Hon Cecil

Jackson, Robert

Parris, Matthew

Jenkin, Rt Hon Patrick

Patten, Christopher (Bath)

Jessel, Toby

Patten, J. (Oxf W & Abdgn)

Johnson Smith, Sir Geoffrey

Pattie, Geoffrey

Jones, Gwilym (Cardiff N)

Pawsey, James

Jones, Robert (W Herts)

Peacock, Mrs Elizabeth

Joseph, Rt Hon Sir Keith

Percival, Rt Hon Sir Ian

Kellett-Bowman, Mrs Elaine

Pollock, Alexander

Kershaw, Sir Anthony

Porter, Barry

Key, Robert

Portillo, Michael

King, Roger (B'ham N'field)

Powell, William (Corby)

King, Rt Hon Tom

Powley, John

Knight, Gregory (Derby N)

Price, Sir David

Knight, Mrs Jill (Edgbaston)

Proctor, K. Harvey

Knowles, Michael

Raffan, Keith

Lamont, Norman

Raison, Rt Hon Timothy

Lang, Ian

Rathbone, Tim

Latham, Michael

Rees, Rt Hon Peter (Dover)

Lawler, Geoffrey

Rhys Williams, Sir Brandon

Lawrence, Ivan

Ridsdale, Sir Julian

Lawson, Rt Hon Nigel

Rifkind, Malcolm

Lee, John (Pendle)

Roberts, Wyn (Conwy)

Leigh, Edward (Gainsbor'gh)

Roe, Mrs Marion

Lennox-Boyd, Hon Mark

Sainsbury, Hon Timothy

Lester, Jim

St. John-Stevas, Rt Hon N.

Lewis, Sir Kenneth (Stamf'd)

Shaw, Giles (Pudsey)

Lightbown, David

Shelton, William (Streatham)

Lilley, Peter

Shersby, Michael

Lloyd, Ian (Havant)

Sims, Roger

Lloyd, Peter, (Fareham)

Skeet, T. H. H.

Lord, Michael

Smith, Sir Dudley (Warwick)

Luce, Richard

Spencer, Derek

Lyell, Nicholas

Spicer, Jim (W Dorset)

McCrindle, Robert

Squire, Robin

McCurley, Mrs Anna

Stewart, Ian (N Hertf'dshire)

Macfarlane, Neil

Stokes, John

MacKay, Andrew (Berkshire)

Sumberg, David

MacKay, John (Argyll & Bute)

Taylor, John (Solihull)

Maclean, David John

Tebbit, Rt Hon Norman

McQuarrie, Albert

Temple-Morris, Peter

Madel, David

Thompson, Donald (Calder V)

Major, John

Thompson, Patrick (N'ich N)

Malins, Humfrey

Townsend, Cyril D. (B'heath)

Maples, John

Trotter, Neville

Marlow, Antony

Vaughan, Sir Gerard

Marshall, Michael (Arundel)

Viggers, Peter

Mates, Michael

Wakeham, Rt Hon John

Mather, Carol

Waldegrave, Hon William

Maude, Hon Francis

Wall, Sir Patrick

Mawhinney, Dr Brian

Warren, Kenneth

Maxwell-Hyslop, Robin

Watts, John

124

Wells, Bowen (Hertford)

Wheeler, John

Tellers for the Ayes:

Wilkinson, John

Mr. Tristan Garel-Jones and

Wood, Timothy

Mr. Archie Hamilton.

Young, Sir George (Acton)

NOES

Alton, David

Garrett, W. E.

Archer, Rt Hon Peter

Gilbert, Rt Hon Dr John

Ashley, Rt Hon Jack

Godman, Dr Norman

Ashton, Joe

Gould, Bryan

Atkinson, N. (Tottenham)

Gourlay, Harry

Bagier, Gordon A. T.

Hamilton, James (M'well N)

Banks, Tony (Newham NW)

Hamilton, W. W. (Central Fife)

Barnett, Guy

Hardy, Peter

Barron, Kevin

Harman, Ms Harriet

Beckett, Mrs Margaret

Harrison, Rt Hon Walter

Beith, A. J.

Hart, Rt Hon Dame Judith

Bell, Stuart

Haynes, Frank

Bennett, A. (Dent'n & Red'sh)

Healey, Rt Hon Denis

Bermingham, Gerald

Hogg, N. (C'nauld & Kilsyth)

Bidwell, Sydney

Holland, Stuart (Vauxhall)

Blair, Anthony

Home Robertson, John

Boothroyd, Miss Betty

Howell, Rt Hon D. (S'heath)

Boyes, Roland

Hoyle, Douglas

Bray, Dr Jeremy

Hughes, Robert (Aberdeen N)

Brown, Gordon (D'f'mline E)

Hughes, Roy (Newport East)

Brown, Hugh D. (Provan)

Hughes, Sean (Knowsley S)

Brown, N. (N'c'tle-u-Tyne E)

Hughes, Simon (Southwark)

Brown, R. (N'c'tle-u-Tyne N)

Hume, John

Brown, Ron (E'burgh, Leith)

Janner, Hon Greville

Bruce, Malcolm

Jones, Barry (Alyn & Deeside)

Buchan, Norman

Kaufman, Rt Hon Gerald

Caborn, Richard

Kennedy, Charles

Callaghan, Jim (Heyw'd & M)

Lambie, David

Campbell, Ian

Lamond, James

Canavan, Dennis

Leadbitter, Ted

Cartwright, John

Leighton, Ronald

Clark, Dr David (S Shields)

Lewis, Ron (Carlisle)

Clarke, Thomas

Lewis, Terence (Worsley)

Clay, Robert

Litherland, Robert

Clwyd, Mrs Ann

Lloyd, Tony (Stretford)

Cocks, Rt Hon M. (Bristol S.)

Lofthouse, Geoffrey

Cohen, Harry

Loyden, Edward

Coleman, Donald

McDonald, Dr Oonagh

Concannon, Rt Hon J. D.

McGuire, Michael

Conlan, Bernard

McKay, Allen (Penistone)

Cook, Frank (Stockton North)

McKelvey, William

Corbett, Robin

Mackenzie, Rt Hon Gregor

Corbyn, Jeremy

McNamara, Kevin

Cowans, Harry

McTaggart, Robert

Cox, Thomas (Tooting)

McWilliam, John

Craigen, J. M.

Madden, Max

Crowther, Stan

Marshall, David (Shettleston)

Davies, Rt Hon Denzil (L'lli)

Mason, Rt Hon Roy

Davies, Ronald (Caerphilly)

Maynard, Miss Joan

Davis, Terry (B'ham, H'ge H'l)

Meacher, Michael

Deakins, Eric

Meadowcroft, Michael

Dewar, Donald

Michie, William

Dixon, Donald

Mikardo, Ian

Dobson, Frank

Mitchell, Austin (G't Grimsby)

Douglas, Dick

Molyneaux, Rt Hon James

Duffy, A. E. P.

Morris, Rt Hon A. (W'shawe)

Dunwoody, Hon Mrs G.

Morris, Rt Hon J. (Aberavon)

Eadie, Alex

Oakes, Rt Hon Gordon

Eastham, Ken

O'Brien, William

Evans, John (St. Helens N)

O'Neill, Martin

Fatchett, Derek

Owen, Rt Hon Dr David

Faulds, Andrew

Park, George

Field, Frank (Birkenhead)

Parry, Robert

Fields, T. (L'pool Broad Gn)

Patchett, Terry

Fisher, Mark

Pavitt, Laurie

Flannery, Martin

Pendry, Tom

Foot, Rt Hon Michael

Pike, Peter

Forrester, John

Powell, Rt Hon J. E. (S Down)

Foster, Derek

Prescott, John

Foulkes, George

Radice, Giles

Fraser, J. (Norwood)

Redmond, M.

Freeson, Rt Hon Reginald

Rees, Rt Hon M. (Leeds S)

Freud, Clement

Richardson, Ms Jo

125

Roberts, Allan (Booth)

Smith, Rt Hon J. (M'kl'ds E)

Roberts, Ernest (Hackney N)

Snape, Peter

Robinson, G. (Coventry NW)

Soley, Clive

Rogers, Allan

Spearing, Nigel

Rooker, J. W.

Steel, Rt Hon David

Ryman, John

Stott, Roger

Sedgemore, Brian

Strang, Gavin

Sheldon, Rt Hon R.

Straw, Jack

Shore, Rt Hon Peter

Taylor, Rt Hon John David

Short, Ms Clare (Ladywood)

Thompson, J. (Wansbeck)

Short, Mrs R.(W'hampt'n NE)

Thorne, Stan (Preston)

Silkin, Rt Hon J.

Tinn, James

Skinner, Dennis

Torney, Tom

Smith, C.(Isl'ton S & F'bury)

Wallace, James

126

Wardell, Gareth (Gower)

Wrigglesworth, Ian

Wareing, Robert

Young, David (Bolton SE)

Welsh, Michael

White, James

Tellers for the Noes:

Williams, Rt Hon A.

Mr. John Maxton and

Winnick, David

Dr. Roger Thomas.

Woodall, Alec

Question accordingly agreed to.
Resolved,
That the draft Rate Limitation (Prescribed Maximum) (Rates) Order 1985, which was laid before this House on 19th February, be approved.

European Court of Auditors
11.16 pm
The Economic Secretary to the Treasury (Mr. Ian Stewart): I beg to move,
That this House takes note of the Annual Report of the European Court of Auditors on the financial year 1983, together with the replies of the institutions; and approves the Government's efforts to ensure that the Court's recommendations are implemented.
The procedure for dealing with the Court of Auditors' report was set out in an explanatory memorandum which I submitted a month ago. For the purposes of this debate I wish to draw attention to the very useful report by the Select Committee on European Legislation which was published recently and which contains important passages about the report.
This is not one of the most dramatic items of European Community business that comes before the House. None the less, it is important that we consider not only the provision of expenditure for the Community but the control of expenditure and finance during the financial years.
We have an annual debate on the report, and I am glad that it can take place this year, as it usually can, before the report is cleared by the Council. The European Parliament is required to give discharge by the end of April, acting on the recommendation of the Council. Therefore, we need to keep to that timetable.
I pay tribute to the valuable work undertaken by the Court of Auditors. It has a daunting task in scrutinising the entire range of expenditure in the European Community, and it does it well. I especially welcome the increased stress that the court has laid in recent years on looking at efficiency and value for money in Community expenditure, not confining itself to more technical accounting matters. The court's role is becoming more like that of a European Comptroller and Auditor General. The British Government strongly support that development as valuable and necessary for the whole Community in the proper conduct of its finances.
As the House well knows, the British Government have been a prime mover in the introduction of budgetary discipline for planning Community expenditure. But tonight we are mainly concerned with the way in which such expenditure, once authorised, is controlled and operated. On both counts the Government have consistently been in the lead for better and more effective control. The report represents one of the most important means of improving the system of financial management used in the day-to-day administration of the Community.
In relation to procedure, in recent years we have been pressing for more thorough and rigorous consideration of the court's report by the representatives of the member states. Our objective must be to ensure that management of the Community finances is no less efficient than financial management in the United Kingdom or in other member states.
This year, for the first time, we have persuaded other member states to agree to a more detailed and more structured scrutiny of the report. Official representatives of member states in Brussels have already spent a considerable time going through the detailed contents of the report. In addition to the more detailed technical
128
response, a shorter summary report is being drawn up that will concentrate on the main issues as set out in chapter 1 of the court's report. The British Government, with the support of other member states, have proposed that this should be discussed by the Economic and Finance Council of the Community in March to ensure that the points raised are adequately followed up at ministerial level.
As for the main contents of the report, the British Government identify four main areas of priority. First, there have been serious weaknesses in the Commission's financial planning and expenditure control in the financial year, and these have led to a build-up of unspent payment provision. This means that member states were called on to make available revenue all of which would not be used. The Select Committee has noted that point in its report, one which the Government strongly endorse, and there is certainly room for improvement on that count.
Secondly, the build-up of future commitments under the structural funds — notably the regional and social funds—has been outstripping the rate of payment. The Select Committee draws attention to the court's comment
"that the present budgetary and legislative framework does not serve to control commitments"
which mount up from year to year. It must be said that this is due partly to the European Parliament's tendency to enter commitment appropriations into the budget, even when it is clear that the money is not available or could not be spent within the budgetary year in question.
About 7·8 billion ecu in such commitments was outstanding at the end of 1983. The United Kingdom will continue to urge the Commission to put more realistic figures for commitments into the draft annual budgets and to reverse this upward trend in commitment appropriations for which no funds for payment are available.
Thirdly, we are concerned to improve the administration of agricultural guarantee expenditure. The court points to deficiencies in the system of management, illustrated by inadequate control of cash resources during the year. Again, the Select Committee highlights this point.
The Government have been pressing for some time for an improved system for monitoring agricultural payments during the financial year so as to lessen the risk that a sudden shortfall of resources become apparent at a late stage in the year. We have now succeeded in ensuring that the Commission will provide monthly profiles of agricultural guarantee expenditure, which can be examined by member states. The earlier in the year that we can identify potential divergence or overspend, the more opportunity there will be to find ways of dealing with that within the budgetary provisons.
Mr. Tony Marlow: When my hon. Friend refers to dealing with the matter within the budgetary provisions, does that possibly also mean having a reimbursable loan at the end of the season to make up the cash?
Mr. Stewart: The management of the agriculture budget during the year should always be contained within the allocated provisions, if that is possible. In previous years, where there has been room within the ceiling of own resources, supplementary budgets have sometimes been introduced and financed through that means. The only reason why there had to be a special inter-Government

129
agreement for 1984 was that the Community had hit the ceiling; it must remain within the ceiling from the point of view of the internal arrangements of the budget.
I should comment on the Community's overseas aid programme and in particular its execution of food aid programmes.
Mr. Nicholas Budgen: My hon. Friend will know that Accountancy Age has drawn attention to the way in which no provision is made for the contingent liabilities of disposing of the huge stocks of excess food that is held by the Community. It observes that if proper provision for that contingent loss had been added to the accounts in 1983, a charge of about £840 million, would have been added to the accounts. Does that mean that in 1983, 1984 and 1985 the accounts have been, or will be, prepared so as to take no account of these contingent liabilities, and that once we get the increase in own resources to 1·4 per cent. it will be possible to write off all the losses which should have been taken into account in 1983, 1984 and 1985?
Mr. Stewart: My hon. Friend raises an interesting point about the accounting mechanism in the Community. I am aware of the comments that have been made in Accountancy Age and elsewhere, which derive from some comments by the Court of Auditors. To account in the way suggested would be a fundamental change for the Community. It would not be possible to make any accurate provision of the sort that my hon. Friend has described because of the impossibility of predicting market conditions under which sales from intervention might eventually be made, or the timing of them. A programme of disposal from intervention is already built into the agriculture provision. The pace and price of disposal is affected by the resources within the budget from year to year. When I tried to explain this to my hon. Friend on an earlier occasion, I drew attention to the fact that the existence of substantial stocks in intervention meant that the budget discipline, or agriculture guideline, in the next few years would be a tighter one than many supposed as it would include the cost of dealing with intervention stocks.
Overseas aid is an important aspect of the Court of Auditors' report and it is rightly an area of considerable concern to the Select Committee, the House and the public, especially in the light of current problems of famine in Africa. The British Government agree with the court that the preparation, monitoring and evaluation of development projects generally should be much improved. Some progress has been made in these areas since 1983, the year to which the report refers. Thanks largely to United Kingdom initiatives, the new Lomé agreement makes much greater provision for assessment of the efficiency of the aid which is being provided and for improvements where necessary.
We were able to ensure that the Commission's record on food aid in 1984 was considerably better than in 1983 but there is room for further improvement and we intend to maintain the pressure in that area.
These debates give the House an opportunity to comment on the report of the Court of Auditors and the important issues that it raises about the financial management of the Community. I hope that, if I am able to catch your eye a short time before the debate ends, Mr. Deputy Speaker, I shall be able to respond to the issues raised by hon. Members.
Mr. Marlow rose—
Mr. Stewart: I have already given way to my hon. Friend the Member for Northampton, North (Mr. Marlow). This is a short debate and I want to bring my introductory remarks to a conclusion. If my hon. Friend is able to catch your eye, Mr. Deputy Speaker, I trust that he will make a contribution to the debate. It is important that his views and those of other hon. Members are known to the Commission and to others involved with matters in Europe. As in previous years, I intend to send a copy of the report of the debate in the Official Report and an account of the debate to the new budget Commissioner, Mr. Christophersen, and to the chairman of the Budgetary Control Committee of the European Parliament. I look forward to hearing the views of hon. Members towards that end.
The United Kingdom has secured significant reforms in the Community's procedure for settling its expenditure plans in accordance with the system of budget discipline agreed in Dublin in December, but it is proper that administrative and financial control should be exercised in the implementation of the budget. That is equally important.
The Government therefore welcome this further constructive report from the court of auditors and we support their efforts to ensure sounder financial management and value for money in the execution of the European budget.
I commend the report to the House.
11.30 pm
Dr. Oonagh McDonald: The motion ends with a statement that the House
"approves the Government's efforts to ensure that the Court's recommendations are implemented"
but looking at the report it is clear that we have a long way to go to ensure that the court's strictures on the European Community management procedures are implemented.
The Minister said that he was aware of the comments in Accountancy Age and elsewhere, but I think that he skipped over some of the trenchant criticisms. For example, on 13 December 1984 Accountancy Age referred to the quality of the Commission's financial statements as being
"so poor that if it were a private-sector organisation a heavily qualified audit report would be unavoidable."
That gives us some notion of the extent of the Commission's failings in the presentation of the Community's accounts and shows the justification of the court's criticisms.
The Minister drew attention to the Government's aim of bringing about a new system of budgetary discipline. That is not the subject of today's debate, but we must bear in mind that there is no chance whatever of achieving budgetary discipline in the Community unless the detailed management of the budget is carried out properly. The financial controls and accounting systems must be efficient and accurate if there is to be any chance of achieving budgetary discipline, and at present that is plainly not the case.
The court sums the matter up at the very beginning of its report when it says that the
"1983 accounts do not adequately represent the real liabilities of the Community."
The Minister cheerfully skipped over the fact that over £7 billion disappears from the accounts, partly through

131
agricultural expenditure and partly through amounts raised for capital projects which get lost in the Commission's bureaucracy. [Interruption.] I hear someone saying from a sedentary position, "Easy come, easy go," and the Government certainly seem happy to hand out more money whenever it is requested. Indeed, we expect to be asked for more in the next few weeks in another reimbursable loan to the Community which will disappear down the drain as well.
The Minister did not do justice to the extent of the criticisms of the Commission's budgetary procedures. I will pick out just a few comments from paragraphs 4·51 and following. The report states:
"The present budgetary and legislative framework does not serve to control commitments."
It goes on to refer to the inadequate control of the management of cash resources, blockages in the charging of expenditure to the budget and persistent delays in the clearing of accounts and concludes that it is doubtful that the Commission can fulfil its treaty obligations of proper control over agricultural expenditure.
It also refers to the need to control cash movements and says that in asking for a direct check on cash movements in relation to agricultural payments to member states, it is asking for something which is only a matter of common sense. Those of us who are not quite as enamoured of the Community as some hon. Members are not at all surprised that when the Court of Auditors asks for procedures to be undertaken as these are a matter of common sense, the Commission and the EC do anything but accept them.
The Minister referred to intervention costs and the problems of predicting the price at which stored goods will be disposed of. One understands that there is a problem and that this depends on assessing world prices. But let us consider the losses in 1983, to which the court refers. Skimmed milk powder lost 84 per cent. of its value; butter, 30 per cent.; and baled tobacco, 87 per cent. If these costs are to be included in the budget in future, one hopes that the Commission will get better at predicting the possible sums to be raised on disposal.
So far, these costs do not come within the budget. The auditors say that the Commission does not provide an estimate of the value of the stockpile or make adjustments when parts of it are destroyed. These should be properly included in the accounts. It is estimated that at the end of 1983 these represented a liability of £4 billion on the EC account.
Any budget which leaves out massive items such as that cannot possibly enable us to ensure that budgetary discipline is followed.
However, the Government claim that they are doing their best to achieve proper control and to ensure that items such as this are included in the accounts. That has not happened so far. I cannot resist saying it — the Government are incompetent in two respects. The costs relating to intervention stocks are not put into the budget, and when we consider where these intervention stocks are stored—where some sort of bonanza seems to be taking place—we are not in on that act either. So long as some advantage can be gained, the Government should at least get a look in.
Paragraph 4.30 shows that 40 per cent. of stocks of beef and veal are in Italy and that an average of 35 per cent. of all stocks are to be found in Germany. This enabled
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Germany to obtain an additional 42·5 million ECU from the Community. We do not seem to be getting a look in where we could in terms of the bonanza which the Community can provide.
Intervention stocks are transferred from one member state to another, and the transport costs are borne by the Community. Perhaps some member states are transferring stocks from one country to another so that extra money can be made out of the Community. The Court of Auditors decries the necessity for that by saying that the need for the transfers, the transport costs of which were borne by the Community and amounted to 15 million ECUs in 1983, is not clear. There are, therefore, other dodges going on, through which some member states gain, albeit small amounts, but they all add up, from the Community.
Finally on agriculture, I shall deal with fraud. The Court of Auditors made the understatement of the year when it stated that member states
"do not always have a common conception of fraud and irregularity."
Mr. Budgen: What page?
Dr. McDonald: It is on page 43. It is a delightful statement. I am sure that the Government are making every effort to impose their concept of fraud and irregularity on the Community so that the Mafia will no longer be accused of milking millions from the EC in big farming fraud, when, for example, returns are submitted for olive trees that have never existed. I could give many examples of fraud. However, I shall resist that temptation and say only that the Court of Auditors ends on a despairing note in paragraph 4.39. It states:
"The fact is that the Commission has not given the requisite degree of priority to exercising its supervisory responsibilities with regard to the prevention of frauds and irregularities to the extent that it has not attempted to improve the organisatiion of its information and has not subjected control systems in the Member States to serious scrutiny with regard to their efficiency."
The Court of Auditors is almost wringing its hands in despair about the lack of action by the Commission. What are the Government doing to ensure that proper control is exercised so that fraud is expunged from the Community? Obviously, it is difficult to assess the amount of fraud, but recent press comment suggests that it runs into millions of pounds. If the Commission returns holding out its cap for a further hundred million in the next few weeks, we shall want to be sure that the money will not go into the hands of Sicilian farmers.
There are two further issues, over which the Minister seemed to skip much too lightly. As I wish to be brief and give other hon. Members an opportunity to speak, I shall refer to the Select Committee on European Legislation. It points out what has happened to the regional funds regarding the projects involving port instalations in Scotland. It refers to the 22 firms in receipt of fund aid totalling £21 million, when only one had fulfilled the planned objective for jobs. In its summary the report states
"some of the projects financed 'were carried out by firms which, in global terms, were making sizeable reductions in their workforce as part of their rationalisation plans'."
I wonder why the Minister did not see fit to refer to the importance of the regional funds being directed to job creation. A sum of £21 million was shared out between 22 firms, which is not a bad sum, with no efforts made to ensure that their commitments to job creation were carried out. Most of them were allowed to cut the number of people employed. It is disgraceful that regional funds

133
should be used in that way, and that although this is referred to in the report, the Minister said nothing about it in his opening remarks. I hope that when the Minister replies to the debate, he will give an explicit assurance that further moneys from the regional fund will be used to ensure that real jobs follow from such investment.
The regional and social funds form a small part of the Commission's budget, although in 1983 the share of the social fund increased slightly to just more than 6 per cent. Throughout the Community, the funds enabled 1·8 million of the young unemployed to engage in further job training. That is a small proportion of the young unemployed in the Community, and I hope that the Minister will press for an increased proportion of the funds available to be given to regional and social projects rather than to agricultural spending. Such projects should be properly controlled so that the young will he trained in skills which will lead to jobs, and so that jobs will be created.
The Minister referred to the administration of food aid, which is the most disgraceful and shocking part of the report. I am surprised that he did not refer to it in stronger terms. Paragraph 10.19 states that deliveries of food aid were completed so late that, in some cases, the wheat when it arrived was declared unfit for human consumption. By the end of December 1983, some of the countries in the greatest need of aid, including Tanzania, Zambia, Ghana and Sri Lanka, had received none of the aid promised to them under the 1983 programme. Only 42 per cent. of the cereals, 36 per cent. of the milk powder and 26 per cent. of the butter oil which the Commission had intended to send as food aid was delivered. The Commission claims that 1983 was an untypically bad year and that matters improved in 1984, but the improvement would have to be very great to recover the losses mentioned in the Court of Auditors report.
We want an assurance from the Minister that the skimpy and mean food aid from the EC to Ethiopia will arrive on time and that it will be fit for human consumption—that it will be the sort of food which starving people can eat because it fits their diet. It is disgraceful that so much food is stored, expensively, in the intervention stocks, yet the Commission cannot manage to deliver the food aid on time.
The Court of Auditors report is a damning survey of the Commission's practice, bureaucracy, incompetence, omissions, and its unwillingness to accept criticism and alter its procedures. If the Government are to have any hope of achieving their aim of budgetary discipline—I do not believe that the recent agreement will bring that about—they must take stronger action than they have done so far to improve all the budgetary and administrative procedures of the Commission.
11. 48 pm
Mr. Anthony Beaumont-Dark: This is a short debate, and we shall all wish to make short contributions. I understand why my hon. Friend the Minister made one of the shortest contributions of all because, having read the report, I must say that if a British company such as ICI or Unilever had received such an auditor's report, the board would be driven from office and the company might be driven into the hands of the receiver.
We all sympathise with British Ministers because, with this huge organisation, which seems almost impossible to control, they are doing the best they can. Other hon.
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Members will point out other irregularities, and what is happening is a disgrace. It may be because the staff is picked on the basis of nationality rather than ability. Some of the Commissioners seem to be chosen on the same basis.
In paragraph 1.19, the report shows that one of the simplest things—the placing of contracts with outside bodies—is done incorrectly. Contracts are not put out to tender. We all know the corruption that comes from such practices. We all know what happened with local authorities when they did not put contracts out to tender. We have seen what has happened in this country and can imagine the things that are happening in the Common Market.
As the Court of Auditors says in more than one note, with a kind of despair, despite persistent criticisms of particular activities in earlier reports, no experience seems to have been gained. We should expect that experience will be gained.
I have found a few odd things in this incredible report. Paragraph 15.13 and onwards are to do with EDFs to some of our friends in the Commonwealth and the ex-Commonwealth. It shows that 20 per cent. of the payments are not accompanied by suitable supporting documents, and photocopies are submitted in the place of original documents. Of the photocopies, the auditors calmly say:
"the photocopies submitted in place of the original documents are sometimes illegible".
They send documents that nobody can read. What is more:
"they bear alterations to the data which has been photocopied."
Is there not somebody in the Common Market who knows how to use a photocopier? They could learn from this place, where the photocopying machines go hotter than the mills of war. Is it too much to expect that if photocopies are to be used, there should not be such arrogance and lack of purpose that it is thought that nobody will question the documents that are sent? They are not queried because nobody can read them.
Another disgraceful episode happened in the Caribbean. There is much potential for corruption in the case set out in the report. By the time that they get to item 15, the auditors seem to have got past the shock barrier, and are almost stunned. They use calm words about 4·5 million ecus, which was used for the promotion of tourism in the Caribbean. The report says:
"This contract did not provide for any Community checks on the expenditure".
There was a flat-rate basis for travel, a modest 0·4 million ecus.
"Moreover, two professional bodies have, under another contract, received 0·5 million ecus … to cover their travel and management expenses, without there being any mention in the contract of Community checks on this expenditure."
Throughout the document is the fact not that the Common Market does not try to do some worthy works but that it is done in such an appallingly amateurish way, and the sums of money involved are so appallingly large. Instead of having to come to the House for £119 million, something should be done about this. We had the Minister before the Treasury Select Committee, and he was wise not to take me up on a point that I made. He said that he hoped that he would not have to come to the House for more money. I begged him not to put his political reputation at stake and guarantee that he would not. I can give a guarantee—if he did, before the month was out,

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we should be asking for another few hundred million. A report such as this suggests that we shall be asked for it again and again.
My remarks are not light-hearted. They are not made by someone who is against what the Common Market is trying to do. It is what it is actually doing that I am against. We have to make economies at home. We have to tell our people that they cannot have this or that. One of the reasons why they cannot is that this hopeless organisation is making such a mess of running our affairs in Europe.
11.55 pm
Mr. John David Taylor: This is a debate that does not arouse much interest. That is why there is such a poor attendance here and why the Ulster Unionist parliamentary party has comprised 50 per cent. of the total Opposition presence throughout the debate.
The Minister rightly emphasised the importance of control of the European Economic Community budget. That is a theme that rings well in the ears of the Ulster Unionist parliamentary party. We want to see greater budgetary control in the EEC, but this auditors' report does not confirm that which has occurred in 1983. We know that in 1984 agriculture has already broken through the 70 per cent. level of total consumption of the budget, and we are all anxious now to see what will happen to agriculture prices in the coming month and whether we shall see any evidence of budgetary control. Within the Ulster Unionist parliamentary party there will be no support for any proposal to raise the own resources to 1·4 per cent. until there is obvious evidence of budgetary control in the EEC.
The Minister mentioned the European Assembly and its role in budgetary matters. In that Assembly there is a body known as the Budgetary Control Committee, which is one of the more effective institutions in the Community. Tribute should be paid to the Conservative Members of the committee, who have been most active in ensuring that there is some level of budgetary control. However, the evidence in the auditors' report is somewhat damning.
When he referred to the European Parliament, the Minister said that it had to give discharge to the auditors' report by April of this year. This raises two questions. The first is the role of the Council of Ministers in the discharge of the auditors' report. The second is the role of the European Assembly itself.
It is more than likely that the House will approve the auditors' report, and it is more than likely that Her Majesty's Government at the Council of Ministers will recommend the discharge of the report. But let us consider the constitutional position whereby the Council of Ministers, as it is bound to arise sometimes if we continue to get reports of this nature, refuses to give discharge to the report. What are the implications of such a refusal? I ask that question because the Council of Ministers alone does not have responsibility for budgetary matters in the Community.
The European Assembly is very much an assembly, and we in Northern Ireland more than anyone else in the United Kingdom know the difference between an assembly and a parliament. The European Assembly has only two real powers. The first is a rather important one, the authority to dismiss the European Commission. The second power
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is a shared responsibility: that of controlling the budget of the EEC. The Council of Ministers and the European Parliament jointly control budgetary matters.
It is interesting to note that we are discussing the Court of Auditors' report for 1983 when three months ago the European Assembly considered the report for 1982. Then, instead of automatically approving the report for 1982, it refused to give discharge to that report. The House is being asked to approve the 1983 report when one of the partners in the joint budgetary authority has rejected the 1982 report. Discharge has not been given. What was the result of the refusal of the European Assembly to give discharge to the report? Absolutely none. The Commission took no action. It did not respond to the rejection of discharge by the European Assembly. It did not, as one would have expected, offer its resignation. It ignored the European Assembly. Therefore, I want to know whether the Commission has no responsibility whatsoever if at some stage the Council of Ministers likewise refuses to give discharge to the report of the European Court of Auditors for 1983 or for any subsequent year.
12.1 am
Mr. Michael Knowles: May I follow up the point made by the right hon. Member for Strangford (Mr. Taylor) and pay tribute to the budgetary control committee which at least tries, which is more than can be said about anybody else, with this budget, and especially to Peter Price, the European Democratic Group spokesman who is preparing the reply of the European Parliament. I hope that his recommendations will be fairly forceful.
The real problem is who really controls the Commission's expenditure. It is supposed to be controlled by the Council and the European Parliament, but the European Parliament has no effective power. The difficulty with the Council of Ministers is that the members of council, in the form of its individual national Governments, are responsible for the quagmires that are listed in the report. If one is the Government and Parliament concerned, one is getting a fair return on one's investment in the Community, but if it is another Government it is a rip-off and a fraud. Numerous references to national government procedures are to be found in the report. Paragraph 1.17 refers to the fact that control and supervision by the Commission of its services as well as the budgetary authority tend to be hampered by the lack of relevant financial and management information. In some cases there is no formal requirement for such information while in others national administrations and other bodies in the member states have failed to provide any, reports and returns.
That is absolute nonsense. The Council of Ministers will never agree as a whole because it represents individual national governments who are all trying to get action taken on their own behalf. The only supra-national body which can do that is the European Parliament and its independent powers need to be strengthened. [HON. MEMBERS: "Ah."] Ah, there's the rub. The European Parliament is the only body that can do it. It is no good Ministers making promises or Front Bench Opposition spokesmen trying to hold the Minister to account for a body in which he has only a 10 per cent. say. It will always be a trade off. In theory there is a veto, but if one plays the veto game other

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Governments will play the veto game back. That could very well result in cutting off one's nose to spite one's face.
Reference was made earlier to paragraph 4.37 which deals with no common concept of irregularities. That is putting it gently and mildly.
Paragraph 4.39 goes through the same matter yet again in another form. When one speaks of irregularities in the United Kingdom Parliament one always means other peopls's irregularities.
Paragraphs 7.47 to 7.55 make quite interesting reading.
Paragraph 7.52 says:
"The public expenditure declared by the national authorities as a basis for calculating the Community contributions under the supplementary measures in favour of the United Kingdom, is a gross amount which does not take account of revenue paid by third parties … nor even, in most cases, other aid paid by the Communities."
Every national Government has a vested interest in trying to get the largest piece of the action and will go to its national Parliament and declare what a good boy it is if it gets away with it.
We have had these reports year after year and no action has been taken. There is only one body that can take action on these reports and that is the European Parliament. The Council cannot do it. It has to be the European Parliament, and the sooner that that nettle is grasped the sooner we shall solve this problem.
12.5 am
Mr. Nigel Spearing: I am pleased to follow the hon. Member for Nottingham, East (Mr. Knowles). We are both members of the Scrutiny Committee and we have produced a report from which I wish to quote. As we are all, including the Economic Secretary, on the side of financial probity, there is no difference between us. It is only a matter of finding out the means to achieve the ends. On that, I join the hon. Member for Nottingham, East. However, I draw his attention to page 186 of the report where, in respect of the cash deficit of the same European Parliament, we read that 4·1 million Belgian francs have gone missing and that the insurance company did not feel that it could pay the amount requested because in its view a serious offence had been committed. The equivalent would be if our deputy accountant in the Fees Office had collared the equivalent of 4 million Belgian francs.
The matter of contracts was referred to by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). Let me read into the record the Select Committee's summary of that matter. We said:
"The Court notes also (para. 1.18) that in many areas of Community-financed activity the lessons of experience have not all been learned, despite persistent criticisms of particular activities in its earlier Reports. In this respect the Court instances (para. 1.19) the placing of contracts with outside bodies, pointing out that contracts which might have been the subject of competitive tendering have been placed by private treaty, and that there is no evidence of systematic follow-up and evaluation of the performance of contractors or of a Commission responsibility for co-ordinating practice or for disseminating the lessons of experience".
That reads like a formula for fraud. Not only do we have the mistakes which inevitably occur but it seems here, in the words of the Committee's summary of the Court of Auditors' report, that it is far worse. A formula for fraud is built in.
Of course, that paragraph was in respect of the important matter of food aid. As members of the Select
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Committee on Foreign Affairs said after their recent visit to Ethiopia, it appears that the organisation cannot organise effectively the crumbs from the rich man's table. Indeed, we might say that the crumbs sometimes, according to my hon. Friend the Member for Thurrock (Dr. McDonald), rot from the time that they leave the table to the time that they drop into the hands of those who wish to receive them.
The Scrutiny Committee has recently considered a number of regulations dealing with the transfer of surpluses from one country to another. We have not drawn the attention of the House to those relatively minor regulations, because the amounts of money involved have been relatively small. However, in view of what my hon. Friend the Member for Thurrock has said, perhaps the Committee should reconsider the matter. If the expenditure is required to move surpluses from one country to another, to the benefit only of warehousemen and transport companies, that is a serious matter.
Will the Financial Secretary shed a little more light on the discharge of the budget? What is the use of having an auditors' report if one can do nothing about it when it is highly qualified? If the discharge from the Assembly for the 1982 report was not taken, what difference does it make? We are asked to approve
"the Government's efforts to ensure that the Court's recommendations are implemented."
I do not expect anyone to vote against the motion, but it behoves the Financial Secretary to tell us with what tools and by what method the court's recommendations can be implemented.
I draw attention to a speech made in 1891 which is quoted by Mr. Paul Einzig in the preface to his important book "The Control of the Purse", several copies of which are in the Library:
"The finance of the country is ultimately associated with the liberties of the country. It is a powerful leverage by which English liberty has been gradually acquired. … If the House of Commons by any possibility lose the power of the control of the grants of public money, depend upon it, your very liberty will be worth very little in comparison. That powerful leverage has been what is commonly known as the power of the purse—the control of the House of Commons over public expenditure."
Those are the words of William Ewart Gladstone in a speech at Hastings on 17 March 1891. I do not think that the fact that he made that speech at Hastings was a coincidence. He made a deadly serious point. The power of the House has depended on the leverage of the power of the purse. What leverage do the Government have in public expenditure across the Channel for which the British people pay and which the House has approved up to now? What leverage enables that liberty to be maintained?
12.13 am
Mr. Nicholas Budgen: I hope that the hon. Member for Newham, South (Mr. Spearing) will forgive me if I deal later with the point that he made at the end of his excellent speech.
I warmly commend my hon. Friend the Economic Secretary for the tact and loyalty with which he moved the motion. Gone are the days when the Prime Minister was saying in what rude people would describe as her somewhat acerbic way, "We want our money back." As my hon. Friend the Economic Secretary loyally reflects, the Government have declared that, since Fontainebleau, the finances of the EEC have been put on a perfectly satisfactory basis.

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So whereas in 1979 it would have been the role of a senior Minister to pick up and tear apart this document, and to demonstrate that our money was being wasted in a very profligate way, my honourable, highly tactful and loyal Friend the Minister mentions quite blandly today that there are a few small, almost printing errors, that the Government will politely point out to the other states in the EEC. They will immediately pull their forelocks and say to whoever it may be—Margaret, Geoffrey, or even on a humbler plain, Ian—"Thank you so much for drawing our attention to that small matter. We shall put it right yesterday."
On that basis, my hon. Friend the Minister does not point out, for example, the principal criticism made by Accountancy Age, which is that the contingent liabilities for the disposal of these vast, unwanted and very embarrassing stocks of food have not been included in the EEC accounts. The reason for that is, of course, that my hon. Friend was one of those who urged the Commission that these contingent liabilities should not be included in them. If they are included in the accounts, he will have the embarrassment of coming before the House and asking not, as he did last time, for £120 million, or as he will have to do between now and the end of the year, for perhaps £200 million, but for even larger sums.
My hon. Friend the Minister asserts with great good manners that all is more or less well in the EEC. But one of the arguments that the Government will no doubt put forward is that the EEC's finances are properly supervised by the Court of Auditors. Politicians, particularly English politicians, do the sonorous act extraordinarily well: the rolling stuff about the gratitude that we all feel towards the splendid self-sacrifice of these deeply important gentlemen from all the nation states, and about how wonderful it is that they have so unstintingly given of their best to regulate all that can be regulated, and so on. But others may say, for the sake of argument, "As a matter of fact, all this system of budgetary discipline depends on the will of the nation states". They may add that last year the Council of Ministers agreed that in 1985 cereal prices should be reduced by 5 per cent. but has since resiled from that, and now say that the best that it can do is to suggest that they just might be reduced by 3·5 per cent. It might also be added that there is not much indication of a will throughout the EEC to reduce agricultural overspending.
Nevertheless, there is a fundamental dilemma, and that is that the Court of Auditors is a proper appurtenance if the EEC moves towards a federal state. It is a proper and necessary appurtenance if there is, say, an EEC police force or an EEC criminal law and court. But as long as the EEC is something more like an alliance of nation states, each of which is fiercely resentful of interference from the EEC, such frauds and irregularities will continue. We may laugh about the way in which the unfortunate Irishman from the Court of Auditors was attacked when, I believe, he went to investigate something in Italy, but, as the Government would have pointed out in 1979, the report shows instance after instance of irregularity. We see instance after instance of nation states averting their eyes or conniving at fraud, because they see their own nationals making a killing out of the EEC.
If there were any proposal—my hon. Friend the Member for Nottingham, East (Mr. Knowles) raised the point very fairly—to set up EC police, or if there were,
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for the sake of argument, any attempt to enforce upon the people of Sicily the standards of honesty that are common in Scotland, there would be a revolt in Sicily. There would be deep resentment in England if Sicilian policemen, coming on behalf of the EC, were to investigate whether proper payments were being made for sheep that were being certified for EC payments.
So long as we resist, as I hope we always will, the extension of the EC into having all the characteristics and powers of a federal state, it is inevitable that fraud, irregularity and evasion will continue. It is no good pretending that, simply because the EC has gone one step towards the appurtenances of a federal state, it has the system of enforcement, of collection and of law that would be the wholly necessary—and, I say, immediately, the wholly rejected—part of bringing any form of regularity to the finances of the EC.
12.21 am
Mr. Tony Marlow: I am very pleased to follow the erudite and brilliant speech of my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).
At 12.21 am, with about 12 hon. Members in the Chamber, we are talking about £3,000 million per annum of our constituents' money—£60 per head. We are talking about a net cost to our constituents, over the past five years, of about £600 million per annum; £12 per head of the population; £2·50 per winter week that could have been spent on heating for those who have been suffering so much recently.
We have just an hour and a half in which a few Members of Parliament can speak to the issue. When we deal with any small measures, relatively important in their own right, we have a Second Reading, we have a Committee stage where we go through the Bill line by line, we come back here for the Report stage and Third Reading, and then the Bill goes to the House of Lords. Everything is properly and fully scrutinised. If money is then spent, we can form up in front of the Government and ask them to account for that expenditure. But this House has very little accountability for money spent within the Community.
The hon. Member for Newham, South (Mr. Spearing) was right to give us the quotation from 1891: once we lose control over the public purse we lose control over the destiny of our people. That is of fundamental importance, and we should bear it in mind in all our consideration of matters in the Community.
What does the Court of Auditors say about the expenditure? Has it been properly looked after? The Court of Auditors has said that the present budgetary and legislative framework does not serve to control commitments. We have heard a great deal about the much-vaunted financial mechanism. It is all things to all men, so that the United Kingdom Government can say to the United Kingdom, "We are going to control expenditure", and the French Government can say to France, "Don't worry — it is not going to be controlled". At the beginning of each year there will be set out how much money is to be spent in each field of Community activity. But commitments have not been controlled. There is no proposal to control commitments any differently in the

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future from the control used in the past. Even with the much-vaunted financial mechanism, how is the Community's expenditure to be controlled? Paragraph 1.17 states:
"Control and supervision by the Commission and its services, as well as the budgetary authority, tend to be hampered by the lack of relevant financial and management information. In some cases there is no formal requirement for such information, while in others national administrations and other bodies and Member States have failed to provide reports and returns on time or at all."
The French, I dare say, or the Mafia in Italy—too tough a nut to crack.
I heard this morning on the radio the story of a farming couple in Cornwall who had milk and cream quotas. They were producing less milk than they were entitled to, but more cream than they were entitled to—but add the cream and milk together as milk equivalents and they were producing probably less overall than the quotas allowed. Yet because they got the balance wrong, they are to be fined. We, here, have a system that scrutinises, operates and checks up on people. What happens in Italy? Would they be fined in Italy for behaving that way? Yet my hon. Friend the Minister talks about financial mechanism that will control Community expenditure — everything will be all right in future. Is it really?
Let us see what reassurance we can get; let us hope that the strictures of the Court of Auditors will in future lead to remedies But will it? In 1981, the court drew attention to numerou administrative irregularities, including the cashing of two cheques for a total of approximately 4 million Belgian francs. that has still not been resolved. It was reported on three years ago, but nothing has happened yet. Can we really have any confidence that things will be better in the future?
Hon. Members have referred to Accountancy Age, perhaps a more objective source of comment on Community financial affairs. It states:
"The Commission has failed to take action to remedy the numerous flaws revealed in last year's court of auditors report, which included millions of pounds of cash unaccounted for and almost non-existent budgetary controls."
This year's report shows that the position is now slipping out of control. This year's report refers to 1983—what happened in 1984? It fell so much out of control that the Community ran out of money and we had to bring forward what are known as the reimbursable grants. That is an interesting prospect, is it not?
My right hon. Friend the Prime Minister said on 27 June good words:
"article 119 of the treaty provides that the revenue and expenditure shown in the budget shall be in balance, so it is not right to raise loans for budgetary purposes because it is contrary to that article …I beleive that methods other than loans will have to be found to bring the budget into balance."—[Official Report, 27 June 1984; Vol. 62, c. 1003.]
I suppose that a reimbursable advance is not a loan. If it happened once it surely cannot happen a second time, and it surely cannot happen until Community expenditure is properly under control and we do not in future have appalling reports such as this before us today. I am perfectly happy to give way if my hon. Friend the Minister wants to offer us some reassurance here and now that until the Community financial mechanisms are much more effective than those that we have been talking about and reading about, the Government have no intention of bringing before the House another loan or reimbursable
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advance. I shall be happy to give way if my hon. Friend wants to bring the matter to our attention at this stage. Perhaps he will do so when he replies to the debate.
We discussed the report. If any hon. Member — or you, Mr. Deputy Speaker—had a report on a horse one might own rather like this report, would one breed it? If an hon. Member had a report on a shop in this tenor, would he buy things from it? If any hon. Member had a report on a company in much the same style as this report today, would he invest in it? Of course not.
Is my hon. Friend suggesting to the House that in those circumstances the Government want the House to provide more money by increasing the Community's own resources? Surely not. If the Minister was too polite, or perhaps too shy, to interrupt me earlier, would he care to interrupt now and say that under these circumstances, the Government could not consider asking the House to agree to an increase in own resources? He would surely not expect hon. Members to agree that more of our taxpayers' money should be at the mercy of an organisation such as that.
As my hon. Friend is obviously mute on the subject, perhaps we can go to the Prime Minister for support. In June of last year she said that any
"new increase in own resources, should it go through all the legislatures"—
it was as well that she included that qualification—
"is primarily to allow for the enlargement of the Community by Spain and Portugal."— [Official Report, 27 June 1984; Vol. 62, c. 1001.]
It seems that that may be running into the sand. If Spain and Portugal are not to join the Community on 1 January next year, probably it will not then be necessary—the Prime Minister said as much—immediately to bring before the House a request for an increase in own resources. While there is a delay because of that, all the terrible things that we have been reading about in the report of the Court of Auditors can be put right. Then and only if they are put right, and if Spain and Portugal are elected to the Community—perhaps we can consider an increase in own resources. In view of all the commitments that the Government have given, I am sure that the Minister would not wish to bring forward a request under any other circumstances.
The monster will grow with feeding until it devours us. The Government in Britain try to control public expenditure, and that is a difficult task. There are institutions in this country that generate ever increasing public expenditure. The aged, hospitals, defence, all require great sums, and local government tends to run away with money. Do we also want a massive engine of increased public expenditure on the other side of the Channel? That is a body not of elected representatives but a Commission of bureaucrats competing with each other to increase their empires.
We can keep Community expenditure under control only by not letting it have any more money. Let it deal in a proper and fair way with the money that it now has—in a way about which the Court of Auditors does riot in future have to produce a report such as this—and then we can consider what further steps to take on the Community's behalf.
12.32 am
Mr. Bowen Wells: On whichever side of the House we sit and whether or not we

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support our continued membership of the European Community—and I most certainly do—none of us can welcome the revelations in the report of the Court of Auditors.
I shall dwell on only one aspect, and that is bitterly to regret the way in which the administration of the food aid programme has been illustrated, and I draw attention to the summary at paragraph 10.17, where it is stated:
"At the end of 1983, quantities equivalent to more than half of an annual programme in cereals, to more than two thirds of an annual programme in milk products and to virtually the whole of an annual programme in butteroil, had still not been delivered … Under these circumstances, the Court requests the Commission to review the entire management system for food aid and then to propose both rules and administrative procedures for at least rectifying the defects, which keep recurring and even worsening, at the expense of the poorest countries of all."
The Foreign Affairs Select Committee, of which I have the honour to be a member, visited the Sudan, Ethiopia, Mali and Senegal to see how the food aid was being administered in relation to the desperate problems of the refugees from Chad, Uganda, Eritrea and Tigre and who have fled within the borders of the Sudan and how they have been receiving food to sustain their very lives. The United States had just as much or as little notice of the need for food aid for Sudan as the Commission and it managed to deliver and distribute food aid to the western-most part of the Sudan by the time of the arrival of the members of the Select Committee two weeks ago. The Commission had not delivered any food aid to the Sudan at the time we were there although it had delivered some to Ethiopia.
It is the administrative muddle and bureaucratic procedures which have been illustrated in the report of the Court of Auditors which I ask my hon. Friend the Economic Secretary to take up with great determination with the authorities in Brussels to ensure that the food aid which the population of Britain and of the Community generally want to see delivered quickly arrives before the rains come in June.
It is no good the European Parliament and the Commission saying that it is "their fault" or someone else's fault that the supplies have not reached those who need them. The grain must arrive before June if thousands of lives are not to be lost in the Sudan, Mali, Senegal and Ethiopia. I ask my hon. Friend earnestly to ensure that he sends representatives to Brussels to ensure that the food is placed in ships and that the ships sail. They should monitor their sailing until they arrive at Port Sudan so that previous muddles do not occur in this vital operation.
12.37 am
Mr. Ian Stewart: With the leave of the House, Mr. Deputy Speaker, I wish to reply to the debate. In the time remaining to me I shall endeavour to concentrate on the specific issues that have been raised rather than stray more widely, as I have been tempted to do so by some including my hon. Friend the Member for Northampton, North (Mr. Marlow). I shall resist the temptation of taking up the future financing of the Community. I am sure that we shall have opportunities to debate that issue on future occasions.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) spoke of me—I am not sure whether this was by way of criticism—being tactful in what I am trying to do. He drew attention to my comments as if I were speaking of printing errors. I said that there
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were serious deficiencies in the Community's financial arrangements. I chose my words carefully, but they were meant most definitely. I hope that the way in which the debate has developed will leave no doubt in the mind of the Court of Auditors, the Commission and the Budget Control Committee of the European Parliament of the concern that is felt in the United Kingdom about the management of the Community's finances as well as about the budget that makes provision for Community expenditure.
The issues that my hon. Friend the Member for Hertford and Stortford (Mr. Wells) raised at the end of the debate were telling ones. The performance of the Community in supplying food aid in 1983 was deplorable. Undoubtedly there were special circumstances at that time—for example, the regulation for food aid was adopted late in 1983, so many of the disbursements were not able to be organised in time. However, matters such as quality control and control of delivery need direct and specific attention, and my right hon. Friend the Minister for Overseas Development, who has been in the Sudan and who was answering questions on these topics this afternoon, is hoping to visit Brussels in the near future—possibly during this week—to raise a number of these matters with Mr. Natali and other members of the Commission. I shall draw to his attention the remarks that have been made in the debate, especially by my hon. Friend the Member for Hertford and Stortford with his direct experience from his recent visits.
The hon. Member for Thurrock (Dr. McDonald) mentioned provision for Scottish ports. Those industrial investments took place between 1978 and 1981 when the recession was biting on shipping and ports and the estimates for jobs that should have been created were not realised. Subsequently, however, as a result of that and other cases, funds have been returned to the Commission when job targets have proved unlikely to be achieved, so at least something has been learnt from that.
The hon. Member for Newham, South (Mr. Spearing) referred to customer contributions in the calculation of subprogrammes. The court found that in two of the subprogrammes the amount was expressed gross of customer contributions. That is mainly a matter for the corporations concerned and the sponsoring departments do not know the details. The practical effect of declaring net amounts in cases of that kind would have been to increase only the nominal rate of Community support to take account of the reduced public expenditure element. It would not affect the total level of Community support which would already have been agreed by the Council of Ministers.
A number of hon. Members, including the hon. Member for Thurrock and my hon. Friend the Member for Wolverhampton, South-West asked about provision for future disposal of stocks. The actual accounting procedure is complicated, but I should emphasise the distinction between two aspects. The first is the long-term cost of disposal of the stocks. Not only is that difficult to estimate, but it is not part of the annual budget, which is a revenue and expenditure item, not a balance sheet item. The costs during the budgetary year are purely those of storage and disposal within that year and are covered under various headings — actual storage costs, interest costs on the funds tied up by purchasing a product into intervention and, finally, gains or losses on sales.

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The Court of Auditors raises an interesting point about the accounting treatment of this, but there would be other implications such as potentially increasing the size of the budget.
Mr. Budgen: That was my point.
Mr. Stewart: I should wish to think very carefully before concluding that extra provision of this kind in relation to the agricultural budget would be in the best interests of maintaining control over the management and expenditure of those funds. I am not entirely sure that it would.
The right hon. Member for Strangford (Mr. Taylor) asked what would happen if the Council of Ministers failed to grant discharge. In fact, the Council of Ministers can only make a recommendation to the Parliament, which decides whether to grant the discharge. I believe that the case in 1982 to which the right hon. Gentleman referred, when the European Parliament refused a discharge, was a way of making a political point against the Commission. As the right hon. Gentleman knows, there was considerable dispute between the European Parliament and the previous Commission and the year of the report, 1983, comes under the responsibility of the previous Commission.
That does not mean, however, that we shall not press most strongly to ensure that many of the lessons of this auditors' report are taken on board by the new Commission. I hope that Mr. Delors, as a former Finance Minister with a sound reputation for financial management, will bring his reputation and ability to bear on the finances of the Community because they certainly need it. I do not intend to mince words about the nature of the comments in the report. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) referred to it as an incredible report, and in many ways it is a very serious indictment of the way in which the management of the community budget was conducted in 1983. Some improvements have been made but we shall be looking for many more.
I stress the point that I made in opening the debate. The United Kingdom Government have taken the initiative in tightening up budgetary matters, including the management aspects with which the Court of Auditors is dealing. I was asked what leverage we had. The leverage that we have can indeed be exerted in some respects through the annual budget. I have proposed, and succeeded in getting through the Budget Council, measures to reduce the extra commitments that were being proposed by the Commission or the European Parliament.
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We have pointed to the fact that many of the payments provisions included in the budget have not always been spent. That is one of the specific criticisms of the Court of Auditors' report. During the negotiations last year on the supplementary finance, I was able to point to those unspent payments provisions and to say that we would not provide the money that could be found from within the budget because it was there but had not been spent. The supplementary finance would have been significantly higher had we not been able to make sure that those unspent funds were used.
Clearly there is a continuing problem—
Mr. Marlow rose—
Mr. Stewart: I have only one minute left and must conclude.
We have an important duty to the Community and to ourselves to ensure that many of these problems are properly dealt with. That is why we have suggested that these matters should not just go to the official representatives of member states for consideration before the Council passes a formal recommendation back to the European Parliament at the conclusion of this process, but that Ministers should also consider these matters. I hope that they will be able to do so in the Economic and Finance Council, because I believe that the scale and nature of the problems which have been raised in the context of the 1983 budget—
It being one and half hours after the commencement of proceedings on the Motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
Question agreed to.
Resolved,
That this House takes note of the Annual Report of the European Court of Auditors on the financial year 1983, together with the replies of the institutions; and approves the Government's efforts to ensure that the Court's recommendations are implemented.

European Court of Auditors
  STATUTORY INSTRUMENTS, &c.
  Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instrument, &c.).
  STATUTORY INSTRUMENTS, &c.

    ROADS AND BRIDGES (SCOTLAND)
    That the draft Tay Road Bridge (Scheme) Approval Order 1985, which was laid before this House on 24 January, be approved.—[Mr. Lang.]
    Question agreed to.

National Theatre
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]
12.46 am
Mr. Clement Freud: When the Minister replies, I have no need for history or geography lessons. Anything he wants to tell me about the beginning of the National Theatre I can buy at any bookstall for insignificant sums of money.
I have raised the future of the National Theatre for no other reason than to get Government thinking on the National and on the subsidised theatre, and to obtain a few answers on what I consider to be important questions.
Since 1982, the funding of the National Theatre has not kept up with inflation. I shall give a few facts and figures, and shall gallop through them at some pace. From 1976, when the National Theatre moved into its new building, until 1979, the National ran into deficit. The deficits were caused by costs incurred through the delay in opening the building and through insufficient funds to run the building.
Following the appointment by the Arts Council of the Wilson committee to investigate the funding of the National Theatre, a special grant of £700,000 was given in 1979 to pay for arrears in building and maintenance costs and to provide a reserve for future renewal and maintenance. It was clearly understood that most of this money would be included in the base for future grant in aid. The National hoped that all the £700,000 would be added in the following year, 1980–81, because of high inflation in the months following the special grant, when the RPI rose 20 per cent.
If the £700,000 is included in the base year 1979–80, the National Theatre grant increase from the Arts Council from that year until the current year, 1984–85, is 44 per cent., against an increase in the RPI of 64 per cent. That is what I meant when I said that the funding of the National Theatre has not kept up with inflation.
Since the erosion in its grant, the National asked Coopers and Lybrand, a leading firm of accountants and management consultants, to look specifically at this point. It chose to take 1980–81 as its base year—the year following the special grant—which it assumed would represent the council's view on the proper base for the National Theatre's grants. The analysis showed that the increase in Arts Council grant offered was 33 per cent. and that the RPI increase 37 per cent. It showed that the increase in average earnings was 46 per cent. and that the composite inflation index was 42 per cent.
I shall deal quickly with the arguments being used against the National Theatre. It is doing insufficient to help itself through income from the private sector, especially compared with the Royal Shakespeare Company. It employs too many people, it is extravagant, it will not privatise, it does not control wages, the £7 million grant which it now gets is a significant sum and more than any other theatre gets and it must cut its coast.
I shall give the counter-arguments. On private sector income, the National Theatre aims to increase its self-earned income, apart from through its box office, through training activities, catering, programmes, publications, hires, book stalls, tours, ice creams and so on, exploitation, sponsorship and patronage. Its performance has been positive in all those areas. The publication profit this year is £215,000, which is more than the combined
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catering profit of the Royal Opera House, the Royal Shakespeare Company and the English National Opera. Its hiring income is rising each year, and is four times that of the RSC. In the past two financial years the NT has raised more than £1 million from exploitation, sponsorship and patronage. That is 21 per cent. more than that achieved by the RSC in the same period. I mention the RSC because somehow the Government seem to have befriended it, and made enemies of the NT. The NT has raised more than £700,000 in sponsorship and patronage.
The second complaint was that the NT employs too many people. Since 1979, 40 jobs have been removed. It is said that the NT is extravagant. That word must be taken to be relative. To some people all subsidised theatre is extravagant. The theatre aims to set budgets for sets and costumes which allow the first-class directors and designers to realise their creative aims. The budgets are finite and closely controlled.
It is felt that the NT will not privatise. Where services are central to the NT's purpose, such as production workshops or wardrobe services, its thrust has been to tighten planning and control, and to improve management. Where services are peripheral, such as security, cleaning and maintenance, the NT has compared costs with those of contractors. It contracted out security in 1979, and planned to do the same two years later with cleaning. However, the Greater London council, which is a generous funder of the NT, made it clear that if it were contracted out, funds would be stopped.
It is felt that the NT does not control wages. I remind the Minister that its wage rates are now below those of the RSC, the ROH and private contractors. It is said that £7 million is a significant sum and that the NT must cut its costs. When the £2 million-plus costs are subtracted, the theatre is left with £5 million. I remind the Minister that the RSC gets £5 million, the ROH more the £12 million and the ENO nearly £7 million.
No debate on the NT has been conducted for about 100 years, and no debate should be conducted without mentioning Matthew Arnold. In 1879, after the Comedie Francaise came to London with Sarah Bernhardt, Arnold said, after a long and well-argued passage:
"The people will have a theatre. Make it a good one.
The national theatre movement rumbled on and on. Sites were bought and sold and bombed, and when finally the south bank foundation stone was laid in its present site, the stonemason looked at it and said:
"This foundation stone needs refurbishing."
It must have been the first time that a foundation stone had to be refurbished before it had founded anything.
I wish to remind the Minister — I know that Adjournment debates are one-on-one confrontations, whatever newspapers would have us believe—of the national theatre concept: that there should be a theatrical centre of excellence, subsidised by the state, to act as a beacon for the profession. That is what the National Theatre is about. Of course it must be cost-effective, but it must also be able to put on plays with more characters, more scenes, more costumes, more artifice and more music. All of those are expensive. Without a national theatre or a similar subsidised company, theatregoers would be fed a steady diet of one-set, eight-character plays, reducing Shakespeare to that from whence it came. Shakespeare wrote about a touring company of minstrels, all of whom play many parts. What would be attractive to

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the commercial theatre would be a Beckettesque, Pinteresque play with one character, one dustbin and one spotlight.
The National Theatre has, rightly, got away from that. To our pride, it has staged "Coriolanus", "The Oresteia" by Aeschylus, "The Rivals" and many more productions to vitalise the theatre, to make us proud of it, and to bring foreign visitors to our theatre and our country. The National has helped tourism to become our third largest industry. Subsidised theatre has won well over half the awards that are on offer. It is our heritage.
I have raised this matter today because the Government have decided that the National must cut its costs in tune with housing benefit, Health Service expenditure and tertiary education. If the Minister were to say, "We need the £100 million or more that we give to the Arts Council to spend on those important sectors," I might argue with him, but I would understand. At least that would be an honest argument. What he is saying is that the National must trim its sails—fewer scene changes, fewer actors, fewer plays and shoddier sets. My point is that this is a far cry from the concept of using the National Theatre to invigorate our entire arts sector.
I want the Minister to acknowledge that the existence of a properly funded National Theatre has benefited the arts of the country. The monetarist approach of cash limits cannot work. It is bad enough for rural bus services and post offices, but at least in those sectors the buses that run are run properly, and the post offices that remain servce their customers decently. Trimming the spending power of a centre of excellence reduces it to pedestrianism. That is my argument. One ends with a deficient product which removes the entire reason for its existence.
There is an argument for abolishing the National Theatre, but I say that there is none for stifling it, which is what is happening at present.
The concept of the Arts Council was a splendid idea—an arm's length approach whereby the Government subsidised, and the Arts Council distributed. One suspects that the Arts Council is now no more than an instrument of Government, with no cultural view. Arm's length when there is a tourniquet between the source and the extremity does not work.
"The Glory of the Garden" is a sound principle. Let the regions flourish. The Minister will know how much and how often I have spoken to him about the need to invigorate my region—the eastern region—and he has been decent in acknowledging it. However, in "the Glory of the Garden", surely the regions must not flourish at the cost of maiming the metropolis. It is like knocking down a greenhouse so that one can get at the cuttings and the shrubbery.
The Minister for the Arts has spoken of our "flourishing" commercial theatre, but it flourishes because of the example of the subsidised theatre, just as ITV flourishes because of the decent standards set by the BBC. If we take away that excellence, we are left with mediocrity for the entire sector. We have a Minister who is an able economist, and a chairman of the Arts Council who is a monetarist. Admittedly, one has to say in his favour that he is a monetarist who believes that if one invests £250 million in the theatre, it will be cost-effective in that it lowers the PSBR, generates employment and VAT, and saves a lot of supplementary benefit.
We have, alas, a chief executive who believes in commercial sponsorship. I believe in it too. It is a small
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and welcome trickle, but it will go on being a trickle until the Chancellor of the Exchequer changes the ground rules and makes it tax-effective for industry to sponsor the arts. It is wrong, and we have been telling him for many years now, to expert commercial sponsorship to be anything more than a trickle.
The Minister sent Sir Clive Priestley to look at the Royal Shakespeare Company, expecting a report with condemnation of irresponsible management, overmanning, and general excesses. He was wrong, and Priestley became a fan of the RSC—perhaps as great a fan as the Prime Minister became of President Reagan — and money went to the Barbican. I was delighted, as most of us were. Now, we need a Priestley to examine the National Theatre. It has nothing to fear. It has funded a study, with its money, by Coopers and Lybrand to look into National Theatre efficiency.
Last week, I asked the Minister whether he would look into the suggestion of central Government taking over the £2 million-plus costs for the maintenance of the building, as they have done in the British Museum and the National Gallery. That would be welcome. Tonight, I wish to put two questions to the Minister. First, do the Government want to stop subsidising art, thereby killing standards, destroying a sector in which Britain leads the world, with actors, directors, designers and writers? If they do, they should tell us. If they do not, they should find the cost, which is the cost of half a day's occupation of the Falklands. That is all that the National needs to raise its head and continue as a centre of excellence, not close the Cottesloe, renew contracts and look into the future One cannot run a theatre without some confidence in the future and without planning.
Secondly, what else does the National Theatre have to do before it can function as it was set up to function by an Act of Parliament? It has kept within budget. It has played to 80 per cent. capacity. It has been steadily spectacular, if occasionally wrong. But no theatre can always get it right, and I, who have missed very few productions at the National Theatre, have been steadily proud of what I have seen, even if every now and again I have deplored what it has done because I thought it failed to enthuse and to entertain. But it has always been of great quality, artistically and culturally.
The Minister must tell us whether the Government want the National. If they do, they must fund it. If they do not want it, the Minister must have the courage to kill it. But let me warn him that the commercial theatre needs the National the way that any form of art needs a standard. I rather suspect that the Government hope that the National will fade away. That it will not do, because too many of us care, and in Sir Peter Hall we have a champion who will fight his corner.
I shall forgive the Minister if he does nothing else than give us the Government's opinion on the subsidised theatre. I believe that we need it and that the whole theatre needs the excellence that costs perhaps £7 or £8 a seat but is a spectacular beacon in which the rest of the theatrical profession can take pride.
1.6 am
The Parliamentary Under-Secretary of State for the Environment (Mr. William Waldegrave): I am grateful to the hon. Member for Cambridgeshire, North-East (Mr. Freud) for giving me the opportunity to put one or two

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matters clearly on the record about the Government's attitude both to the National Theatre and to the subsidised arts in general.
I can answer the hon. Gentleman quite straightforwardly. He first asked whether the Government wanted to stop subsidising the arts. To that question I give a resounding reply. No, of course we do not want to stop subsidising the arts. As a subsidiary to that question he asked whether we wanted the National Theatre to fade away. It is an unlikely concept that Sir Peter Hall might fade away, as the hon. Gentleman quickly added. Again I can say a resounding no.
To add to my resounding noes, the Government have supplied the more important commodity of money over the last years. Since 1978–79, there has been an 18 per cent. real terms increase in Government funding of the arts. That is no small thing at a time when many other programmes have been squeezed in real terms, and many of them within my Department.
There is no question that within the pressing priorities of Government the arts can be wholly privileged. They cannot. Professor Peacock was asked recently by the Arts Council to look into the argument that the arts had a higher inherent inflation rate than the RPI. He found, taking one year with another, that that was not generally so and that there was no special case to be made for the arts in that argument.
We heard reference by the hon. Gentleman to the argument from macro-economics that in some way the arts may be a generator of such production that funding of the arts diminishes the PSBR. I find that argument a little eccentric. It was refuted in a letter in the Financial Times today. Assuming that one believed the complete opposite to the kind of economics that The Times used to argue when Sir William Rees-Mogg was its editor and assuming, further, that we took a wholly Keynesian view of economics, it would still be for those putting forward this line of argument to show that investment in the arts would be better as an income and employment generator than, for example, investment in the construction industry, which is more naturally put forward as a candidate for such Keynesian pump-priming of the economy. Therefore I do not believe that that is either a necessary or a particularly convincing argument in favour of subsidy of the arts. The argument is more fundamentally based upon our assessment of the nature of a civilised society.
I agree with a great deal of what was said by the hon. Member about the extent to which the National Theatre is a beacon to the commercial theatre. However, I take issue with the hon. Member over the extent to which the National Theatre has or has not been decently funded. There is a familiar argy-bargy between the Arts Council and the National Theatre about whether there has been an increase in real terms in the theatre's funding. As the hon. Member rightly said, it all turns on how the £700,000 is to be treated. I think I am persuaded by the argument of the Arts Council that since this sum of money was not provided for expenditure in a single year—indeed, only about £250,000 was spent in the base year, while the rest of it was spent in subsequent years — it cannot be considered as part of the recurrent grant. If, therefore, that sum is ignored, the National Theatre has had a real terms increase of about 12 or 13 per cent. since 1978–79.
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The argument of the Arts Council is reasonable, but it does not lie at the heart of the matter. As the hon. Member said, the heart of the matter is the attitude adopted towards the subsidised theatre, what is now required of the National Theatre, and whether we believe that it can fulfil its fundamental role following all the pressures that have been placed upon it. I accept the hon. Member's implication that there are certain kinds of activity that it is not worth doing badly—that it might be better to cut out some activity entirely rather than do it badly: that the concept of a second-rate brain surgeon is unsatisfactory and that the concept of a badly subsidised theatre is unsatisfactory. I assure hon. Members and those outside Parliament that the Arts Council retains its arm's length relationship with the Government. It is lobbying hard in public, perhaps not with a strident voice but with the persistent and scholarly voice of its chairman, for a good deal more money than has been made available to it.
The Arts Council is not making life particularly convenient for the Government in doing so. Nevertheless, it is doing its job for the arts. The arm's length relationship still obtains. It is for the Arts Council to judge whether the level of subsidy that is available enables this great theatre, with its many triumphs behind it — to which the hon. Member paid tribute and I join him in that tribute—to do its job. We do not believe that the Arts Council has so dramatically mistaken its judgment as to require the intervention of my noble Friend to overturn that arm's length relationship and correct the allocation to the National Theatre.
What is the National Theatre supposed to do? There is a potential philosophical dispute about at least some of the comments Sir Peter Hall has made about the role of subsidy. In his diaries, from which we learned that Sir Peter quite rightly voted for my right hon. Friend the Prime Minister in 1979—which is very satisfactory to the Government—he wrote that to use sponsorship for the main house work would:
"not only be betraying ourselves but the rest of the subsidised theatre and the Arts Council. Private subsidy should be used to help us expand into areas we otherwise couldn't afford to be in: children's theatre, very experimental writing, etc."
We should all welcome the injection of private money into those areas, but I do not understand the philosophical argument that in some way it would be wrong if private sponsorship could be found for some of the main line activities. It is difficult to understand why money extracted through the compulsion of the taxation system by means of the terror of my noble Friend the Lord Chancellor with the law and the Inland Revenue behind him is in some way good money, whereas money given voluntarily is in some way bad money. Money is money. As the Emperor Vespasian said when he put a tax on the urinals in the city of Rome, money does not smell. From wherever it comes, it is useful.
I hope that in the search for sponsorship and for money from outside, given the tremendous good will that has been generated over the years by so many of the performances that have been put on, the theatre will not limit itself in its application. It has been raising sponsorship, as the hon. Gentleman said, and that has particularly been applied to touring and outreach work and now to foyer music. But why not use all the great good will that exists to see if more can be done for the central aspects of the theatre's work?
I also agree that there is no evidence in, for example, the pay settlements, that the theatre is behaving in an

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irresponsible way in comparison with other theatres, but that does not wholly absolve it, despite the difficulties with the GLC which is being rather mischievous in the way that it is on the one hand dangling carrots of potential money and on the other laying down conditions that make it difficult for the money to be accepted and savings to be made. It must examine every cost in the way that institutions of the utmost excellence in other fields such as universities have to do.
Although Sir Peter argues that there has been no overspending, we must remember that the savings that he
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is now seeking are over £1 million. If he had what he says is his share of the Arts Council money — a 5 per cent. increase—that would leave him with a shortfall of some £900,000, so there must have been a coming budget crisis. We must ask the theatre, like all other institutions in the country, even those of the utmost excellence, to seek the further savings to continue that excellence and that contribution to our national life in the future.
Question put and agreed to.
Adjourned accordingly at sixteen minutes past One o' clock.