HC Deb 16 July 1985 vol 83 cc195-266 4.58 pm
The Minister for Local Government (Mr. Kenneth Baker)

I beg to move, That the Rate Support Grant Supplementary Report (England) (No. 3) 1982/83 (House of Commons Paper No. 504), which was laid before this House on 11th July, be approved. It may be for the convenience of the House if we discuss at the same time the following motion: That the Rate Support Grant Supplementary Report (England) 1985/86 (House of Commons Paper No. 478), which was laid before this House on 4th July, be approved. This has already been an interesting day in local government terms. About an hour ago, Mr. Speaker, you announced that the Local Government Bill had received Royal Assent. This debate is not about that, but suffice it to say that many people hoped, and many more thought, that that event would never occur. Now that that Bill has become an Act, I hope that there will be co-operation by all councils to ensure a smooth transition to the new regime when the Greater London council and the six metropolitan counties come to an end at midnight on 31 March 1986.

We now have another debate on the rating system. Such debates often acquire the nature of seminars. I believe that Mr. Edward Pearce referred in the Daily Telegraph to the verbal sludge of municipal speak which characterises many parliamentary debates on rating matters. I shall try to avoid that verbal sludge.

I should like to remind the House of something that Fowler said in his "Modern English Usage". I paraphrase slightly. [HON. MEMBERS: "Norman Fowler?"] No, the other Fowler. He provided a classic description of the split infinitive, which can be applied to the rate support grant system. The English speaking world may be divided into those who neither know nor care how the rate support grant system operates, those who do not know but care very much, those who know and condemn, those who know and approve, and those who know and distinguish. As Fowler said: Those who neither know nor care are the vast majority, and are a happy folk to be envied by the minority classes. It is those who do not know but care very much with whom I feel the greatest affinity. The rate support grant system is fiendishly complicated, and of crucial importance to all of us, for it is responsible for distributing and redistributing vast sums of ratepayers' and taxpayers' hard-earned money.

I should like to make it clear that this debate is not about 1986–87. My right hon. Friend will make an announcement about rate limitation for next year, and the Government's provisional proposals for the 1986–87 rate support grant settlement, before the House rises for the summer recess next week.

The House has before it today two supplementary RSG reports. We have the first report for the present financial year, 1985–86 and the final report for the year 1982–83. This is, therefore, an occasion when we can review the total of local authority spending, the Government's policy on this, and the success of rate capping.

I remind the House of the long timetable that we are debating. Nearly one year ago, on 24 July, my right hon. Friend gave local authorities their provisional targets for the current year, 1985–86. Following consultation with local authority representatives last autumn, he announced on 11 December the RSG details, including the final targets and the holdback tariff. On 16 January the House approved the main RSG report for the current year.

The message is one of substantial success in the long campaign to contain the growth of local authority expenditure. The information we have so far is that 107 authorities are planning to spend £278 million in excess of the targets which the House approved in January. The overspend this time a year ago was three times greater—£848 million. Overall, authorities in England have not increased their spending in real terms in 1985–86. This has reversed a 20-year trend. In the 1960s, local authority current expenditure was rising at 3.7 per cent. per year above the rate of inflation, and in the 1970s it was rising at about 3 per cent. per year above the rate of inflation. This led Tony Crosland to go to Manchester city hall in 1976 and make his brave speech, "The Party is Over". For about 18 months the party was over, because the Chancellor of the Exchequer was nailed down by the International Monetary Fund.

When we came to office, we inherited a rising level of local authority expenditure. During the past six years that level has been contained to slightly less than 1 per cent. above the rate of inflation, and this year it will just about match the rate of inflation. In effect, local authorities this year are matching their expenditure to the annual rate of inflation. This cannot possibly be presented as creating a wasteland through savage and severe cuts in local authority expenditure.

As the overspend is down, average rate increases have been in single figures for the third successive year. The average general rate increase for 1985 was 7.4 per cent. Without rate capping, rate increases would have been far higher. If Labour councils in London had had their way, the total budgets of rate-capped London boroughs would have been at least £220 million higher. For the country as a whole, the figure is more like £330 million. This means that ratepayers in London have been saved £220 million and that ratepayers in the rest of the country have been saved £110 million.

Ratepayers in the rate-capped areas have enjoyed savings. For example, the average householder in Lambeth will pay £21 less on the local rates bill than last year and a staggering £185 less than the council would have demanded if it had not been rate capped. Twelve of the 18 rate-capped authorities have issued lower rate poundages this year than in 1984–85.

The high-spending councils have known all along—despite their rhetoric—that the expenditure levels and rate limits that we proposed required no savage cuts in jobs and services. Many of them have now said so openly and some authorities, such as the Greater London council, budgeted for a rate even below the level that we set.

Does the House recall the hysteria earlier this year and the claims that local authority expenditure would be slashed as a result of rate capping—slashed to such an extent that the very elements of civilised life would be undermined? In Islington the leader, Councillor Margaret Hodge, predicted that fixing the rate at its rate-capped level would mean an immediate loss of up to 1,000 jobs and severe cuts in services. A few days before Islington fixed its rate, the finance committee chairman, Councillor Wilson, said that it was perfectly possible to fix the legal rate without cutting jobs and services. Journalists employed in Islington's public relations department have complained strongly that they were asked to lie during a £200,000 campaign about the number of job and service cuts and that subsequent events have proved claims about cuts to be totally bogus. Public relations experts turning on their clients in this way is almost totally unprecedented and a little like the monkey biting the organ grinder.

Mr. Simon Hughes (Southwark and Bermondsey)

If the system has worked so well, will the Minister explain why an authority such as Haringey, which was rate capped, had an enormous rate rise and exceeded by more than any other authority its target and incurred a gross amount of penalty? Why does the right hon. Gentleman's system produce such amazing distortions and aberrations? If he were less selective in his quotation of authorities, the system would he seen to be far more of a hit-and-miss affair and not nearly as effective at reducing local government expenditure as he thought it would be one year ago.

Mr. Baker

The hon. Gentleman will remember that at the last moment the district auditor told us and Haringey that there was likely to be a deficit on the previous financial year. Under local government law, that has to be recovered in this financial year, so we had to adjust the rate limit level for Haringey at the last minute.

Dr. John Cunningham (Copeland)

I remember it well.

Mr. Baker

Like the hon. Member for Copeland (Dr. Cunningham), I, too, remember the episode well. If we had not acted, the rate level in Haringey would have been much higher. The same is true for the hon. Gentleman's London borough, which is rate capped.

All of the authorities selected for rate limitation in 1985–86 have now set a rate. The campaign that was supposed to spearhead the Labour Opposition's fight against the Government whimpered to its end on 3 July, when Lambeth became the last of the rate-capped authorities to set a rate. The collapse of the rebel councils has been a triumph for the role of common sense. It has meant that, as promised, ratepayers in these areas are being protected from excessive spending.

Mr. Colin Moynihan (Lewisham, East)

Is my right hon. Friend aware that, in a borough triply rate capped through the Greater London council, the Inner London education authority and Lewisham borough council, rate capping has brought welcome and popular relief? Is he further aware that in three recent council by-elections there have been substantial swings and overwhelming victory to the Conservative party in once safe Labour wards?

Mr. Baker

I am grateful to my hon. Friend for reminding the House that protecting the ratepayer is a popular policy which has its results in the ballot box.

The process of fixing a rate this year has been marred by scenes that are quite unacceptable in our free democratic society. We have seen gangs of thugs shouting from the gallery and taking over the council chamber. Mayors have refused to call in the police to restore order. Moderate Labour councillors and Conservative councillors have been physically threatened and assaulted. Mobs outside the town hall have prevented councillors from getting into the town hall. Fortunately, that is not characteric of local government. We have had flying pickets and all of the bullying antics of Scargillism. It is the highly organised brutality of the Fascist Left, and I hope that we will hear today from the Opposition Front Bench utter and complete condemnation of these tactics. I ask the Leader of the Opposition to repudiate those tactics and the illegality in Lambeth and Liverpool.

Lambeth and Liverpool, which set a rate on 14 June—

Mr. Eric S. Heffer (Liverpool, Walton)


Mr. Baker

I shall give way in a moment.

Lambeth and Liverpool, which set a rate on 14 June, may pay a heavy price for their delaying tactics. The auditor is investigating losses in those two councils because of the delays in rate setting and has issued formal notices of surcharge to the councillors responsible. In that regard, the auditor is acting in his capacity as the watchdog of public expenditure. I wish to make it clear that the district auditor is completely independent of central Government, and has been since the office was established 150 years ago. That position has been accepted by Governments of both parties.

It is nonsense for Labour Members to talk of the auditor being the lackey of the Conservative party. They know that during the past 12 months the Audit Commission has published reports which have been highly critical of Government policy. Labour Members should reflect on Tony Crosland's statement: I have no power to interfere with the work of the district auditor. In no circumstances would I dream of doing so "—[Official Report, 24 March 197.5; Vol. 889, c. 62.] I echo that statement. The auditor is equally independent now. All that I can do is to call on councillors in Lambeth and Liverpool to manage their finances properly and to prevent further losses from being incurred.

Mr. Heffer

The Minister referred to Liverpool and to some authorities where there had apparently been trouble, but I am not aware of that. Will he make it absolutely clear that there was no such trouble in Liverpool, that on no occasion did the police have to be brought in, and that no gangs invaded the city council?

Secondly, the right hon. Gentleman mentioned Liverpool and Lambeth in relation to district auditors. They were not the only local authorities which failed to set a rate on a particular day. Many other local authorities also failed to set a rate. Why have Lambeth and Liverpool been picked out by district auditors, and why have other local authorities not been tackled? Is it that some people—I am not sure who, because the Government say that they have nothing to do with district auditors—are attempting to suggest that those councils are led by loonies, whereas the others are not?

Mr. Baker

Lambeth and Liverpool do not have that unique distinction. On the hon. Gentleman's first point, I agree that rate setting in Liverpool was not marred by scenes of violence. However, rate setting in other councils, including some in London, was marred by unacceptable scenes of violence in which people were physically hurt. Pressure was applied to distort the democratic process. I am sure that the Opposition Front Bench will not sanction that. Secondly, it is up to the district auditor to decide what action to take. Lambeth and Liverpool were the last two authorities to fix a rate, and the hon. Gentleman could raise that point with the district auditor or the Audit Commission.

Some right hon. and hon. Members opposed the Rates Act 1984. They preferred to avert their gaze from a minority of local authorities' reckless disregard for public spending and their ratepayers. A responsible Government, of any colour, cannot take such a detached attitude. We may regret the necessity to set ceilings on rates, but our responsibilities for public expenditure, and our concern to protect ratepayers, compelled us to act.

Liverpool's budget problems are of the council's making. It has ignored every opportunity to improve its grossly inefficient services and to bring down spending. It now looks to the Government for more taxpayers' money to bale it out. The council must think again. There is no question of the Government seeking to undo the rate support grant settlement approved by Parliament in January, to increase the city council's programmes at the expense of other authorities. The city council must find its own salvation. It has not helped itself by fixing a rate which it claims to be substantially less than is necessary to fund its budget. It must reduce its grossly inflated spending figure of £265 million. Each £1 million saved above the target increases its grant entitlement by £2 million. The city treasurer has already shown that £10 million can be saved, and the council must go further.

If the council cannot balance its income and spending, it remains open for it to ask the courts to set aside the rate, thereby providing the council with the opportunity to set a new one. The central message to Liverpool city council and the representatives in the House of that great city is, "Face up to reality". If the council wants to maintain services and ensure that its staff are paid, it must put its finances in order.

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

As the Government are anxious to cut public expenditure, or to keep it down to what they regard as a reasonable level, does the Minister agree that if Liverpool city council were to carry out the strictures of his Department it would have to dismiss thousands of workers and cut services? Has he estimated what the increased social benefits would cost the Department of Employment and the Department of Health and Social Security? Have the Government worked out the social cost of the policy in Liverpool and elsewhere? If they have not, they are failing in their declaimed objective.

Mr. Baker

I know that the hon. Gentleman is concerned about the matter because he represents parts of the city of Liverpool. If the city council had started to put its house in order a year or 18 months ago, it would not be in its present position. In a moment I shall point out some areas in which councils can make savings without slashing services.

Mr. Heffer

This is an important matter. Yesterday, when we met the Secretary of State and the Minister, I asked the Secretary of State whether, if Liverpool city council kept to the £222 million target suggested by the Government, it would mean cuts in services and up to 6,000 workers being thrown out of employment. He admitted that it would mean reductions in staff and that people would be thrown out of work. I remind the House that the area has one of the highest levels of unemployment.

Mr. Baker

As I said earlier, if Liverpool city council had started to address itself to its substantial overspending a year or 18 months ago, it would not be in its present position of demanding more Government money. If it receives more money, it will be at the expense of other local authorities which are living within the system. As the hon. Gentleman will know, the city treasurer has already made it clear in the report that was given to the city council last week that the present rate level can support a budget of £229 million.

Last year, some 60 per cent. of local authorities planned to meet their spending targets. This year, 74 per cent. are doing so. That is good news, but, inevitably, our attention is directed to the 107 authorities which, if the House approves the 1985–86 report tonight, will be subject to holdback this year. The holdback tariff is deliberately severe. It is a necessary complement to the realistic spending targets which we were able to set, thanks to the advent of rate capping. Realistic targets had to be matched by much tougher holdback. Sadly, as before, a comparatively small number of local authorities have ignored their ratepayers' interests and set their budgets and rates deliberately to incur holdback.

The total holdback this year is £550 million. The House should sympathise especially with ratepayers in the areas of seven authorities, which between them account for £250 million of the total block grant to be held back. They are Avon, Cleveland, Derbyshire, Nottinghamshire, Liverpool, Greater Manchester and the West Midlands. Of the total sum of £550 million, £491 million will be forfeited by Labour-controlled councils—that is 90 per cent. That is a clear sign that old habits die hard.

Holdback need not have been incurred. The choice is not simply between spending and cutting. There is no doubt that savings can be made if a council is determined to make them. Brent authority, for example, which is under minority Conservative control, saved £24 million in 1984–85 and is on course to saving £32 million in 1985–86. In achieving that, no one has been made redundant. It has been achieved through more realistic rents, efficiency savings and a careful review of all staff vacancies, but the authority has still been able to allow £2 million growth for redecoration for schools, which were neglected for 10 years under the previous Labour administration. It has also increased the amount spent on social services for the psychiatrically disturbed. That shows what can be achieved in a relatively short time when Conservatives take over and begin to reverse the legacy of Labour overspending.

Sir Dudley Smith (Warwick and Leamington)

The vast majority of individual ratepayers would support what my right hon. Friend is saying and his theory that local government expenditure should not exceed the rate of inflation, but should be below it. However, the great problem is that the individual ratepayer is in the minority.

Mr. Baker

My hon. Friend is right, and this will be a central feature of the review of local government finance being conducted by me and by my hon. Friend the Under-Secretary of State. Our society is unique in that it has only one tax at local level, whereas all other developed countries have a variety of taxes. That single local tax bears an enormous burden, and one strain on it is that only about one third of the locally registered electors pay full rates.

Mr. Simon Hughes

Does the Minister accept that, despite the efforts of Brent, that authority, with three other Tory-controlled London authorities, will lose money by way of clawback? If an authority which the Minister commends must be penalised because it cannot reduce its expenditure further, does that not prove that the system is defective?

Mr. Baker

The hon. Gentleman is right, but I should say that Brent may not suffer any holdback if it continues to make savings similar to those that it has made during the past two years. I said earlier that this holdback could be suffered by local authorities. It is up to them to incur it or to make savings and tighten their belts slightly. Brent has made remarkable savings during the past two years, and I am told that it could continue to do so.

May I draw to the attention of the House the series of reports published by the Audit Commission to show how local authorities can make significant savings without a reduction in services. They could save £150 million a year if there was a better match between the number of places and the number of pupils in secondary schools. They could provide up to 20 per cent. more social services for the elderly within existing resources, and at the same time improve the quality of service to clients. Improved efficiency in vehicle fleet management could save £130 million a year without reducing standards of service or safety. They could save £20 million on refuse collection, £200 million on purchasing and £150 million on further education.

Wandsworth has made substantial savings in refuse collection. It charges its ratepayers £8.70 a year per head to empty their dustbins, whereas the ratepayers of Lambeth, which sticks to the traditional, union-dominated system, must fork out £17.58 each a year. Wandsworth has saved £25 million as a result of privatising its services, and one can see the result. The borough rate is 30.7p, whereas neighbouring Labour-controlled Lambeth—which has a similar population and social characteristics—sets a borough rate of 107.6p. Wandsworth, whose population problems are similar to those of Lambeth, makes do with 5,700 council employees, while Lambeth requires more than 10,000.

There is scope for worthwhile savings, all of which can be achieved by applying good practice more widely. Such good practice is already a way of life in many local authorities.

Mr. Peter Pike (Burnley)

The Minister compares Wandsworth with Lambeth. When I stay in London, I reside on the border of the two boroughs. What the Minister did not say was that the collection of refuse in Wandsworth is so appalling that I would rather pay a higher rate for a better service in Lambeth.

Mr. Baker

I understand that the hon. Gentleman lives in Wandsworth—

Mr. Pike


Mr. Baker

How lucky he is. He has the benefit of low rates and good services.

As I said to the hon. Member for Southwark and Bermondsey (Mr. Hughes), savings can still be made by authorities which face holdback. It is not too late to make savings. Grant holdback on the basis of budgets in this report can be returned if spending turns out to be lower. For example, if Liverpool spent £10 million less than its present budget, it could reclaim £22 million worth of grant. I urge all authorities in this position to reconsider the matter, in their ratepayers' interests.

Why should one authority spend £126 per pupil on school cleaning when another can manage with £31? Why does one council service its vans every 600 miles when identical vans can go twice as far between services elsewhere? How can it possibly be right that some vehicles go for fewer than 10 miles between services? If one authority spends £7.30 on meals on wheels to the elderly, why does another spend only £1.30? [HON. MEMBERS: "Because the quality is lower."]. If Labour Members would read the Audit Commission's reports, which I know will be unpalatable to them, they will see that the variation in the provision of services does not reflect the variation in costs. It is in the interests of all councils—whether Labour-controlled, Conservative-controlled or hung—to find ways of saving money.

Dr. John Cunningham

The Minister talks about efficiency. The Opposition welcome all attempts by local authorities to use precious public resources effectively. Since he is quoting from the Audit Commission reports, may I draw his attention to the two major reports—one on block grant distribution and the other on capital investment under the Government's financial system? The latter states: The Commission believes that the systems have contributed to wasteful investment by a combination of delays to worthwhile projects, pressure to spend before the year end, failure to plan ahead and abrupt curbs in programmes as a result of Government policy.

The report on the block grant distribution states: The uncertainties associated with the present arrangements for distributing Block Grant to local authorities are now leading to higher rates than are necessary. Are they not damning criticisms of the Government's policy?

Mr. Baker

I am glad that the hon. Gentleman has reaffirmed that the Audit Commission is not the poodle of the Government—[HON. MEMBERS: "Answer the question."] I am about to answer the hon. Gentleman's point. I must ask him to await next week's statement on the block grant system for the future. As to capital control, we are examining, with the local authority associations, ways to improve the system, which everyone recognises is imperfect.

Dr. Cunningham

Is that it?

Mr. Baker

That is the answer.

The third supplementary report for 1982–83, which is also before the House, is intended to be the last supplementary report for that year to close the books. I should say that 1982–83 was only the second year of the block grant arrangements. There is no change in the total of block grant payable to authorities, but there are changes within the total for all authorities.

I should also refer to what has become known as the housing grant-related expenditure anomaly for that year. This matter has a comparatively long history, and I apologise for the complexity of my explanation. There was an error in the main rate support grant report for 1982 in the specification of the GREA on some items of housing expenditure. It was discussed with local authority representatives in the summer and autumn of 1982. It was agreed that the first supplementary report for 1982–83, made in December 1982, should incorporate a disregard to ensure that no local authority could incur holdback as a result of the understatement of its GREA in that year. The treatment of the anomaly has been maintained in successive supplementary reports.

My right hon. Friend considered carefully whether he should correct the anomaly in his final report. After listening to the representations of the local authorities, as he does on all matters—they were divided in their views, as those who follow the matter will know—he concluded that it would be unreasonable now, in the course of the year, to alter the basis set in 1982, on which local authorities have made their 1985–86 budget and rating decisions.

I now return briefly to the supplementary report of 1985–86.

Mr. Robin Maxwell-Hyslop (Tiverton)

Before my right hon. Friend concludes, will he consider a very important point? Of course there was not agreement among the local authorities, because £36 million was being filched from the counties and given to other areas of the country. Of course there will not be agreement between those who benefit from an error and those who lose from it. Why was it not put right in the main GREA formula, so that the shire counties would not continue to suffer in their GREA assessment from having £36 million filched from them? It is not good enough to say that there is not agreement when some benefit from the mistake and some do not. Once a mistake is located, it must be put right immediately and not continued.

Mr. Baker

It was an error relating only to 1982–83 and has not been continued subsequently. That is an important point. It is not a cumulative error. The error, which relates only to 1982–83, can be taken into account in later years.

There is a limited pool in the grant to be distributed, and if it is to be given to some it has to be taken away from others. We thought that on balance we had come to the right conclusion in leaving it where it was. We shall listen to the arguments, but there are arguments on both sides. I note what my hon. Friend said.

In conclusion, I return briefly to the main report that is before us. I am sure that Labour Members will represent the holdback schedule as harsh and draconian, and I agree that we have had to make some tough decisions, but I re-emphasis the point that I have made twice before in my speech. The decision to incur holdback is not a Government decision, but is taken by those authorities which determine to exceed the Government's expenditure guidelines. High-spending councils have only themselves to blame. I remind the House that 74 per cent. of the councils this year, compared with 60 per cent. last year, are operating within targets.

We hear a great deal about caring Labour authorities. Where is the evidence that they care for their ratepayers, when they deliberately push up rates by their flagrant over-spending? I have indicated in my speech various ways, identified by the Audit Commission, in which savings can be made, through good management and moderation.

Mr. Christopher Chope (Southampton, Itchen)

My right hon. Friend made an eloquent plea to local authorities to obtain better value for money. Does he feel that the time has come when we should be thinking in terms of compulsory competitive tendering for all local authorities which are not doing so voluntarily?

Mr. Baker

My hon. Friend made a very distinguished contribution, when he was the leader of Wandsworth council, to the privatisation of local authority services. He will know that we published a consultative document, and we are receiving comments upon it. When they have been collated, we shall come forward with proposals on the subject.

One of the Audit Commission reports showed that, whereas some services which had not been privatised were as efficient as those which had been privatised, every council which had privatised its refuse collection made significant cost savings. That is very convincing evidence.

I say to the high spenders that, even at this late hour, it is not too late for them to pull back and avoid the worst consequences of holdback. If they will follow the example of the sensible Conservative-controlled councils, there are savings to be made. This is the way to demonstrate a caring attitude—not by grand political gestures, but by sensible good housekeeping. The choice is not between high spending and cuts in services. The choice is between wasteful extravagance and responsible, accountable local government.

5.34 pm
Dr. John Cunningham (Copeland)

The House waited with interest and not a little amusement—at least on the Opposition Benches—for the Minister of State's speech. We were wondering whether his task in presenting the reports and recommending them to the House would mark a new phase in the Government's presentation of their case. Indeed, that was so. For almost 20 minutes of his speech, the Minister did not address himself to the reports.

We were interested to know whether we would be told that a public expenditure increase in real terms of 9.5 per cent. since 1979 was a virtue, and whether a reduction in rate support grant of 23.4 per cent. in real terms in the same period was a vice—or was it vice-versa? The Minister did not say.

Against that background, is the real reduction in local government expenditure since 1979 of 4.6 per cent. regarded by the Government as a success? Public expenditure has gone up dramatically. Local government expenditure has gone down. Were the assembled Tory Members—although there were not too many of them here today—[Interruption.] There are more Labour Members than Tories present, and there are twice as many Tories as Labour Members in the House of Commons. We wondered whether the assembled Tory Members were here to applaud real cuts. Were they here to applaud public expenditure being massively up or rate support grant being massively down?

One thing is clear. In spite of the Chancellor of the Exchequer's Brecon hangover speech, the Prime Minister was correct about rate support grant. There is no middle way for this Government with rate support grant. There is only one way for them—down, down, down; so far down that the total accumulated loss to councils in England in rate support grant alone since 1969 as a result of the Government's cuts is a staggering £16.14 billion.

In 1985–86 alone, the total grant is £3.8 billion lower than when Labour left office in 1979, and that is at 1985–86 prices. They are, indeed, real cuts, and cuts that hurt millions of people, as councils of all political persuasions are caught in the Government's financial vice—or perhaps one should say vices.

It is interesting that, when political argument runs low, the Tory party wheels out the rusty old artillery and flintlocks of political abuse to fill the gap.

Mr. Robert Atkins(South Ribble)

What is wrong with abuse?

Dr. Cunningham

The reality is that councils of all political persuasions are suffering as a result of the Government's policies. The hon. Gentleman asked what is wrong with abuse. I think that it was Samuel Butler who once said,

I do not mind lying but I hate inaccuracy. The Minister of State was perhaps inwardly reflecting that he might have chosen more fertile ground for his leading role from the Front Bench. His right hon. Friend the Secretary of State recently made a speech in which he looked at public expenditure to the end of the century. That is real vision, I suppose—but I wonder. I suspect from his performance today, however, that the Minister of State has much more limited horizons in view—for example, perhaps the next Government reshuffle. Government policy has been presented as a success, although outside this House—and increasingly inside it, too, for that matter—fewer people than ever believe it to be so. Whatever the presentation, the reality is that in the two reports before us the Government's failures lie nakedly exposed.

The Local Government, Planning and Land Act 1980, which was introduced by a Conservative Government, places a duty on the Secretary of State to use the best information available to him to estimate the amount of grant to which each authority is entitled and to notify it. He is supposed to consult the local authorities. Yet today the House is asked to approve supplementary report (No. 3) for 1982–83, which is intended to close the books for that financial year. Everyone knows that, because of an error in the Department of the Environment on grant-related expenditure calculations, the shire counties and districts were deprived, as the hon. Member for Tiverton (Mr. Maxwell-Hyslop) rightly said, of £36 million. The mistake came to notice some considerable time ago but Ministers have constantly and consistently refused to correct it. It is described euphemistically in paragraph 15 of the report as an "anomaly". I think that the Minister used that word himself. How many millions of pounds must be involved before an anomaly becomes an error under this Administration?

The refusal to face facts, which is typical of the Government, illustrates the hollowness of Ministers' consistent promises to help especially the shire counties. The Government's error has been hidden away despite repeated representations. Ironically, it benefits many of the London boroughs that Tories most dislike at the expense of the counties, which many of them pretend to prefer to support and represent. The hollow claims in respect of the Berkshire factor were quickly disposed of earlier in the year and the Government's GRE error demonstrates once again their inherent weakness on these issues.

Do Conservative Members really intend to vote for and approve the report when they are aware of the facts? They know that Ministers are ignoring their representations, their error and the standing agreement between the Department and local authority associations that such errors should be corrected before the books are closed on a financial year. If that is the Government's attitude—that is what it appears to be—it exemplifies that under this Government truth is the accident of error. The issue demonstrates above all the weakness of GRE as a means of determining grant. Such errors have even greater significance as GRE is used to set targets for council spending and ultimately to undermine local democracy through the Rates Act 1984, about which the Minister had much to say.

The Minister referred to violence, and the Opposition condemn all violence unequivocally. Violence has no place in a democratic community. Indeed, it is inimical to the entire democratic process. We defer to the Minister not one iota in our condemnation of unacceptable events over the past few months. But the Government cannot evade their responsibility for the social climate and for the attitudes that are often struck by the Prime Minister. Her aggression and uncaring attitude can be described only as provocative in the extreme.

Grant-related expenditure assessments are subjective and unfair, especially to metropolitan authorities as they take little account of the acute social problems existing in our urban areas. Over 70 per cent. of the members of the Association of Metropolitan Authorities, Conservative as well as Labour, are spending more than their GRE to cope with acute problems. They will be penalised even more harshly for such spending if, as has been rumoured. GRE is to become the new test that the Government will impose if targets and penalties are to be abolished.

The Audit Commission has told the Government that there is too much fine tuning by computers of inadequate basic data resulting in spurious accuracy and that the information used to calculate the needs for local authority services is open to serious question. When I intervened in the Minister's speech to put that to him, he said, "These matters are being considered''. These matters have been well documented for a long time, but the Government persist in using their system, and the methodology associated with it, knowing that it is open to serious question.

It is the view of all local authority associations that the Government's system, and the GREs upon which it is based, is completely discredited. Yet if reports are to be believed, the Government are contemplating using that system when they scrap targets and penalising authorities solely on the GRE formula. We would reject such an approach, and I believe that it would be rejected overwhelmingly throughout local government.

The School of Advanced Urban Studies was commissioned by the Government to examine various matters and it concluded that GREs are inherently unsuitable to form the basis of legal limits on local spending. That has implications for the implementation of the Rates Act as well as for setting targets for local authority expenditure. Even the Government, in their published document, which is in the Library, admit that GREs are intended to be an objective assessment of the need for spending based on independent indicators rather than the actual expenditure required for services. We reject the third supplementary report for 1982–83.

The supplementary report for 1985–86 raises many more serious objections. The total grant in 1985–86 was reduced by £660 million in real terms compared with the previous financial year. That meant that a significantly smaller pool was available to all councils. Although councils' budgets in total are only about 1.3 per cent. over proposed expenditure, grant penalties are the most severe yet. As the Minister has said, they total £550 million or 6.5 per cent. of total block grant. That illustrates the major Treasury windfall gain from penalties imposed on councils by the Government's financial arrangements. In reality the penalties are twice the amount that is in dispute between the Department and the councils.

The Secretary of State has reputedly refused to limit the impact of the Government's system, as he could have done by disregarding expenditure by councils that have been elected to tackle the problems of some of the most disadvantaged communities in areas such as those of time-expired urban programme projects or joint financed schemes. This approach has been urged on him again by local authority associations only very recently, but it has again been rejected.

The Secretary of State has agreed to disregard expenditure on contributions to the Bradford fire disaster appeal. That sounds generous and it could be asked, "Who would disagree with that?" The irony is that Bradford council will lose £11.4 million in grant because of the severity of the penalty system that is being imposed upon it. It would be far more beneficial for Bradford if the Minister were to consider some of the disregards and got rid of the Government's iniquitous scheme than to agree a disregard for sums given to the disaster appeal, however worthy that appeal might be.

Penalties are likely to affect 107 councils. That is an illustration not of profligacy or irresponsibility, as the right hon. Gentleman implied, but of how unacceptable the Government's approach to local government finance is.

Mr. Robert Atkins

I have been listening to the hon. Gentleman with interest because he speaks with authority and sometimes with wisdom. Does he include in his remarks the borough of Tameside which has recently announced that it will spend about £300,000 a year of ratepayers' money exploring the voting records and other behaviour of north-west Tory Members of Parliament? Does he believe that that is a justified use of money? If it is not, should my right hon. Friend take action on it?

Dr. Cunningham

I can understand the hon. Gentleman being annoyed about such decisions. I have no difficulty with such matters because, unlike him and his right hon. Friend, I do not believe in central Government controlling local government expenditure, especially when it is raised through income. I do not believe that there is a sensible macroeconomic argument in favour of it. However, like the hon. Gentleman, I can identify items of expenditure by authorities that I might not support, but the Opposition have faith in the democratic system. We believe that in a plural democratic society the right way for the ratepayers—at Tameside or anywhere else—to resolve such problems is through the vote. The way to improve local government accountability is not to weaken local government and take away powers but to strengthen it—the obverse of what the Government have been doing for six years.

Mr. John Powley (Norwich, South)

The hon. Gentleman might be surprised, but I agree with most of what he has just said. I agree with accountability and democracy. If he believes what he says about accountability, surely consideration should be given to those who foot the bill. In other words, the business and commercial ratepayer has no vote and no influence and therefore local government is not accountable to them. If he believes in democracy and accountability he must take account of the lack of accountability and democracy in the case of those who contribute more than those who vote and exercise their democratic will.

Dr. Cunningham

I am familiar with that curious argument. It has been raised many times by Conservative Members in the past two years. I am not sure what the hon. Gentleman was implying when he said that the business men have no vote. They have one vote like everyone else. We live in a system of universal suffrage. There is universal franchise. If he is suggesting that the system should be altered or tampered with, he should be explicit.

The Opposition have no intention of changing the system and we shall oppose any proposals from the Government that appear to do that—whether by giving people additional votes, imposing a tax on votes or on the right to vote through a poll tax, or by any other means. I reject the argument. I hope that I have made myself clear.

The 107 councils to which I was referring before those interventions are not deciding voluntarily, as the Minister of State implied, to spend money that they desperately need in clawback. They are not rushing into penalties willy nilly. The overwhelming majority are paying little in penalty, as he pointed out. They are not in that position out of choice. They are there despite improving their efficiency, despite using money from balances and despite rate increases, because they have decided to do their best to sustain the services and jobs—the quality as well as the range of services—wherever possible.

However, there is no disguising the fact that even many of the best managed councils have been faced with severe problems because of the cuts in rate support grant. That is most graphically spelled out by looking at an individual case. The Minister did that and I shall do the same. I should like to quote from a long letter from the Tory leader of Sefton borough council to the Secretary of State for the Environment. That gentleman pleaded for leniency for Sefton because, he said, Sefton was staring a penalty in the face. He continued: There is much work that needs to be done in Sefton. I know that my hon. Friend the Member for Bootle (Mr. Roberts) would agree with that if he had not been unfortunately absent on House of Commons business with a Select Committee, because there are many major problems in the borough. Councillor Watson, the Tory leader of the council, continued: I am very concerned that Conservative Members on Sefton council feel that they have exhausted their capacity and indeed their desire to explain away rate increases … caused almost entirely as a result of adverse block grant movements. That is the view of many other Tory local government leaders. He then said: Political support is ebbing away at an alarming rate. There are hundreds of such examples in local government after six years of these policies. The latest evidence of the political debacle facing the Conservative party was demonstrated in this year's county council election results and, more recently, the Brecon and Radnor by-election. Not only have services been undermined and jobs squandered, but rates have been forced up as a direct result of Government policy. The right hon. Gentleman carefully quoted the average industrial and domestic rate increases for the current financial year. The Chartered Institute of Public Finance and Accountancy figures show an average domestic rate increase of 9.5 per cent. this year— shattering the Government's claims to be protecting ratepayers. Rates have now increased in real terms under this Government by more than 80 per cent. in six years. Rates fell in real terms by five per cent. under the previous Labour Government. Who governs in the ratepayers' interests?

In 1978–79, the average weekly rate payment in England and Wales, including water rate, was £3.19. After six years of those policies, it now stands at £8–27—two and a half times higher—under a Government who promised to abolish domestic rates and who pretend to protect the ratepayers.

Mr. Tony Favell (Stockport)

Does the hon. Gentleman recognise that the Government have a duty not just to the ratepayer but to the taxpayer, because, after all, that is where the rate support grant comes from?

Dr. Cunningham

It is astonishing that the hon. Gentleman has not noticed, after all this time, what every Labour Member is now telling him, that it is not just the rates burden that has increased under the Government but the tax burden. The tax burden is much higher after six years of these policies than it was under the Labour Government.

There is now a certain amount of panic, no doubt with attempts by the Minister for Local Government to steady the ship. The Department of the Environment Ministers are apparently willing to contemplate a tax on the right to vote in a desperate attempt to escape responsibility for what the Government have been doing for the past six years. I reiterate that there can be no consensus for a poll tax. Will the Government, if they wish a consensus, as the Prime Minister suggested at the Scottish Tory party conference, publish a Green Paper on reform of local government finance?

The Government seem oblivious to the long-term damage that they have done to local democracy and good local government. They seem unconcerned by the diminution in the quality of the crucial services such as education, transport and housing. They seem unaware of the harm done to inner city communities, black and white, to families, children, the disabled and the elderly. As Shaw said: The worst sin towards our fellow creatures is not to hate them, but to be indifferent to them: that's the essence of inhumanity. The Government increasingly display indifference to the problems faced by millions of people.

Mr. Peter Bruinvels (Leicester, East)

Can the hon. Gentleman square what he said with the experiences of the citizens of Leicester? They were told that, with rate capping, 25 per cent. of services would go, 800 jobs would be lost, community centres and swimming baths would be closed, and dustbins would not be emptied. Many tales of doom were told about what would happen. Now, under rate capping in Leicester, more jobs are being advertised, the council continues to operate, the rates are reduced and more people are coming to work in the city at a time when the council is spending £137,000 on an anti-rate capping political research unit. How can the hon. Gentleman say that the Conservative Government do not care when the business men of Leicester are taking on more people? Has not success come through the Government bringing rate capping to a city such as Leicester?

Dr. Cunningham

I am not sure whether the hon. Member was speaking in support of the policies of the Labour-controlled city council. He must be as aware as I am that the biggest single swing seen against the Conservative party in the county council elections was in Leicestershire. The hon. Gentleman would have lost his seat with such a swing in a general election. If he is interested in the reaction of voters to these policies, I suggest that he looks no further than the outcome of the county council elections in the county where his seat is located.

Mr. Peter Bruinvels

We have control.

Mr. Kenneth Baker

The hon. Member for Copeland (Dr. Cunningham) referred twice to the county council elections. If they were such a triumph for the Labour party, why did it end up controlling five fewer county councils at the end of the elections?

Dr. Cunningham

If the right hon. Gentleman wants me to digress into the county council elections and into the private grief of the Tory party, which was shattered in its strongholds, I can say this. The Labour party dramatically increased its share of the vote in the shires. The Tory party did not win back control of any of the 10 councils that 'we controlled when we went into the elections. It is true that we lost overall control of five such counties and it is true, I regret to say, that in some of them, thanks to Liberal collaboration, the Tories are administering the councils.

I regret that it is true in my council of Cumbria. I also regret that the Tories, with Liberal assistance, have started to implement cuts in budgets in Cumbria and, I understand, in Lancashire. However, the Tory party did not win control of any councils from the Labour party. If the right hon. Gentleman thinks that, he is deluding himself.

It is increasingly clear that the Government are not concerned about the people and their problems and do not feel responsible for the people and communities, and the country's problems. Therein lie the seeds of this Government's defeat. While Conservative Members may gloat about Royal Assent for the Bill to abolish the metropolitan councils and the GLC, their problems as a result of that appalling legislation are only just beginning. The Government have once again demonstrated, by draconian orders such as this, their invincible commitment to centralisation and control from Marsham street of the daily routines of each and every town hall in the country.

Once again, I say that the Government's policy is unacceptable to the Labour party. The past six years of Tory Government, and particularly the last two years of debate on local government, have convinced those Labour Members who still needed to be convinced—there were very few of them—that Ministers and officials in Whitehall simply cannot cope with the minutiae of local government, nor should they try. People elect local authorities to run local affairs and the evidence available to us from recent elections and opinion polls suggests that people favour more, not less, local independence from central Government.

For example, a report to the non-party constitutional reform centre shows that over half the people questioned in detail want some independence for their local council from central Government, and not less, but the Government have spent two precious years of parliamentary time enacting legislation—the Rates Act and the Local Government (Interim Provisions) Act—and producing orders such as these that we are debating today that run counter to the increasingly popular will of the people.

We have necessarily spent this time pointing out the error of the Government's ways, frequently supported by the Government's Back Benchers, senior and junior, by the other Opposition parties, by the other place, by local government in all its shades, as well as by the public at large. It has been right and absolutely necessary for us to oppose that legislation, but now that the Government have apparently exhausted their miserable stock of malevolent attacks and ideas for local government we serve notice that we shall be talking about change under the the next Labour Government and about strengthening and enhancing the local democratic process.

The Labour party will be calling on all those who claim to care for the quality of the country's government to join us in debate. The debates will not be about the sterile attempts to abolish councils that support or oppose us, or about the arcane detail of financing individual services, which Ministers in the Department of the Environment are so pleased to be always nit-picking about, or about individual administrative areas. It will be about how to increase and improve democratic opportunities and performance in Britain in the future.

All this means a rethink about the role and function of local government and, for that matter, of the regional or strategic delivery and control of services, including some now run by appointed boards. It means the strengthening of local government and the enhancing of its powers and its role in the British economy. It does not mean the continual bleeding away of its freedom and strength, as has been happening since 1979, because we believe that it is only by strengthening local democracy that better performance and real accountability can come. Strengthened local government, with powers devolved from Whitehall, will make a major contribution to the vital and essential attack on unemployment in Britain, and strengthened support services and finance will be required to match up to the reality of full-time councillors.

On the other hand, the two reports are simply the latest in a long line of squalid impositions on local government, ratepayers and those who depend, often essentially, on local services. They offer a miserable prospect, and we reject them.

6.10 pm
Mr. Gerald Bowden (Dulwich)

I am delighted to be called in the debate so that I can convey the pride and pleasure that so many of my constituents feel at rate capping having taken effect in Southwark. When they find that their borough rates bill has been reduced by some 25 per cent. as a result of the Government's action, they are delighted. I offer their congratulations to the Government on that.

Southwark is a deprived area. It is an inner London area in which we know that there are great problems, but many of those problems are of the borough's own making. The hon. Member for Copeland (Dr. Cunningham) said that the worst sin was not to hate one's fellow men, but to be indifferent to them. Never have we seen a council which is more indifferent to the needs of people than Southwark in its present-day practice.

Southwark's greater failure is perhaps not just its indifference but its incompetence. We see its incompetence in its full flowering in its housing management. Here we have a borough with a housing stock of some 66,000 properties, but where 4,500 of those properties are left vacant and boarded up. Is that a way to care for the homeless? Is that how to show one's compassion to the homeless? That is an indictment of the way in which Southwark runs its housing.

Of those 4,500 vacant properties, some 1,500 have squatters in them. At a recent civic service the preacher drew attention to the fact that squatters were often more efficient at running Southwark housing than Southwark council itself. That was not a particularly spiritual message. Indeed, in the eyes of the leadership of Southwark council, it was regarded as distinctly heretical. However, the point was made that the squatters could manage housing for themselves in a better way than the council could.

Those vacant homes represent the loss of some £4 million to £5 million in rent. Is it the way to concern oneself with the careful management and housekeeping of the finances of the borough to forgo some £4 million to £5 million in rent on vacant voids? In addition to that, if that were not bad enough, rent arrears now amount to some £21 million, and £5.5 million of that is owed by former tenants. Is that a way to manage housing? Is that a way to exercise good housekeeping? Southwark can be indicted on that ground also.

It is against that background that we need to improve the way in which housing is managed in this borough, so that the benefit can be passed on to those in real need. The system demonstrates the indifference and incompetence of present housing management there. That is to cite but one aspect of the housing problem.

The aspiration of so many of my constituents in Dulwich has been towards home ownership. Those who have been council tenants for many years and who are now reaching retirement, having brought up their families in a family council home, and for whom the prospect of being a home owner never suggested itself as a reality in the past. have, as a result of the Housing and Building Control Act 1984, been enabled—in theory at least—to purchase their homes. However, since the Act has been in force—almost a year now—there have been few sales.

The powers that be in the town hall—the union bureaucracy—have attempted consistently to thwart the wishes, aspirations and hopes of prospective purchasers, by several different tactics. The latest and most dispiriting one for prospective purchasers is the law's delay. I speak as a quasi-lawyer. I recognise that there are sometimes necessary reasons for delay, but the way in which the legal department of Southwark council has delayed the preparation of the legal documents that are required for the transfer and conveyance of property is a scandal.

I am delighted to know that the Department of the Environment is to have meetings with the officers and members of Southwark council to see whether there is a way of speeding up the process, whether the council is so incompetent that it cannot find the appropriate form of words for its legal documentation, whether it should be helped, or whether the duty should be taken away from it. My constituents feel that the Government have offered them the opportunity, but the council has failed to see it through, and by its intransigence is attempting to thwart the tenants' applications to purchase their homes.

Mr. John Fraser (Norwood)

Did the hon. Gentleman notice in the South London Press this morning that the ombudsman had upheld two complaints against the goody-goody council of Wandsworth for exactly the sort of delay that he is complaining about in Southwark?

Mr. Bowden

De minimis non curat lex. If there were only two complaints to the ombudsman in Wandsworth, that is remarkable. I shall show my colleague from Norwood the postbag that I have, which runs to several hundred letters from frustrated tenants who are trying to buy. Two seems a very small number. I would willingly settle for two in these circumstances.

Southwark council is unable to fulfil its job in its present role. The housing management problem is far too big for it. The opportunity to improve its finances and housekeeping by the sale of some of its properties, and to redress the unhealthy imbalance between local authority and private housing—there is some 70 per cent. local authority housing and 30 per cent. private housing in the borough—is not being seized. It is an unhealthy climate, in which local authority financing cannot operate effectively. We see the demands of heavy rating on the very limited number, the minority, who pay full rates—a mere 28 per cent. of the electorate.

It is against that background that my constituents welcome and applaud the fact that rate capping has been applied to Southwark. However, that is only a beginning. There is a need for greater impetus and direction in the operation of local authorities such as inner London boroughs in general, and Southwark and Lambeth in particular, to ensure that they fulfil their proper functions, exercise good housekeeping and use the resources that are available to them for the good of those whom they are there to serve. They are patently not doing that at the moment.

6.18 pm
Mr. Robert Litherland (Manchester, Central)

This debate is about local authorities endeavouring to meet their obligations under the Rates Act, along with the targets and penalties that are imposed upon them. At the same time, they are trying to meet the needs of the community and to act in the interests of their ratepayers.

My local authority of Manchester has endeavoured to protect and promote employment, and to improve and extend services for which it is responsible, in the light of the remorseless deterioration in the standard of living and conditions of Manchester residents. At the same time, the council is opposed to any large rate increases, recognising that excessive rates only add to the hardship of its residents.

A local authority such as Manchester, a major inner city area, needs only to look at the social and economic statistics of recent years to be aware of the downward spiral of urban deprivation. Manchester now has the highest level of urban deprivation outside inner London. Unemployment is higher than the national average. In 1978 the unemployment rate stood at just over 10 per cent. It is now over 23 per cent. Male unemployment in one part of my constituency is running at over 50 per cent.

About 20,000 jobs have been lost in the north-east area of Manchester since the late 1970s—4,000 in the last couple of years. While that has been going on, people in their thousands have been languishing on the housing waiting lists. More than 21,000 are now listed, and their chances of being housed grow weaker daily while the Tories are in power.

We in Manchester have over 6,000 unfit dwellings. Another 7,000 lack basic facilities and 58,000 are in need of renovation. Many of those are of the system-built rubbish variety which were foisted on local authorities by central Government. Massive finance will be required to try to save them or, better still, to demolish them. Many ministerial visitors have looked at that type of housing. They cry crocodile tears and say that they suffer from a design fault and require what they describe as a "repair element". That is nonsense, and they know in their hearts that a massive financial input from central Government will be required to put them right.

The unemployed and those in need of housing are only two of the groups affected by the rate support grant cuts. In addition, the city contains a concentration of deprived social groups, pensioners living alone—they now account for 17 per cent. of all households—and 51,300 single parents, and the number of residents claiming supplementary benefit has increased from 50,000 in 1980 to more than 81,000 in July 1984.

All those problems affect the provision of services. About 50 per cent. of schoolchildren are now receiving free school meals. Whether the services are for the unemployed, the homeless, the elderly in need of meals on wheels, the provision of home helps, day nursery places, cultural and recreational services, cleansing and environmental health, street lighting and road maintenance, all are vital and all fall within the responsibility of the local authority.

Despite that, the Government try to compare one authority with another and attempt to blanket coverage the lot. That cannot be done, because one cannot compare Manchester even with its sister city of Salford. Much less can Manchester be compared with Birmingham or, further afield, Torquay or Blackpool. Each local authority is different and has different needs.

Manchester believes in meeting those needs and in honouring its commitment to improve and expand its services. In its 1985–86 submissions for improvements in services, Manchester city council reckoned to spend an additional £33 million. That increase would have created 2,200 jobs, mainly among lower paid and manual workers. Staff would have been employed in old people's homes, in establishments caring for the mentally ill, in teaching and in the housing benefits sector. It would also have gone some way to restore some of the 6,000 city council jobs which have been lost, not to mention the many other jobs lost in the private sector.

To maintain services and jobs at existing levels, the city council will need to spend £276 million. The Government have set a target of £250 million. A £2 penalty for every £1 spent will mean the Government pocketing £53 million which should be used to provide jobs and services,

Mr. Favell

Will the hon. Gentleman explain why in Manchester, which is next door to Stockport—there is no grass between the two—and where there are twice the number of local government employees per head of population, there should be a downward spiral, whereas in Stockport the unemployment rate is down to less than 10 per cent.?

Mr. Litherland

The hon. Gentleman does not compare like with like. Manchester is a core city, with art galleries, museums and so on, all requiring money for their upkeep. When we last debated this subject I tried to explain the position to the hon. Gentleman, who invariably tries to make that comparison. We in Manchester have had a mass exodus of the more able, and those strong in wind and limb, into the suburbs, leaving in Manchester those with greater needs, including the elderly, mentally ill and young unemployed.

Our massive majority on the city council has arisen because the electors want what the council can provide, if given the chance. If the people of Manchester want the level of employment and services which the council wishes to provide, it is for them, the voters, to decide. Manchester wants to provide the services which the people want and for which they have voted.

Mr. Harry Cowans (Tyne Bridge)

The hon. Member for Stockport (Mr. Favell) should accept that, by the inner city partnership, even the Government recognise the problems of cities such as Manchester and Newcastle. One problem is the tightly drawn boundaries, which condense those problems into smaller areas. In view of the lecture that he has received from my hon. Friend, the hon. Member for Stockport should accept that the difference between Labour and Conservative Members such as he is that we want to solve the problems, while they want to draw money away from local authorities. They claim that so long as the rates are low, the level of services does not matter.

Mr. Litherland

I am obliged to my hon. Friend for making the position abundantly clear. As he says, the inner city partnership recognises the differences and. as I have explained on many occasions to the hon. Member for Stockport, the type of comparison that he wants to make cannot be made.

Why do the Government and their Whitehall mercenaries think that they are better at costing and assessing the needs of local authorities, when central Government spending has increased by 100 per cent. since 1979, while local authority spending has fallen by 14 per cent. in real terms?

Rate support grant cuts in Manchester have amounted to £161 million in the last four years. All that cost must be borne by those of whom the Tories claim to be the champions, the ratepayers. Those cuts have been the primary cause of the massive rate increases that have occurred, with, in Manchester, the loss of more than 6,000 jobs.

The council has made representations to the Secretary of State to reconsider the harmful effects on Manchester and other local authorities of the Government's targets and penalties, with a plea for the restoration of the reduction in the level of grant paid to the city of Manchester. It is estimated that since 1979, against the growth in demand for services, the Government have reduced revenue support by more than £1 million a week.

Penalties and targets are applied unfairly. The result is that local government expenditure is by Government instruction. For example, under the housing benefit scheme, which was imposed on local government, authorities must meet all the residual costs, including the running of the local discretionary scheme to meet local needs. All of that expenditure is borne by local government. It should be financed by central Government. In other words, it should be taken out of the cost assessment and disregarded.

Manchester city council has produced a statement on the issues which it wants the Secretary of State to disregard. They include:

  1. "(a) the full cost of projects assisted by Government grants or projects recognised by Government as priority initiatives including
    • —the urban programme and UDG scheme.
    • —joint finance schemes with health authorities.
    • —European regional development fund projects.
    • —section 11 expenditure.
  2. (b) the changes to advanced further education 'pooling' arrangements.
  3. (c) the costs of operating a free school meals scheme.
  4. (d) the cost of providing mandatory student awards".
On the subject of employment, the council said: Disregard should be introduced for the residual cost of YTS and other schemes together with all other expenditure designed to tackle unemployment, including grants, loans, rent guarantees, mortgages, estate development and infrastructure work for industrial development. The council said that the cost of administering housing benefit should be disregarded. All the increased charges in the nationalised industries above the cost of inflation—for instance, water and electricity charges—should be disregarded, as should services outside local authority control, for example, magistrates court expenditure net of specific grant.

These issues should exercise the mind of the Secretary of State so that he gives Manchester and other local authorities a better deal. Until the Secretary of State understands the real difficulties facing local authorities in balancing their budgets, as they must do by law, and balancing the interests of the ratepayers against those of the community to whom they are responsible for providing services, we can expect more conflict as more councils refuse to accept cuts in jobs and services.

Next year, many local authorities will confront the Government. Next year is crunch year. The Government's policy is one not of compassion or care, but of political confrontation, which is meant to strip away every vestige of local democracy as long as local authorities oppose a centralised diktat.

The Government's attack is not just on Manchester, but is part and parcel of a national campaign directed at local government and the public sector. The aim is to starve local authorities of finance. To have a monetarist policy, one must have financial control. To obtain that control one must crush all forms of organised opposition, whether trade unions, local authorities, county councils or even opposition parties. This is the sinister path down which the Government are taking us. This is fully recognised in the speeches by the more responsible elements of the Tory party. They know that to use legislation to impose centralised control on local authorities and to ride roughshod over democratic rights is sinister and foreign to the old Conservative doctrines.

The Minister said that local government finance was fiendishly complex. The attacks on the most needy in our community have been more fiendish. The Minister asked for councils such as Liverpool to be condemned. The Government stand condemned for their confrontation of local government and their obscene policies towards it.

6.33 pm
Mr. John Powley (Norwich, South)

One quality in Parliament since the 1983 election has been the emergence of hon. Members with practical local government experience. I commend those Labour Members with experience of local government at a senior level. For the first time for many years many Conservative Members have had such experience. Whatever our political beliefs, that experience benefits the House. We may disagree about policies, but at least we are discussing them from a background of practical experience.

I shall mention my local government experience for the benefit of hon. Members. Although they may disagree with my views, I have seen service on a county council for 10 years and a district council for 12 years and was leader of a local authority. Many of my colleagues have had similar experience.

Whether in relation to local government or central Government expenditure, my basic philosophy is that we should not any more than is necessary tell other people how to spend their money. I prefer the individual to keep as much of his or her own money as possible. I prefer central Government taxation to be as reasonably low as possible, taking account of the need for certain public expenditure. The same applies to local government expenditure. Local authorities should allow the people within their areas, within the constraints of providing essential services, to keep as much of their money as possible. Some may say that that is a hackneyed Conservative policy, but it is my basic philosophy.

Some people take a different view. In central Government they think that they know best, that they should incur higher Government expenditure and tell people how their money should be spent. Many people associated with local government take the same view—that they know better how to spend the money of local ratepayers or business ratepayers. I do not subscribe to that view. I approach local government and central Government financial dealings on that basis. I am no better qualified than anyone else to spend other people's money. Invariably the individual ratepayer knows how to spend his money better than I or any other hon. Member.

Many years ago, the Labour party decided that the percentage given to a local authority in rate support grant should be decreased. That decision was correct. The Labour Government reduced the percentage—

Dr. Cunningham

As the hon. Gentleman has raised this red herring, I must tell him that, when the Labour party came to office, the level of RSG was 60.5 per cent. It increased for two years and then decreased to 61 per cent., remaining at that level for the last three years of the Labour Government. In every year that the Labour party was in office, the percentage of RSG was higher than in any one year of this Tory Administration.

Mr. Powley

A former Minister, Anthony Crosland, said, in referring to local government, that the party was over and that profligate spending would have to cease. As a follow-up Labour Ministers said that the percentage of grant given to local authorities should be reduced—they did not carry that policy all the way through—and that was a wise decision. It was wise also for the Conservative Government in 1979 to carry on that philosophy.

District and county councils and metropolitan authorities should be more responsible for the expenditure that they incur rather than put out a hand to the Government so that they might dole out the taxpayers' money to cover that expenditure. I firmly believe that he who pays the piper calls the tune. If one depends more and more on central Government for funds to run local government, central Government inevitably must have a greater say in local government expenditure.

Mr. Cowans

To hear the hon. Gentleman talk, one would think that central Government imposed nothing on local government. In fact, 148 Acts have been passed which impose financial spending on local authorities. The hon. Gentleman seems to be making a good case for his being neither in Parliament nor in local government if everybody knows better than he does.

Mr. Powley

I certainly do not pretend that I know better than anyone else. It is my philosophy that preferably individuals should have their own say, and I wish that they had more of it.

Central Government—and this has been recognised by Labour and Conservative Governments—have a responsibility for the effects of overall economic policy on the country. There is no question but that the level of rates in a local authority has a direct influence on inflation and on the well-being of the economy. Therefore, central Government must exercise that responsibility, and the Government are right to exercise control now on the general level of the economy. Indeed, the Labour Government between 1974 and 1979 exercised even more control over local government. Anybody who was in local government in that period, as I was, will know the constraints which were put on local government. The cuts in housing allocation, hospital building and many other services between 1974 and 1979 occurred because the Government had a responsibility for the economic effect of all spending, in particular local government spending.

I turn from the generality of my remarks to my area of East Anglia where there are considerable problems. I apologise for referring to the time when I was in local government, but one draws on one's own local government experience. In East Anglia, we suffered when regression analysis was put into operation. In general, it seemed that the sparse areas with increasing populations received fewer resources while those areas with declining populations, particularly the urban areas, received more resources. That appeared to be patently unfair. It had a disastrous effect in East Anglia. East Anglia is a fairly populous area—indeed it has a growing population. Here I am critical of my own Government, because, in my opinion, they have not sufficiently restored the effect of regression analysis.

In Cambridgeshire, in Suffolk, which is my old county, and in my county of Norfolk, there are three very efficient authorities which are traditionally low spending. Given the target and penalty system which has been in operation, of which I am critical, those authorities have suffered because of their efficiency and low spending. Where targets have been put into operation based on previous expenditure, which in many areas has been profligate expenditure, they have benefited. Where targets have been based on authorities whose expenditure generally has been much lower and more efficient, counties like Norfolk have suffered because of the system.

The efficiencies and economies of counties in East Anglia such as Norfolk must be taken into account more realistically to reflect the economies which they have made in the past so that they are not repeatedly penalised. There is a limit to the number of economies that can be made. Whatever criteria one takes, East Anglia has been economical. It has accepted the realities of financial discipline, and does not deserve to be penalised again for its economies while observing that the Government appear to be supporting authorities which have incurred increased expenditure and in which greater economies could have been made. I therefore make a plea for the abolition of the target and penalty system and for a greater recognition of the regression analysis as it initially operated.

In East Anglia one can also see the difference between the services of a county authority and those of a district authority. Norfolk has Norwich in its centre. Norfolk administers essential services such as education, fire and police, in all of which economies have been introduced. Norfolk does its best to privatise its services. It looks for more efficient ways of doing things and endeavours not to engage in profligate spending, which is to its credit. However, Norfolk, like many other shire counties with cities at their centre, observes a city like Norwich engaging in profligate and unnecessary spending. When my own district council of Norwich wastes money on promoting CND or other such oddities, although this is not the same scale of spending as that in which Norwich has to engage, Norfolk realises that it is being economical at the expense of another authority in its area which is profligate and wasting ratepayers' money. That is not good enough.

The Government, through their allocation system, must recognise that it is those district authorities like Norwich which engage in profligate spending which need to be penalised, at whatever level the spending happens to be, because they are getting away with it at the expense of counties like Norfolk which administer essential services.

Some way must be found in the rating system to remove business and commerce from the political element of rate fixing. I do not know the Government's view on this, but I believe that commerce and business should make a contribution to the services which an authority rightly needs and of which it rightly takes advantage such as the fire service, the police service and the security services. However, I do not believe that any business or commerce should make a contribution to the profligate spending patterns of other authorities in the area. There is no reason for business or commerce in the city of Norwich to contribute, say, to expenditure on CND, which my authority loves to support.

I believe that there are other elements to which business and commerce should not contribute, and these should be taken out of the district rate. High rates cost jobs. I know that this is disputed in some quarters, but I have no doubt that that is the case. I ran a small business in Cambridge for 24 years. I have talked to my colleagues, and I have my own experience on which to make a judgment. There is no doubt that high rates cost jobs. Local authorities must recognise—and unfortunately Norwich has a high unemployment problem—that an efficiently-run and low-rated local authority attracts business and commerce. There is no doubt in my mind but that that is the case. We want to attract business and commerce to my constituency, but that will not happen if the local authority levies too high a rate.

Rate capping has had the right effect. In the past, the ratepayers of Norwich were used to rate increases of 10 per cent., 15 per cent. or 20 per cent., but thanks to rate capping and the discipline placed on that authority, the increase can now be 4 per cent. or 5 per cent. or nothing at all. Rate capping has had the desired effect, at any rate in some areas.

In my area, the district council has moderated its expenditure. The past Lord Mayor, Councillor Leonard Stevenson, said that if the Rates Bill ever became law he would resign. That legislation has now become law and is having a good effect, rather than the disastrous effect that Councillor Stevenson predicted. However, he has not seen fit to resign, and that gives the lie to his integrity.

Norwich city council has a bad council housing record. It tried to resist the 1980 Act which gave local authority tenants the opportunity to buy their own homes if they wished to do so. A commissioner was put in to ensure that the authority complied with the law. Thankfully, it has seen some of the light in that it is now co-operating within the law and is selling local authority houses. However, Norwich's housing policy has not been good for the people of the area. The authority has been so inefficient that there are 600 empty council houses in the city. If the rent for each house is, say, £15 a week, and that is multiplied by 600, and then by 52, that will show the sums of money that are being wasted by the local authority simply by allowing 600 council houses to remain empty.

The local authority may argue that it has a very long waiting list—about 4,000 people, 3,000 of whom are single. But my own son is eligible to go on that waiting list, even though he lives at home and has no housing need. Therefore, waiting lists are not necessarily an indication of housing need within a local authority area. Any local authority can go a long way towards resolving its housing needs so long as it gets away from the idea that it can be resolved simply by building more and more council houses. That will never be the case.

Local authorities should look beyond the objective of owning as much of the property within their areas as possible. Instead, they should look to owner-occupation and to giving local people the freedom to choose. Our housing problem could then be resolved much more economically and efficiently and at less strain on ratepayers' and taxpayers' resources.

I hesitate to comment on Labour's alternatives. The Labour party does not believe in rate capping or in penalties. It believes in favourable treatment for Labour local authorities and in profligacy. Where will it all end? The Labour party knows that what it says cannot be put into operation. When it was in government it put those policies into operation and had to introduce economies.

The economies introduced by the present Government have resulted in a sounder basis on which local authorities can operate. I sincerely ask the Minister to look at the points that I have raised with regard to those local authorities that have operated economically.

6.54 pm
Mr. Simon Hughes (Southwark and Bermondsey)

So predictable are the routines of the House that I have checked and discovered that we went through this ritual a year ago minus a day to the moment, and I was called to speak a year ago minus a day minus three minutes to the moment.

We are now at the time of year when we look back on what has happened to the Government's predictions, and today's debate takes us over the past electoral year. On this occasion, this is unusual for one reason. I have a feeling that the Government's defence of its case today is rather like the Government arguing the case for the nationalisation policies of the right hon. Member for Chesterfield (Mr. Benn) before the European Court of Human Rights, because we are likely to hear next week that the Government do not believe in targets anyway and that they will change the system of finance. In other words, they will be putting forward a correction to a system that they can no longer support.

It will be recalled that when we met just before the summer recess last year there was on the horizon the first of the two reports of the Audit Commission. We had only the leaked document before us, and I do not blame the commission for that. I well remember the hon. Member for Copeland (Dr. Cunningham) and others—I think that I added to it—taunting the Secretary of State with the fact that it was likely that he would be criticised during the summer. The right hon. Gentleman made great play of the fact that the report was only a draft, but the substantive document was not all that different. It came out on 30 August and was critical of the system of setting expenditure assessments and target figures for local authorities under which if authorities overspent they would be penalised according to a rapidly escalating graph. That had bizarre implications, one of which was that some people ended up with nothing at all. It also meant that one penalised other authorities, often previously Tory-held shire counties, that were not overspending as much in the first place.

Last August, the Audit Commission, when reviewing the grant aid system for local authorities, came to the conclusion that major changes were now desirable. It found many things wrong with the system, such as unnecessary uncertainties and the fact that reserves had been built up unnecessarily. Perhaps most important of all, it came to the conclusion that: Because some information on local needs is often inadequate and that on local resources is out of date, serious distortions result … The introduction of targets partly related to past expenditure has encouraged some authorities to spend more to secure more grant, a perverse incentive which the present system was designed to avoid; and the gap between targets and grant related expenditure is generally widening. No one suggests that the Government should not determine the amount of money available to local authorities. All Governments must retain that power. But the hon. Member for Norwich, South (Mr. Powley) will know that one of the criticisms of the present Government is that they have imposed far more rigorous restraints on local authority expenditure since 1979 than on national expenditure. That may be a criticism of their own public expenditure policy which the electorate does not seem to think is particularly appealing.

Although the two sets of figures are getting closer, it is clear that the Government have been seeking to screw down the local authorities—which deliver the front-line services—more than they have been able to screw down themselves.

Mr. Waldegrave

That is not really a fair point to make. Our 1979 manifesto, quite straightforwardly—it was repeated in our 1983 manifesto—gave a set of priorities. The priorities on which we were elected had at their centre defence, the Health Service and pensions, as protected programmes, and law and order. The principal services on which we promised growth happen to be in that category, but the principal service in which the client group has dramatically declined—education—happens to be a local authority service. That fully explains the discrepancy.

Mr. Hughes

A Labour Member has muttered to me that that is the Government's new line—that pensions and the Health Service will have more money and that everything else will suffer. I expect that in real terms that is true—[Interruption.] Of course that is true, but it is not satisfactory. Employees on my local health authority were told only the other day that 350 of them are likely to be laid off. That includes doctors, nurses, ancillary staff and specialists in Guy's hospital and in others. Clearly even that policy is not acceptable.

Last year, this debate was opened by the Secretary of State who is not here today because he is in Cabinet Committee. That, of course, is a perfectly valid reason. It may be that one of the things to be grappled with is how one replaces the present system by the system we are to hear about next week in a way which complies with the Government's general policy of continuing to screw down local government expenditure. He has had as much criticism about that over the past year from his own hon. Friends as he has had from the Opposition.

The second report of the Audit Commission issued on 2 April this year said something similar and reached the similar conclusion to the first. It was a report by an independent official on the operation of the rate support grant system. It said: The addition of a regime of targets and penalties unrelated to objectively assessed spending needs, but designed to restrain spending, has detracted still further from the original purposes of the system, to the point of making its sophistication worthless. To show how worthless it is, I will take some examples.

The Minister will know that the Government's record of arguing that local expenditure should be cut and that the system is fair has failed abysmally to convince the electorate. I shall take two obvious examples. The first relates to parliamentary by-elections, of which there have been eight since the general election. The Tory vote has gone down in each of them. In six of the eight it has gone down by more than 10 per cent. The Labour party vote has gone down in four and up in four, but never by more than 10 per cent. either way. Our vote has gone up in seven, and in six of those it went up by over 10 per cent.

In county elections, local services were clearly what people were voting about. I do not want now to labour the point, but the Labour party lost five out of 10 of the authorities it held. But the Tory party, as the Minister knows, for the first time in its history lost control of the Association of County Councils, and, instead of the majority of the shire county councils being run by the Tories, the Tories are now a minority group on the ACC.

In passing, I must add that it is not true to say that we more often support the Tories in shire counties than we support the Labour party. In Cheshire and Shropshire and originally Warwickshire, we supported the Labour party. In places like Essex, Hertfordshire and Humberside, we have supported the Tories. In three places—east Sussex, Hampshire and Oxfordshire—the Labour party put the Tories in, much to the chagrin of many people. In two places the Tories put Labour in. Let it not be imagined that in this new three-way balanced political scene it is only the alliance which is willing to put in its opponents. The Labour and Tory parties are now deciding that they often would prefer to see one or the other in power rather than have us in power.

Mr. Jack Straw (Blackburn)

The hon. Member is talking about the great election successes of the Liberals and their junior partners the Social Democrats, whose members have been conspicuous by their absence throughout this debate. I am sure that it is embarrassing to the hon. Member for Southwark and Bermondsey (Mr. Hughes), who dislikes them perhaps even more than many of us do. Will the hon. Gentleman explain what happened to the Liberal-SDP vote in the county elections? While it is true that compared with 1983 the Conservative vote collapsed, it is also true that Labour's vote went up by almost 10 per cent. Compared with 1983, the Liberal-SDP percentage share of the vote went down a little. Why did the Liberals and the SDP do worse in the shire county elections than in the general election?

Mr. Hughes

I thought that the hon. Gentleman was about to make a 100 per cent. correct point, but he tripped at the last fence. I anticipated his questions and have the answers to hand, supplied by the research department of the Library. Yes, he is right in saying that in the shire counties the Tory vote went down from 50.2 per cent. to 38.4 per cent. He is also right in saying that the Labour party vote went up from 21.4 per cent. to 30 per cent. As he said, that is a rise of nearly 10 per cent. But he is not right in saying that our share went down, because the figure is exactly the same, at 27.9 per cent.

I will not rise to the bait of saying why there are no colleagues of mine here from the other party in the alliance, except to say that I have no doubt that they trust me to argue the case for both parties because we are agreed on the subject. An interesting development on the political scene is that the hon. Gentleman's party now argues votes and percentages and not seats. I look forward to the natural consequence of that which we will no doubt have to discuss after the next general election.

Mr. Straw

Given that the hon. Gentleman's party subscribes to proportional representation, will he explain why on the hung council in Wiltshire, when the Conservative party proposed proportional representation for committees, the SDP and the Liberals categorically refused to accept it because it would have undermined their power?

Mr. Deputy Speaker (Mr. Ernest Armstrong)

If the hon. Gentleman follows that line, he will be getting away from the debate on the rate support grant. Let us get back to that subject.

Mr. Hughes

I will tell the hon. Gentleman later. I accept your stricture, Mr. Deputy Speaker. There is a very easy answer, but I shall deal with it in another way.

The debate has shown up the anomalies of the system by way of some very bizarre examples which I want to put in the context of the overall figures. The figures show that local authorities will overspend their targets this year by about £278 million. That is about 1.3 per cent., a relatively small amount. But it means that over £500,000 will be incurred by way of penalties lost to the local government budgets. That will affect a considerable number of local authorities. It will affect 19 out of 46 shire and metropolitan counties which will be penalised and will lose money, and 14 out of the 32 London boroughs, including, as I said to the Minister, four Tory-controlled boroughs. They would not incur the penalty if they honestly believed that they could get below the target, especially if they are seeking to uphold Tory policies on strict budgetary control.

Twenty-five out of 36 of the metropolitan districts will incur penalties, and of the other districts about 60 of all political species of authorities will be penalised because they have chosen to spend a certain amount of money. In their case, it is an overspend of about 3 per cent., but for that they will lose 12 per cent. of their block grant.

There are some very bizarre distortions. How can the Minister justify them? How can he justify a penalty of £17.7 million on an overspend of £10.1 million in Brent when surprisingly—and this redounds to the benefit of some of my constituents—in Harrow the penalty is £3 million on an overspend of £1.5 million and yet in Southwark there is less than half of that penalty, £1.4 million, on an overspend of £1.6 million? How can anyone justify a system of swings and roundabouts which penalises certain types of authority to such an enormous extent? As the Government know, it is not just the inner city authorities which suffer, although most of them suffer most. I hope that whatever system the Government come up with next week will recognise that with cuts in rate support grant, if they do not find substantial amounts of money for the inner cities in which the elderly are most concentrated and services the most run down, they will preside over a further decline in what used to be the power houses of the land.

The shire counties, too, are affected. As the hon. Member for Norwich, South pointed out again today, the present system revolves around special pleading. When the Government announced the figures last year there was a great baying from Tory Back Benchers from Warwickshire to the south-west asking the Government to let them off the hook. The Government did not oblige sufficiently and the Tories lost many seats as a result. We do not want another system geared to special pleading. We must have a system that treats everyone fairly.

Sadly, in the past year several authorities have played into the Government's hands. The hon. Member for Dulwich (Mr. Bowden) represents the southern and leafier end of my borough. Southwark is both rate capped and Labour controlled. That authority, with others, went through the process of arguing that it could not comply with the rate-capped limits and then eventually set a rate. It certainly came within the category to which the Minister referred. Intolerable scenes of violence and viciousness put horrendous pressure not just on elected members of the council but on members of the public who through much publicity had been invited to attend the rate-making meetings, of which I believe there were in the end about 10. Sadly, the Labour party in Southwark played into the Government's hands. Having cried wolf and said that it could not set a rate, the council eventually gave in. Other authorities did the same.

A leader in The Guardian a few weeks ago made the case for local authorities having more money and being able to argue the case for money with the Government without all the derogation and restrictions that now apply and without the Government being able to say that because a council cried wolf last year and then managed to make ends meet it will be penalised even more severely this year when the Government know that the authority has used up most of its reserves. The Guardian said: Yet in many ways the most culpable of the councillors are those who knew all along that the strategy"— the anti-rate-capping strategy— would fail, but who never said so in public, preferring to go along with it either for opportunist personal advancement or in order to set up a witch-hunt against more cautious and realistic Labour councillors and leaders. Into this category must be placed, for varying reasons, Mr. Ken Livingstone of the GLC, Mr. David Blunkett of Sheffield, Mrs. Margaret Hodge of Islington and Ms. Hilda Kean of Hackney. I would add to that list Mr. Tony Ritchie of Southwark.

The Guardian continues: Some of these councillors have done very nicely out of this game. Some have got their parliamentary nominations. Some will soon do so. Others, notably in the London boroughs where elections are due next year, are using the betrayal to launch a purge of councillors who voted to set rates. All of this has lots to do with careerism and lots to do with internal Labour politics. But it has precious little to do with either a council's responsibility to get the best deal for its local people, or with Labour's national need to present a politically credible image to voters who have previously deserted the party at election time". If the hon. Member for Liverpool, Walton (Mr. Heffer) catches your eye, Mr. Deputy Speaker, he may be able to confirm that the deputy leader of Liverpool city council and other members of that council wanted to set a rate of 20 per cent. but the city Labour party said that there must be only a 9 per cent. rate increase, resulting in enormous deficit budgeting. Liverpool clearly deserves a considerably greater grant-related expenditure assessment than it has, but it is financial suicide to bring about a reduction in grant of about four fifths by way of penalty. That is kamikaze politics. Many good, long-serving council officers have been ringing my colleagues and, no doubt, members of the Labour party in Liverpool saying that if that policy continues council officers will lose their jobs. Such a policy is folly indeed.

It is the duty of local authorities to argue against the Government but, more importantly, it is their duty to provide local services as efficiently, competently and munificently as possible. I hope that the lessons of the past year will have been learnt by both the Government and the Labour party. I hope that the Conservatives will never again lumber us with a system of targets that are clearly unattainable by most authorities, including Tory-controlled authorities. I hope, too, that the Labour party will not make a great song and dance about noncompliance purely for party political ends and cost ratepayers hundreds of thousands of pounds, only to give in eventually as it intended from the start.

On a day, which the Government will live to regret, when we have heard that the foolish and ill-conceived measure to abolish the GLC and the metropolitan counties has received Royal Assent, I have received a copy of an internal document from County hall. It is from the chair of the transport committee to Nick Lester of the Public Transport Campaign Unit. The letter, dated 28 June, refers to issue No. 2 of a newsletter on public transport in London put out by the GLC last month and entitled "LT in Exile". The letter requests "Dear Nick" to "See attached." The attached newsletter refers to a complaint that I made about the escalator at Rotherhithe tube station. The letter continues: Please avoid publicising Simon Hughes. In the past when he was invited to the wreath laying ceremony at 55 Broadway"— that was to do with the Government's demolition of London Transport— I was heavily criticised by Labour MPs and activists in the Bermondsey CLP. The writer concludes with his usual flourish: Yours for Socialism, Dave". He then adds the following postscript, just to make things clear: No blame. It's my fault for not proof reading it! I am sorry that the Labour party has to go to such lengths to avoid publicising me, but it does its own publicity no good when it helps the Government—on a policy that we should be united in opposing because the Government do not want to listen to the views of local authorities—by publicising its own folly instead of making it clear that the Government and their policies are primarily to blame. The sooner the system is changed—next week, we hope—the better.

Mr. Jack Thompson (Wansbeck)

On a point of order, Mr. Deputy Speaker. I seek your help and guidance on an important component of today's debate. My point of order concerns the accuracy of the information given in the report. In the table on page 27 a figure of £111,556,000 is given for Northumberland. I have checked today with the treasurer's department of Northumberland county council and I am informed that that figure is about £1 million too high. The treasurer's office checked with the Department of the Environment, which has admitted that the figure is too high and that it is the Department's error. If that is so, may we question any or all of the figures in the document, as they are important in terms of our contributions to the debate?

Mr. Deputy Speaker

That is not really a matter for me. The Minister has heard what the hon. Gentleman has said and will no doubt make appropriate comments at the end of the debate.

Dr. Cunningham

Further to that point of order, Mr. Deputy Speaker. This may not be a matter for you, but it is an important matter for the House. We are being asked to approve the report and the figures set out in it, but the Department itself has admitted that the figure for Northumberland county council is wrong. For all we know, other figures in the report might be wrong.

The Secretary of State for the Environment sent me a letter dated 11 July 1985 about the supplementary report for 1982–83 which was presented to the House and then withdrawn because it contained an error in respect of GRE for Dudley. In that letter the Secretary of State said: The extent of the error is minimal, but since I intend this Report to be the final one for 1982–83 … I have decided that the Report should be re-made and re-laid. The report was reprinted and relaid.

If what the Secretary of State described as "a minimal error" requires a procedure such as that, it cannot be right that the House should be asked to approve this report, which contains an error of about £1 million in respect of Northumberland county council. The fact that the error has come to light today leads us to question the validity of other figures in the report.

My hon. Friend the Member for Wansbeck (Mr. Thompson) has had the error confirmed by Northumberland county council, and the Department has agreed. Further consideration of the report should not take place and the Minister should withdraw it, have the error corrected, have other figures checked and re-present it.

Mr. Kenneth Baker

The hon. Gentleman is right about the final report for 1982–83 and the error concerning Dudley. As we had hoped that it would be the final report, we thought it right to withdraw it and table another one, which was considered by the Joint Committee on Statutory Instruments this morning. As for the 1985–86 report, if there is an error concerning Northumberland, I am glad to say that I have been advised that there is a procedure which allows it to be taken into account. The hon. Gentleman knows that there is a series of reports and there will be a second supplementary report later this year. In that case, the error, if it is an error, can be corrected. The point is that Northumberland will not suffer.

Mr. Jack Thompson

Further to the point of order, Mr. Deputy Speaker. Today's debate is based on the figures presented to us. The £1 million in respect of Northumberland will colour my attitude.

Mr. Cowans

Further to the point of order, Mr. Deputy Speaker. The Minister for Local Government said that he had been advised. The House is entitled to know when he was advised. One alteration to one set of figures has a knock-on effect on all the other figures. I do not know how anybody can debate the report when every figure in it will be altered by that knock-on effect as a result of this efficient Department getting it wrong by one million quid. These are the people who are talking about local authorities. Surely the Minister will have the courage to say, "I am wrong. We will adjourn the debate until we get it right." Perhaps he will acknowledge that the Department is not as efficient as the local authorities it is trying to destroy.

Mr. Simon Hughes

Further to the point of order, Mr. Deputy Speaker. We are being asked to agree the determination of certain figures for a list of authorities of which Northumberland is one. The Minister cannot say that he will make an adjustment, because, if a figure is wrong, it should not be in the report. Only a few weeks ago the High Court found that there had been an incorrect figure in regard to Hammersmith and Fulham and quashed it. If there is an incorrect figure in the report, it is likely that the matter will have to go back to court, because we cannot undo what we do if we approve a figure today. We could deal with Northumberland later in some way which the Minister might think of, but we should not be asked to vote when there is a risk of the court finding our action invalid.

Mr. Reg Freeson (Brent, East)

Further to the point of order, Mr. Deputy Speaker. If the Minister is unwilling to act, we need your guidance. The Minister said that Northumberland will not suffer because the figures can be adjusted in a later submission. No doubt the same argument could be applied—it would be by him—if there were queries on other figures. We might learn of such figures later. It is good if Northumberland, or any other authority, will not suffer, but this is an important matter for the House. The House is being asked to approve a report. If it is not correct, the House cannot endorse it. It does not matter whether other queries might emerge. We cannot be asked to vote on inaccurate figures.

Dr. Cunningham

Further to the point of order, Mr. Deputy Speaker. I have submitted that there is an error in the report. The Minister was equivocal and said that there may be an error. Our information is that there is undoubtedly at least one error in respect of Northumberland county council's GRE. My hon. Friends have said that that error has implications for other figures in the report and for other authorities. It cannot be in order for the House to be asked to vote on and to approve a report which we know contains at least one error.

Several choices are available. You could suspend the sitting, Mr. Deputy Speaker. to give Ministers time to sort this mess out and to advise the House of their intentions. The Minister could say now that he intends to withdraw the report and retable it later. I strongly submit that we cannot vote on the matter, as that would not be in order.

Mr. Deputy Speaker

These are important matters and I have listened carefully, but I cannot adjudicate on the accuracy of figures presented in the report. It is not a matter for me. The arguments being used are arguments for voting against the report.

Mr. Cowans

On a point of order, Mr. Deputy Speaker. This is an important matter. May we have an assurance from the Minister that all of the other figures are correct and will not be amended in any way if we continue to debate the report? So far, we have had no assurances. We know that one figure is wrong. It was discovered, but the House was not informed. Are any more wrong? Have the figures been checked? The error must colour the whole of the report. Surely the Minister will stand up and say whether his report is right or wrong.

Mr. Deputy Speaker

Order. The hon. Gentleman is asking for assurances from the Minister. With great respect, it is not a matter for the Chair or a point of order.

Dr. Cunningham

Further to that point of order, Mr. Deputy Speaker. I must press the point, because it is a matter for the House. You say that the matter is not for the Chair, but I cannot see how a submission on a point of order that the House is being asked to approve a document which is in error is not a matter for the Chair. Surely it is a matter for the order of business in the House. The Minister did not refute our submission about an error in respect of the figure for Northumberland. Indeed, he was equivocal about it. Given the array of senior officials present to advise him, I cannot believe that he does not know that there is an error in the report. I put it to both you and the Minister that the debate should be adjourned to give the Government an opportunity to consider their position in the matter, and the Minister an opportunity immediately to seek the leave of the House to make a statement about the facts and to withdraw the report, if it is in error, as I believe it is.

Mr. Kenneth Baker

Further to that point of order, Mr. Deputy Speaker. I support entirely what you have said. I understand that in the past the House has debated supplementary reports of this nature when mistakes have been discovered. There is a means by which, under the procedure on supplementary reports, such mistakes can be corrected. If there has been a miscalculation for Northumberland, I assure the House that it will be taken into account in the next supplementary report. I hope that the House will now be able to proceed with the debate.

Mr. Terry Fields (Liverpool, Broadgreen)

Further to that point of order, Mr. Deputy Speaker. I implore you to consider the matter far beyond parliamentary activity. As a result of decisions taken here today, Liverpool city councillors—

Mr. Deputy Speaker

Order. The hon. Gentleman must put his point of order to me.

Mr. Cowans

Further to that point of order, Mr. Deputy Speaker. For the protection of hon. Members, would you accept a motion, That further consideration of the report be adjourned until such a time as the Secretary of State can substantiate the correctness of the other figures?

Mr. Deputy Speaker

Order. I cannot accept such a motion. Clearly, the hon. Gentleman has been in touch with his authority, but I cannot adjudicate on the accuracy of the figures. I understand that it is possible in supplementary reports to correct figures, and I cannot accept the motion. Therefore, we should proceed with the debate and allow hon. Members to make their points.

Mr. Patrick Ground (Feltham and Heston)

The hon. Member for Southwark and Bermondsey (Mr. Hughes) accepted the need for at least some national control of local government expenditure. He criticised the method being used by the Government, but did not say how he would change the system or what he would put in its place. I was disappointed that he did not acknowledge the benefits to the people of Southwark arising from the degree of national control of local government expenditure that has been derived from legislation, or some of the benefits mentioned by my hon. Friend the Member for Dulwich (Mr. Bowden).

One of the functions of the 1985–86 report, as set out in the first paragraph, is to make changes to the grant-related assessment of local authorities so that they are based on actual capital allocations rather than estimated allocations. Will the Minister look at the machinery for making those changes, and introduce some means of mitigating their effect when an authority is placed in an awkward position through no fault of its own?

Both the Conservative minority and the Labour majority in the Hounslow authority are disturbed about the way in which the changes have been made in the report. As I understand it, two groups of officials at the Department of the Environment deal with local authority capital expenditure. One group consists only of Department of the Environment officials and is concerned with capital expenditure as part of its work on calculating the rate support grant. The second group has contact with other Government Departments, deals with bids for local authority capital expenditure, and is responsible for allocating the sums resolved by the Government in the PESC White Paper.

In December 1984 both groups made recommendations to the Government, and the Government made two announcements within about a week of each other. The first was about the rate support grant settlement, and the second was about capital allocations. On the basis of those announcements the London borough of Hounslow and other authorities made their budgets and rates. Two months later in June Hounslow was informed that its grant was to be reduced by no less than £1.1 million because of the difference between the assumptions made in the rate support grant settlement of 11 December 1984 and the capital allocations which the Department of the Environment announced about a week later. Having made its rate on the basis of the Government announcement, the local authority is in an extremely awkward position. The sum of £1.1 million is considerable for an authority where the product of a penny rate is £490,000. The local authority could not have known between December and June that the two bodies from the Department of the Environment were making different assumptions on capital expenditure for Hounslow.

First, there is room for some improvement in communications between those two groups of officials. That would undoubtedly be helped if in future the Government made greater efforts to make the necessary decisions at the appropriate time so that the officials could operate as near as possible on the same basis. Secondly, some warning should be given to local authorities when it is discovered—it must be known within the Deparrment—that different assumptions are being made for rate support grant calculations and capital allocations. Authorities would not then be put in such an awkward position over such a substantial sum. Thirdly, there should be a temporary safety net for authorities placed in such a position, whereby the loss of grant should be limited in any one year to the product of a penny rate. On page 8 in paragraph 20 of the Rate Support Grant Supplementary Report (England) 1982/83 it states The Secretary of State is concerned that these changes should not lead to severe mid-year grant losses. In that case, he imposed a temporary safety net such as I have described.

I hope that the Secretary of State is still anxious that the changes in this report should not lead to severe mid-year grant losses. I urge him to follow the precedent set for the 1982–83 report with regard to the London borough of Hounslow, which I believe is one of the authorities worst affected by the anomaly.

7.40 pm
Mr. Eric S. Heffer (Liverpool, Walton)

The Minister referred in his opening statement to the position in Liverpool, and suggested that the city council is not acting responsibly. I and my Labour colleagues from Liverpool believe that the council is acting perfectly responsibly. As I said earlier, the target for Liverpool is £220 million. If the city council kept to that target, it would be forced to lay off up to 5,000 or 6,000 workers. It would also be forced to cut local services. Liverpool city councillors, the people of Liverpool and the work force there believe that that is unacceptable.

Merseyside has one of the highest concentrated unemployment levels in the country. Most of our constituents suffer from unemployment that is unheard of south of Birmingham. In one or two constituencies, unemployment has reached between 40 and 50 per cent., and in most of them it stands at between 27 and 30 per cent. Our people are suffering terrible hardship. The majority of people who live on some estates exist on benefits of one sort or another. Those who wish to know about misery, poverty, unemployment and the conditions in which people must live under this Government should come to Liverpool to see for themselves.

During the past few years, 60 per cent. of the industrial base in Liverpool has disappeared, but not because the workers are lazy or wish to live on charity, as one hon. Member had the audacity to say the other day. On the contrary, they are hard-working people who are crying out for employment so that they can lead dignified lives. That is the background to the stand taken by Liverpool city councillors.

The villains of the piece are not the city councillors, who now face possible bankruptcy and disqualification. The villains are the Government and those who accept the policies and ideas of the Prime Minister and her Ministers.

I draw to the attention of the House the report of the Comptroller and Auditor-General, which was ordered by the House to be printed on 2 April 1985. At paragraph 4.65 on page 24, it states in relation to the rate support grant: Under the previous RSG system the proportion of total relevant expenditure met by grant had remained constant at 61 per cent. for a number of years up to 1980–81. That is true.

Local authorities in areas such as Liverpool used to receive a decent rate support grant. However, the previous Liberal and Tory coalition council in Liverpool did not increase the rates following the improved rate support grant that it received from the Labour Government. It kept the rates down, and boasted about the fact throughout the city. It did not improve services, which meant that when the Labour party took power last year and wished to improve the services it immediately ran into difficulties with the Government's penalties. Labour councillors are called villains, but the real villains are Ministers and the previous Liberal-Tory administration that controlled Liverpool.

The report from the Comptroller and Auditor-General also states: The reduction from this figure to the latest estimate of 48.3 per cent. for 1984–85 means that the proportion left to be borne by ratepayers has risen from 39 per cent. to 51.7 per cent., an increase of almost a third or about £3 billion in cash terms for 1984–85. Over the same period the average rate poundages for domestic ratepayers rose from 100.1p to 160.1p, an increase of 60 per cent., and for non-domestic ratepayers from 117.5p to 178.7p, an increase of 52 per cent. The report makes this important point: These increases can therefore be attributed more to the reduction in the proportion of Government grant than to increases in local authority spending: and unless and until the level of central government support is stabilised again it will be difficult for local electors to distinguish how far changes in rates should be attributed to the actions of the local authorities themselves, except in those few cases where the entitlement to block grant has already been wholly eliminated. Although the Government have said for the past few years that local authorities have placed increased burdens on their ratepayers by spending too much, the report of the Comptroller and Auditor-General shows clearly that the problems have arisen because of Government policy. The Minister cannot say that that is untrue. The Government talk about the terrible wickedness of local authorities, but they are in a Catch 22 situation. They wish to improve services to the community and they must increase rates slightly to do so. Then they are accused of overspending. They are not overspending; they have simply been placed in that position by the Government.

Liverpool city councillors have been unable to set a so-called legal budget because of the Government's policies. I have been given some figures by the council. Its committees have worked out that, to maintain existing services, and taking into consideration inflation and last year's deficit of £6 million, which it must meet, it must spend £258,500,000. That means an immediate penalty on that council of £63 million. The rate requirement would be £204 million, and the rate increase in the city would be 75.7 per cent. With the additional payments that would have to be made, the increase in rates could eventually be as much as 130 per cent. Even some of the employers' representatives who came to see us recently are constantly arguing that the burden of rates is too high. In their own way, they have made representations to the Government about it.

Can we expect councillors to accept that situation? I do not think that we can, because they were elected on a programme. Two years ago they went to the people of Liverpool and promised to defend existing city council jobs and services, to create additional jobs and to improve services. They have created additional jobs in the construction industry to build houses for the people. Council houses had not been built by the local authority for years. If the councillors accepted Government policy, that activity would have to cease.

The councillors made it clear that they would build houses for rent, and end the threat of privatisation of the city council services. They originally went to the public on that programme. Last year they went to the public again on the same programme and they won. The choice before the city councillors is either to carry out their local mandate to the people of Liverpool or to be dictated to by central Government.

The Government are dictating to local authorities what they should and should not do. We have a centralised, authoritarian force developing in Britain. The councillors have said no to that. There can either be genuine local democracy or centralised control by the Government. The Government are always talking about freedom and saying that they believe in freedom of choice. What choice have the local authority and the local people in those circumstances?

On 26 June, the national executive committee of the Labour party, of which I am proud to be a member, made a lengthy statement on the crisis in local government. It said: Local government is now in deep crisis. The Tory Government have progressively cut the grant available to local councils. The national executive also said: Local authorities everywhere are being ensnared by Tory legislation. And the Tories are now prepared to use the District Auditor to crush those local authorities determined to defend their local communities. Liverpool councillors are faced with action by the district auditor, not at this stage on the basis of fixing a deficit budget but on the basis of delaying the setting of a rate. Many local authorities as well as Liverpool and Lambeth have delayed the setting of a rate. They could all be faced with the same action by the district auditors, but Liverpool and Lambeth have been picked out so that the Government can say that those local authorities are led by wicked, Left-wing, loony militants, and so on. That is the Government's line. They know that it is not true, but they want to do their damnedest to make the actions of the Liverpool and Lambeth councillors appear to be irresponsible when those councillors are fighting responsibly for the interests of their local people.

The national executive committee of the Labour party said that it supports the Labour councillors, and calls upon all sections of the Party to offer maximum support to those councillors, in Liverpool, Lambeth, Edinburgh"— the councillors in Edinburgh are faced with the same problems, arising from legislation operated against them in Scotland— and other authorities, in seeking to prevent the threatened disqualification and surcharge". Yesterday the Liverpool Labour Members of Parliament met the Secretary of State. We told him that the Government should give advice to the district auditors. If the Government were intelligent and did not want a confrontation, they could advise the district auditors to have a further look at the problem and see what could be done to overcome it without confrontation.

The Liverpool city council has asked for two meetings so that it can discuss the urban aid programme and rates. I agree with the hon. Member for Southwark and Bermondsey (Mr. Hughes) that we shall soon be hearing of a change in policy in regard to penalties. If there is to be such a change, let us have it now, rather than continuing to put the councillors into a difficult position. The Ministers could discuss the urban aid programme, even if at this stage they did not want to discuss rates. They could discuss in detail what could be done through the city partnership schemes and the urban aid programme to help Liverpool.

Our Liverpool councillors are the victims of legislation that has existed for far too long. When we have a Labour Government, the legislation that is putting councillors into such difficulties must be repealed once and for all. Good honest people must not be put in the position in which councillors at Clay Cross, Camden and St. Pancras found themselves in the past.

In the past, the Government have brought in retrospective legislation on various issues. If councillors are disqualified and bankrupted as a result of Government action, I hope that the next Labour Government will introduce retrospective legislation to deal with those councillors. They are not criminals or people who wish to break the law, but they are being forced to do so by Government policy.

The point has been made clearly by local authorities and by the Association of Metropolitan Authorities in the briefing that I am sure we have all received. I imagine that all hon. Members have received a copy. It states: The penalties are so severe that the 'marginal grant rates— that is the cost to the ratepayers of each additional £1 of spending—are £4.54 in Hounslow, £4.22 in the West Midlands, £3.36 in Birmingham and £3.04 in Liverpool. That AMA believes that that is entirely wrong, and I agree. Even at this late hour, I hope that the Government will have second thoughts. If they do not, the full responsibility for the uneasy, unhappy and difficult summer that might lie ahead for them and our people will be fully their responsibility and will lie fully and squarely on their shoulders. The fault will lie with the Government and not with the honest, decent and courageous councillors of Liverpool who are fighting for those who elected them.

8 pm

Mr. Derek Spencer (Leicester, South)

If anyone is minded to accept the advice of the hon. Member for Liverpool, Walton (Mr. Heffer) and journey north to Liverpool, I invite him first to call in at Leicester, which, unlike Liverpool, is a city on the up and up. It is a city of enterprise in which industry and small businesses form a significant part of the economy.

Leicester has done well out of the Conservative Government since 1979. The rate support grant for this year amounts to over £12 million and the inner urban grant amounts to about £5 million, a total of more than £17 million. That is to be compared and contrasted with the sum that is raised locally in rates, which is £10 million.

It is clear that a large part of Leicester is not funded by Leicester: it is funded by the taxpayer. Who will speak for the taxpayer who has contributed to the rate support grant this year, which is £2.5 million more this year than last? Who will speak for the taxpayer who subscribes to the inner area grant? If that taxpayer is to have a voice, it must be one that comes from right hon. and hon. Members.

The rate-capping exercise which we have witnessed at first hand in Leicester in the past few months has produced three concrete benefits for my constituents. First, it has produced lower rates. If the local Labour party had had its way the rates bill that my constituents would have had to meet this year would have been about twice that which they were eventually set. The second advantage that my constituents will enjoy is a higher rate support grant. The third advantage is a substantial sum for the inner area programme. The amount which Leicester receives for that programme is almost a quarter of the grant-related expenditure.

When I recite these facts to less happy boroughs, they are amazed that we can have such a generous extra subscription from the taxpayer to the city. I can say of behalf of the citizens of Leicester, South that for the most part their money is put to good use in what is a city of enterprise. Indeed, it is evident that it is not a city of gloom and doom. If visitors to Leicester travel on to Liverpool and witness how things are conducted there, I think that they will be able to draw their own conclusions on where they should finally come to rest.

Mr. Powley

Does my hon. and learned Friend recall the extraordinary statements that were made by some local authorities before the Rates Bill, as it then was, became law? They were saying that the Bill, if enacted, would result in wholesale redundancies, the decimation of services and chaos in the streets. Has my hon. and learned Friend seen any evidence of such happenings in his area? The predictions have not come to pass in the area that I represent. Perhaps my hon. and learned Friend will comment upon that.

Mr. Spencer

I shall accept my hon. Friend's invitation and deal with that issue out of order. I can rely on none other than the chief of public relations of the city council, who is not a politician. He is an officer who is paid a salary from the public purse, having been hired by the Labour local authority to advance the anti-rate-capping propaganda campaign. He announced recently that the authority had got it wrong. He acknowledged that many of the claims made in the rate-capping propaganda campaign have not been borne out in the slightest. He and his colleagues were prevailed upon by their political masters to make various claims which, to use his words, with the benefit of hindsight have not been borne out by events. I am sure that the same claims were being made throughout the country by other rate-capped boroughs. I have a copy of the propaganda literature which was circulated in Leicester and it is almost identical to that which was to be found wherever else I went. The same literature was being circulated in Leicester, Camden, Southwark and Liverpool. Its message was virtually the same as that which we received from the hon. Member for Walton. We were told: The Government want to slash services and jobs by over a third. This means a cut of £10 million plus. Cuts of this savagery would affect the services of the city council. For example. housing—reduction in the inner city housing improvement programme. Recreation—closure of three sports halls and two swimming pools. The cancellation of the Leicestershire show and the closure of the Haymarket and the Phoenix. Withdrawal of support for Bradgate Park. Works—severe reduction in refuse collection and street cleaning. Planning—long delays in planning applications. Environmental health—abolish the service for dealing with rats and mice. Employment—abolish the Leicester promotion campaign. If we examine the reality against the promise, what do we find? Do we find that Leicester has been converted into a stinking heap where refuse is piled up in the streets? Do we find that no work is being done on council housing? Do we find that the swimming pools are empty? Do we find that expenditure on the parks has been cut and that the grass is growing knee deep? We find not one of those symptoms. Indeed, we find, as the Labour council has been forced to admit, that all these services are going ahead in much the same way as they were before the anti-rate-capping campaign began.

There is a two-faced monster in many town halls. One face is speaking inwards telling the truth and one is speaking outwards putting forward a pack of distorted nonsense. The pack of distorted nonsense is along the lines that I have just outlined, but the reality is that the council has been able to discharge its functions without laying off one member of staff.

My hon. Friend the Member for Norwich, South (Mr. Powley) may be interested to know that far from a reduction in staff under rate capping, as my hon. Friend the Member for Leicester, East (Mr. Bruinvels) will be able to confirm, there has been a significant increase, month by month, since rate capping came into operation. At one and the same time, we have been able to have rate capping and the city council has been able to discharge the promises to continue taking more people on to the staff that it made earlier.

We have made a start and rate capping has brought benefits to my constituents. I urge the Government not to give up now just because there has been some squealing in one or two town halls and blood on a few municipal banisters. Now is not the time for the Government to become squeamish, because the blood in Leicester was the blood of the Labour party taking to its heels and running away from its commitment to break the law. As late as 14 February, the leader of the city council said in the Labour newspapers: We are firmly committed as a group to non-compliance. When it came to it, at the first whiff of gunfire the Labour party turned and fled. It fixed a rate long before the time limit had expired. It had to send to each ratepayer a certificate of compliance with the Rates Act 1984, which, in its case, was a certificate that it had egg all over its face.

The lesson of rate capping in Leicester is that, once deceptions are practised, the skein of the deception envelops those who seek to practise it.

Although it was possible to fix a rate in Leicester within the time available, with a similar background, similar propaganda and a similar commitment to non-compliance in Camden, where I served five years before the mast before I came to this place, my colleagues found that the Labour party there was not willing to set a rate.

I pay tribute to Tony Kerpel and others of my former colleagues on Camden council who had to withstand a hail of spittle, intimidation and threats at council meeting after council meeting through April, May and into June, not just at the hands of people living in Camden, but at the hands of those bussed in from Lambeth and elsewhere on a so-called battle bus. Is that the responsibility of local government about which some Opposition Members have spoken? Is that local government discharging its obligations to the people who elected those councillors to sit in the town halls on their behalf? I defy anyone to say that that is a proper discharge of is responsibilities.

It was not surprising when Councillor Phil Turner, leader of the Camden Labour party, sent a letter to Camden ratepayers on 3 April saying that the council found it impossible at that time to set a rate. If it found it impossible to set a rate then, am I now justified in saying that I find it impossible to pay it? I should be using words in the way that he sought to do if I were to seek to say that now.

Eventually, on 8 June or thereabouts, Camden council fixed a rate. On 13 June, out went another letter from Councillor Turner saying that on 8 June the council set a rate. It did, but that letter draws a veil over the way in which it was done. It was done through a combination of a few defectors from the Labour party and the Tory party discharging their duty to fix a rate. One has eventually been fixed within the legal boundary.

A loss must have been caused to Camden ratepayers by the late fixing of a rate. It has been said that it would be terrible if, in such circumstances, the district auditor were to pursue the councillors. I say that it would be a dereliction of duty if a public servant such as the district auditor did not pursue them. I, with others, intend to see that the course that I set in motion after the settlement of the dirty jobs strike in Camden on terms that were adverse to the ratepayers, which was eventually referred to the High Court by the district auditor, Mr. Pickell, turns out to be not an isolated case, because, for justice to be done to the ratepayers, matters cannot be left as they are.

If one could say that the anti-rate-capping campaign fought by some Left-wing councils, as well as heightening public perception of the importance of local government—I believe that it has—also informed it better about the true facts of local government, I should have been prepared to chip in as a ratepayer in Camden and Leicester—in the way that I have been obliged to—for that campaign. But, unfortunately, as the public relations officer in Leicester was bound to admit, it has not been information that has been fed to the public; it has been a great deal of misinformation.

Such truth as has emerged from that sorry story has emerged from Tory councillors and Tory Members of Parliament speaking at meetings and trying to put the truth in the face of a hailstorm of misrepresentation. We have done that willingly. We believe that the cause is just and we wish to see the Government go further.

8.20 pm
Mr. Guy Barnett (Greenwich)

The hon. and learned Member for Leicester, South (Mr. Spencer) has misunderstood, if not misrepresented, the motives that led many Labour councillors, decent and sincere people, to do what they did in the face of the appalling dilemma with which they were confronted. They knew that they had a responsibility to some of the most vulnerable members of their communities, but they were being prevented from discharging that responsibility by the actions perpetrated by the Government.

In the last debate that we had on this subject, on the Rate Limitation (Prescribed Maximum) Order, on 25 February I accused the Secretary of State and his Ministers of injustice and vindictiveness towards the London borough of Greenwich. I made that charge on the basis of evidence that in my borough, and no doubt in many other local authorities, as is apparent from the debate, the GREA system is arbitrary in its assessment of need and unjust in its effect on grants.

Greenwich is an inner-city London borough with all the problems associated therewith—high unemployment, decaying industry, the need, and the statutory duty, to spend substantial sums of money on maintaining and improving the council's housing stock, and severe social problems. The Government have manipulated the rate support grant system in a way that is unfair to inner cities in general, and London authorities in particular.

Greenwich has been singled out for particularly harsh and unjust treatment. Since 1979, £119 million in block grant and £85 million in housing subsidy have been withheld or withdrawn. This is at a time when the council is faced with increasing demands for its services as a result of demographic and social factors and, in particular, as a result of Government policy.

For example, the increased unemployment and reduced welfare benefits mean that more people living at or below the poverty line make increased demands on council services, housing services and leisure services. Cuts in the NHS lead to a greater demand on the council's social services. The Government, while consistently increasing their expenditure, as has been pointed out, have reduced financial support for local authorities. In 1979, about half of Greenwich's spending was met from taxes. In 1984–85, it was less than a quarter. As the Audit Commission has noted, the Government, and not local authorities, have been responsible for the increase in rates in recent years. In addition, the Government withdrawal of housing subsidy has meant increased rents for tenants.

Greenwich residents are being made to pay higher rates than they should as a result of the Government diverting money paid in taxes to other purposes, rather than returning it to local authorities through the block grant system to pay for local services and to reduce rates. The loss of block grant and subsidies for Greenwich since 1979 is £204 million, and this figure is very much higher if the grant losses of the precepting authorities—the GLC and ILEA—are included. As the House knows, ILEA is the only education authority in the country that does not receive block grant.

Government policy has forced up rates in Greenwich and has restricted the ability of the council to develop essential services to meet the increased needs of Greenwich residents.

The use of GREAs to distribute block grant was introduced by the Government with the stated objective of giving local authorities enough resources to provide broadly similar standards of service while ensuring that ratepayers were being charged roughly the same rate in the pound. GREAs are claimed by Government to be a measure of the expenditure that an authority needs to spend if the same standard of service is to be provided throughout the country. This is nonsense, and I expect an announcement shortly showing the extent to which the Government know that that is nonsense.

GREAs are not a reliable basis for comparing relative spending levels of different authorities. They have become successively less comprehensible and increasingly unpredictable. Moreover, they are biased, inflexible and based on out-of-date and inadequate data. They are based on mathematical formulas that do not take into account unemployment or urban deprivation. Housing GREAs do not take into account local needs and conditions. Social services GREAs take no account of population changes or demands caused by legislation.

The GREAs for housing and social services were criticised in a recent report by the Audit Commission which stressed that inner city authorities such as Greenwich were suffering because of faulty GREA calculation by the Government. A central failing of GREA calculation, identified by the Audit Commission, is the continued use of inaccurate data. In its recent report on the block grant system, the Audit Commission quotes the old adage, "garbage in equals garbage out" and states that inadequate information in calculating GREAs leads to "serious distortions" to the grant distribution process.

Inner London boroughs are unfairly penalised by the present system, and Greenwich is treated worst of all, for in Greenwich the GREA per head of population is the lowest in inner London. I can illustrate this by reference to social services. Greenwich's social services committee commissioned Tony Travers, research fellow at the North-East London polytechnic, to undertake an independent examination of the Greenwich social services component of GREA. I shall set out his main findings.

First, Greenwich has a relatively low social services GREA compared with broadly similar authorities arid, per head of population, it has been growing less rapidly than social services GREA for inner London as a whole. Secondly, Greenwich has a social services GREA that falls short of its spending by a wide margin. Its GREA is measured in a systematically unfair way. Thirdly, the Greenwich system is particularly disadvantageous compared with that of other London boroughs, which are treated badly enough anyway. This is almost certainly because the borough has, perhaps alone among the other inner city authorities, an increasing population.

In addition, the population numbers of the very young, people over pensionable age and those who are mentally ill or handicapped are relatively high in Greenwich. Social isolation, particularly among the elderly, creates a disproportionate need for social services in Greenwich. Despite this, the Greenwich social services GREA per head has risen less rapidly than elsewhere in inner London. This is only one example of the unfairness of the GREA for Greenwich. Similar examples can be found in respect of highways, housing and libraries.

On top of the block grant system is the wholly arbitrary and subjective system of targets and penalties. Greenwich has been penalised in recent years for spending above a target set by the Government. Although the High Court ruled in 1983 that Greenwich's action in spending above target to provide essential services was lawful, in 1984–85 the Government fined the Greenwich ratepayer approximately £1 for every £1 of expenditure that was 3 per cent. above the arbitrary target set by the Government. The unfairness of this is emphasised when the Government consistently add to the responsibilities of local authorities and require them to incur additional expenditure, which the Government then penalise them for incurring.

I can give some examples of this behaviour, although I make no comment about the value of the legislation. In social services, the appointment of guardians ad litem under the Children Act, implementation of the Mental Health Act 1983, the Criminal Justice Act 1982 and the Registered Homes Act 1984 all add to the statutory responsibilities of local authorities.

The same is true in housing. There has also been the transfer of responsibility for the administration of housing benefit from the Department of Health and Social Security to local authorities. There is the Local Government, Planning and Land Act 1980, which, in an effort to encourage privatisation and damage direct labour teams, has substantially increased administrative tendering costs to local authorities. New duties have been imposed on local authorities under consumer protection and environmental health legislation. I could give further examples of burdens that are placed on local authorities. Little or no recognition is given of those extra burdens in the way in which the Government treat them financially.

Therefore, at a time when the Government are requiring local authorities—and my local authority in particular—to do more, they are steadily reducing the money available. That I believe to be logically indefensible and hypocritical. It needs to be stressed that the legislation to which I referred is new legislation, imposing additional duties. Because of social changes, increasing unemployment and Government cuts in other public services, the demand for existing services has increased, yet central Government are determined to reduce money available to Greenwich to provide those essential services.

The Government have made no attempt whatever to answer the charges that I made in the House on 25 February. Either the Secretary of State does not care about the situation in Greenwich or he is too embarrassed to admit the faults in the lunatic system that he is currently operating. The Secretary of State, or the Minister for Local Government, has a responsibility sooner or later to come clean and admit that the system that he is operating is unjust to local authorities such as mine, and often highly damaging to the most vulnerable sections of the community who depend upon the delivery of services by those local authorities.

8.31 pm
Mr. Roy Galley (Halifax)

There is one important point that I should like to raise about the supplementary report for 1982–83, but in the overall context of some general remarks about local government policy.

It is now nearly 10 years since a Labour Secretary of State said to local authorities, "The party is over," and that unrestrained local authority expenditure would have to be controlled. There have been considerable advantages from Government policies in recent years in terms of better management of local authority resources. The more sensible authorities have accepted the coaxing towards that better management, whereas more rigorous measures have had to be applied to others.

I pay tribute to the management of my local authority of Calderdale for the way in which it has run our services, with no reduction, and within a tight financial budget. It has used imaginative processes to do so. It is surprising that many local councils have not turned to more vigorous attempts at improving their management techniques. Throughout the country we have seen many examples of where, on certain budgets, by the tendering exercise and by contracting out services—sometimes not even by contracting out, but by the practice of tendering—there have been savings of 10, 20, and even 30 per cent. It seems unfortunate that those exercises have not been undertaken by more local authorities. Those authorities have preferred to stick to their tired old ideology rather than release resources which could be given back to the ratepayer or provide better services for the people whom they represent.

There are many ways in which the private and voluntary sectors, in co-operation with the public sector, can work' together to provide services at a reduced cost to our ratepayers. If, as has happened with the encouragement of more sensible management, certain authorities do not carry out policies that are to the advantage of their ratepayers, it must be for the Government to say that they will be compelled to apply such policies. In the absence of any evidence that some local authorities will be sensible, I hope that my right hon. Friend the Secretary of State will say in due course that there will be tough measures to compel local authorities to put out to tender a wide variety of services.

Mr. Bill Michie (Sheffield, Heeley)

There may be some logic in what the hon. Gentleman is saying, but does he agree that the Government should insist that the public works departments, the direct labour organisations in local authorities, should be able to tender in the private sector, as well as the private sector tendering in the public sector?

Mr. Galley

I do not agree with the hon. Gentleman. That is an entirely different debate. There is no reason why the public sector should go into operation as a commercial company. It is not there to run commercial operations. It is there to give the best services that the ratepayers require at the least cost.

As my hon. and learned Friend the Member for Leicester, South (Mr. Spencer) said, the important factor is that in so many instances services have not been reduced in any way. Complaints arise from time to time about local authority budgets. It is remarkable that whenever local councillors have a pet scheme which they want to implement, somehow or other they can find the money to do so. They will take money for their pet schemes from other projects and then say that essential services cannot be provided because of Government policies.

I take as an example the way in which a series of ill-advised traffic management schemes in Halifax have led to the strangling of the town centre. Resources which should have been available for highway maintenance elsewhere have been denied. More importantly, larger sums of money have been used increasingly for overtly political expenditure by local authorities. I shall keep to West Yorkshire in my examples, as I am familiar with it. In opposing Government legislation for the abolition of metropolitan county councils, West Yorkshire county council spent nearly £600,000 of ratepayers' money, without a by your leave. That money should have been spent on providing services for the people whom the council represents, but it was used for party political propaganda. The council also recently diverted money to a campaign against the Transport Bill.

Leeds city council spent over £100,000 in opposing rate-capping legislation. There are many other smaller examples of purely party political use of ratepayers' money. Money is raised from every ratepayer for the services that ratepayers want, yet it is used for purely party political propaganda. If political parties wish to put forward a particular point of view, they should raise their own money to do so, and there should not be a precept upon the ratepayer.

There is an increasing use of public funds to encourage the Campaign for Nuclear Disarmament. There has been the appointment in Leeds of peace officers and the continuing development of councils' ludicrous nuclear-free zone policies, the production of leaflets, the financing of seminars, and the establishment of peace gardens. Throughout West Yorkshire such activities are increasingly using sums of money which should be providing proper services for the people of the area. I refer also to the "great" Liberation Festival in Bradford, when substantial funds were used to support and enhance several Socialist campaigns, such as the Troops Out movement and the El Salvador solidarity campaign.

I hope that in the next Session of Parliament my right hon. and hon. Friends will present to the House legislation banning the use of ratepayers' money for party political propaganda. There will be problems of definition, but I have no doubt that by using the Independent Broadcasting Authority's code of practice on advertising, which bans from advertising any overt political material, it will be possible to enshrine that provision in legislation.

The supplementary report for 1982–83 makes several corrections to the rate support grant settlement that had previously been agreed. I understand that one correction has not been made. It appears that the Department of the Environment made an error in 1982–83 in the allocation of the non-housing revenue GREA. That error resulted in additional payments being made to London authorities and insufficient money being made available to certain other authorities, including my metropolitan borough of Calderdale. As a result, the Calderdale authority lost £116,000.

That loss resulted, not from any over-spending or inefficiency on the part of the council, but from an error by the Department, and the report makes no attempt to correct that mistake. As the error has been known about for some time, we should be told why the position has not been corrected.

During this year's budgetary exercise the Calderdale budget was set on the basis of perceived GREA rules, and after the exercise was completed the amount available to the local authority by way of grant was about £300,000 less than had been anticipated. It is understood and accepted as part of the game that rule changes may happen after budgets have been set, although that presents difficulties for local authorities. It is hard to swallow the fact that apparently the Department of the Environment can make a mistake—a mistake to which Calderdale council had in no way contributed—and the local authority is penalised as a result. If the Department had not made that error, the council would be £116,000 better off.

My hon. Friend the Minister may say that it is a relatively trivial matter. To Calderdale, a small authority, it is not trivial. That money could have been spent wisely and, with the good management that we have in Calderdale, it would have been spent to the advantage of the local people. I urge the Minister to reconsider the matter and, if possible, give the money back to the Calderdale authority.

8.42 pm
Mr. Bill Michie (Sheffield, Heeley)

Conservative Members adopt double standards. They speak of what is responsible and what is irresponsible. They refer to so-called pet schemes, which they regard as good schemes, and question whether political propaganda is paid for out of ratepayers' money, and they call that disgraceful. I remind the hon. Member for Halifax (Mr. Galley) that the chairman of the Tory party is paid by the taxpayer, because he is on the Government payroll. If that is not a scandal, I do not know what is.

Why criticise councillors over small items of expenditure when an enormous hole exists in the Government's financial strategy? Since 1981–82, local government has suffered tremendous interference from central Government, all in the cause of reducing expenditure because the nation cannot afford it, we are told. Grant reductions have been the main cause of the rate situation that now exists in our cities. Since 1981–82, Sheffield's grant reduction has reached a staggering £240 million.

However efficient one may be in management terms and however much imagination one may have, when that sort of money has been lost, it is difficult to make ends meet. I am sure that any other authority. Tory or Labour, would feel the same when faced with a loss of that magnitude.

The excuse given by the Government is always the same. They say, "We are not against democracy. We must take this action because the nation cannot afford the expenditure." They are saying, in effect, that the nation cannot afford local democracy. As I listened to the hon. Member for Halifax, I thought of the way in which certain authorities can always find money for pet schemes—£2,000 for something here and £20,000 for something there. However small or large one regards such sums, one cannot overlook the Government's biggest pet scheme, a scheme about which nobody was consulted, namely, the new runway on the Falklands. That cost four times the whole of the grant-related expenditure taken away from local authorities since 1981. That runway was built, the Government say, for the defence of democracy, yet we cannot have money for local democracy.

Mr. Galley

How can the hon. Gentleman suggest—as there was a general election in 1983 at which the electorate endorsed the Goverment's Falklands policy—that it was not known that our policy towards the Falklands would be carried out?

Mr. Michie

Will the hon Gentleman explain how it comes about that every local authority that has been rate-capped was elected last year on a mandate or manifesto? He cannot have it both ways. The Government cannot declare one policy for democracy and deny it to local authorities.

To enable Sheffield to adopt any form of local democracy, we are having to spend about £3 to achieve £1 of value. That may not make sense, but it is not the fault of the local authority. No account has been taken of the real effect on services. It is easy to do an accountancy' exercise and come up with attractive figures, but no revelation has been made of the real effect of the cuts that have been imposed on the less well-off, the immobile, the single-parent families, the homeless, the aged and the unemployed. Many local authorities do not believe that it is a waste of money to spend it on services to help old people to get about and to help single parent families make a decent life for themselves and their children.

Sheffield is an aging city. In 1976, there were 9,000 live births, but by 1981 there were fewer than 6,000. At the other end of the spectrum, at a point after 1986 there will be 110,000 pensioners in the city, almost 20 per cent. of the population. Within that 20 per cent., the number of over-75s will increase by 20 per cent. to a record 42,000, and, of those, the number aged over 85 will increase by 75 per cent. to 10,000.

Such figures cannot be ignored. They will not go away simply because money is short. The elderly are living longer, and while I accept that some of them do not need help, nobody can dispute the fact that such rapidly rising figures must have implications for the social services.

The city also has growing numbers of people out of work. Today, 15.2 per cent. of people are unemployed in the city overall, and in the inner city areas, on large council estates—the same applies to other major cities that are rate-capped—the levels of unemployment are double that. The chairman of the Sheffield budget subcommittee, when trying to describe the hardship that is being caused to the electorate of Sheffield because of the council's difficulty in maintaining services, said: It is easier for a Rolls-Royce to pass through the eye of a needle than for a Cabinet Minister to enter in imagination the experience of the unemployed. It is not surprising that, with such high levels of unemployment and poverty in Sheffield and other local authority areas, councillors are becoming frustrated in attempting to carry out their duties. We cannot expect them to fulfil their responsibilities by pretending that these things are not happening to thousands of our fellow citizens. These are the realities of life that they face every day in town halls, in their jobs—if they still have jobs—in their surgeries and at meetings which they attend almost daily. All our great conurbations are affected in the same way.

If the Minister is convinced that the cuts, penalties and rate-capping activities have been painless, I challenge him to agree to conduct an independent inquiry into the needs of thousands of people living in rate-capped areas. I am confident of the result of such an inquiry, if it were truly independent. It would reveal incredible suffering for the less able, the less articulate and the most vulnerable. It would also reveal a sad erosion of the quality of the lives of the majority of people in our towns and cities.

8.49 pm
Mr. Peter Bruinvels (Leicester, East)

This is an important debate in which I should have thought that the Conservative and Labour Members representing Leicester would have participated. Having heard the hon. and learned Member for Leicester, West (Mr. Janner) on a number of occasions on the radio assuring the Leicester people that he would be in the House to oppose rate capping, his absence is surprising.

Mr. Straw

Will the hon. Gentleman give way?

Mr. Bruinvels

The concern of myself and my hon. and learned Friend the Member for Leicester, South (Mr. Spencer) is apparent. We are concerned that rate capping, which—

Mr. Straw

On a point of order, Mr. Deputy Speaker. Will you confirm that it is a convention of the House that a Member who is absent should be informed before he is attacked? Is it possible for you to ask the hon. Member for Leicester, East (Mr. Bruinvels) whether he has informed my hon. and learned Friend the Member for Leicester, West (Mr. Janner)?

Mr. Deputy Speaker (Mr. Harold Walker)

The hon. Member for Leicester, East (Mr. Bruinvels) must answer for himself. It is the usual courtesy for an hon. Member who intends criticising another to notify that hon. Member in advance.

Mr. Bruinvels

I am concerned about the allegations about rate capping and what it will do for the people of Leicester and the city council.

Mr. Jeff Rooker (Birmingham, Perry Barr)

The hon. Gentleman did not tell my hon. and learned Friend the Member for Leicester, West (Mr. Janner).

Mr. Bruinvels

Any letter that I have sent to the hon. and learned Member for Leicester, West is a private matter between myself and my conscience.

On 25 February we heard that all was doom and despondency for Leicester, that rate capping would be terrible, that jobs would go out the window and that many services would be lost for ever. I am happy to report from my visit to Leicester at the weekend, where I live, that Leicester is still doing well. The jobs are still there, advertisements for jobs are appearing, none of the services has been cut and many job notices are appearing in the Labour council's propaganda magazine "Leicester Link".

Councillors are elected to keep rates down, not to increase public expenditure. We can argue about the percentages in any local vote. Because 30 per cent. of the Leicester electorate voted, one cannot say that an overwhelming majority wanted increased expenditure on public services. Many of those who voted in the city and county elections did not pay rates. Those who pay the rates, especially business men, do not have a vote. Why not? Rates in Leicester have been too high and the business men have been driven out of Leicester. They are now coming back because rates are decreasing with the arrival of rate capping. That makes a lot of sense.

It is amazing to see advertisements in the London Underground, saying "Come to Leicester where the rates have been reduced." The Leicester people should be grateful to the Conservative Government for bringing in the rate-capping legislation. The Leicester city council budget has been set; the Government grant has been agreed; the rate revenue of £10 million has been worked out; and the reserves are there. The 2p in the pound that will be saved this year will bring much prosperity to Leicester and its people.

The red covered "Leicester Link", which is the Labour council's typical monthly paper, admits: The total rate … is down by just under twopence in the pound on last year. Leicester City Council reluctantly fixed a rate at its March meeting". "Reluctantly"? The council was going to fix the rate from the first moment. It was not going to fight, because a number of councillors did not want to be in trouble. They wanted to stand for Parliament in other parts of the country. The councillors did not put their money where their mouths were. It was clear that this was a great whipped-up fear to get the Leicester citizens rushing around, pinning stickers on their buses and lapels and saying, "We shall fight rate capping the whole way." Yet the council did not even lead from the front. It manipulated some of the Leicester people by frightening them about losing their jobs and threatening to close the lovely golf course at Humberstone Heights. I do not play golf, but many people were playing golf on that course at the weekend. That is typical of Labour—it never goes through with its promises.

The scare campaign had some effects. About £65,000 was spent on the campaign and £135,000 is budgeted for this year. The rates legislation saved jobs and many more people are returning to the city.

Robin Treacher, the head of public relations for the city council, said that the council had spent a large sum printing leaflets and had got it wrong. Just like the Islington NUJ, it is a typical case of where the public relations people have been taken advantage of. They had to provide something in which they did not believe. They did as much as they could, scaring some of my constituents and those of my hon. and learned Friend the Member for Leicester, South. I am glad that the Labour councillors could not match that. That was an abuse of the system.

Leicester deserved to be rate capped, and I was delighted that that occurred. The propaganda included pamphlets entitled "Who Pulled the Plug? What Ratecapping Means for Leicester" and pamphlets in Gujarati. I shall not read the Gujarati edition. Not one of the cuts has occurred. No jobs have gone. There has been no reduction in refuse collection and street cleaning, although for some strange reason the men do not like to collect street refuse on Mondays. The inner city housing improvement programme is on target. There has been no cut in benefits—indeed, I admire what the city council has done there.

A large rally was arranged, which I was not able to attend because it was Monday 13 May and the House was sitting. Not many people went there. The Peace Action Group, which is operated through Leicester city council, had on its pamphlet the logo "Nuclear Free Festival Week". The ratepayers' money is being spent on a nuclear free festival week. What does that have to do with jobs and the people? The declaration of a "Nuclear free zone" will not stop us from being bombed. Expenditure of £12,000 warning people that they are entering a nuclear free zone did not reassure my constituents or anyone else—as usual, it made Leicester a laughing stock. The city has two active Conservative Members of Parliament, yet, because it has a Labour council, people want to attack us. We stand up for the people of Leicester.

The Leicester people feel hard done by when they see how much money the city council spends on the politicisation of jobs manipulating some of our citizens.

The unions in Leicester do not want to bring extra jobs to the city, because they are worried about equality of opportunity. They tried to stop 400 jobs from coming in through the community programme. We are fighting for those jobs for the city. We must keep up with the business of rate capping. I urge my right hon. Friend the Minister to ensure that the rates continue as they did before and that the council is checked financially. The Labour group will try to whip up feeling on this matter. Each time in the annual whip-round the Labour group says that it has been fighting all the way to protect the people. Members of that group fight to protect themselves. They scare us and spend more money, yet, at the end of the day, they will not go through with their aims.

I am very keen, as is my hon. Friend the Member for Southampton, Itchen (Mr. Chope), that council services should be put out for competitive tendering. There is a lot to be done there. Leicester proved, when it had the fear of being rate capped, that it could keep within its limits. I should like us to consider what else we as a Government can do to save the citizens in all our great cities a large sum of money, whether it be on vehicle maintenance, refuse collection—

Mr. Rooker

The golf course?

Mr. Bruinvels

Yes, even the golf course—anything that will bring about some savings for the private golf course. This must be welcome to anybody who wishes to see savings made for the citizens of Leicester.

I am worried about the Leicester Labour party. It has now established a research and information unit to supervise the existing public relations campus. It has been called by the civics reporter of the Leicester Mercury, Colin Vann, "the Ministry of propaganda". This research and information unit is comprised of an information officer, two information assistants and a clerical assistant. It is to spend £29,000 a year with three officer contracts to monitor not only what is happening outside but what is going on in the city council. It is to look at the work of the Labour councillors because obviously it is felt that some of them are not Left wing enough! I do not know about that, but I think that it is incredible. Does it not have its own whip to look after the Labour councillors? We have a whip on the Conservative side of the council Why does it need this monitoring unit?

Mr. Rooker

To check on your questions.

Mr. Bruinvels

It wants to increase public awareness. We all know what is going on in the city of Leicester through the daily Leicester Mercury. We all know what the council is doing because it is advertising this in the Leicester Link. Why is this unit needed? Is that not the kind of thing which would save all the ratepayers of Leicester some money? But, oh no—it also wants to take over education from the county council. A city council to run education? It cannot even run its own council, so why does it want to interfere in education? I suppose that it wants to politicise that as well, and to bring politics into the school room. That is scandalous, it should not be allowed and I shall fight against it. Then there is social services. I suppose that it wants some of its own employees to get social security handouts.

It has a budget of £137,000. That is atrocious. It wants to reject attacks on local autonomy and services. It may wish to do that, but I interpret it as the foundation of extreme Socialism, and I shall have no hesitation in referring this unit directly to the Widdicombe inquiry because I think it is the kind of thing that should be examined.

Keeping the rates down is the most important thing that the Government have so far done. This is bringing real jobs into the city again and giving prosperity to a large number of businesses. If the rates are kept down and Leicester gets back into line, I feel certain that, when the next election comes, Leicester will be better off and better run and, I hope, Conservatives will be running the city council.

9.1 pm

Mr. Peter Pike (Burnley)

In the early part of the debate, the Minister referred to the county council elections and in particular to the results of Lancashire county council. As a shire county council representative, I think that one should consider Lancashire in perspective.

The Minister should recall that when local government reorganisation took place, all the Labour strongholds on the south side of the county were put into Merseyside, Greater Manchester or Warrington, which was transferred into Cheshire. That was an attempt by the Government to try to ensure that Labour would never take control of that county council.

In 1977, Labour had only 12 seats on the council, in 1981 we moved into a majority, and even this year's results were extremely good for the Labour party. We now have 48 seats, and remain the largest party on the county council.

The Minister referred to the Crosland speech in 1976, as did the hon. Member for Halifax (Mr. Galley). The situation in 1976, when councils were being asked to exercise restraint, was very different from the position which we now face. At that stage, there was no penalty and no rate capping. There was some fat which councils could cut then but, cuts having been made continuously since then, that is no longer so. Any further cuts in local government bite on essential services. As finance chairman, I was called to London at that time to meet Anthony Crosland at party headquarters. We co-operated at that stage. It is important to remember that at that time councils had the right to fix their own rates, a right which has now been removed from them.

My hon. Friend the Member for Copeland (Dr. Cunningham) referred to the reform of local government. The one thing that the legislation that has recently completed its passage through Parliament will give the future Labour Government the opportunity to do is reform the whole of local government. The legislation makes it a priority to deal not only with the metropolitan counties but with the shire counties and, as my hon. Friend said, also to give democratic control over hospitals, water and many other services. I look forward to the day when, as Secretary of State, my hon. Friend introduces a Bill that will take us forward in that direction.

My hon. Friend the Member for Manchester, Central (Mr. Litherland) referred to disregards with particular reference to the urban programme. I fully support his comments. We are told repeatedly that the Department of the Environment is considering this issue. But I believe that all expenditure—be it programme, designated authority, partnership or traditional urban—arising from the urban programme should be disregarded.

My hon. Friend also referred to housing benefit, and one must take into account the social security review which will transfer an additional 10 per cent. burden that will have to be met from local government funds.

The Green Paper says that GREs will be adjusted, and it is reasonable to assume that if the Government are to save money—one accepts that that is the purpose of the exercise—the adjustment will not be a full one and that once again the burden will have to be borne by local government.

Paragraph 1(e) of the RSG supplementary report for 1985–86 indicates a total overspend of £278 million. I should stress that that is the Government's view, because I do not believe that it is an overspend. but that is 1.27 per cent. above the figure which the Government believe should be spent. That figure has attracted a block grant penalty loss of £550 million, which is equivalent not to 1.27 per cent. but to 6.5 per cent. That is a further blow to local government, local democracy, local services and local ratepayers.

In 1984–85, when the Government determined the overspend to be £841 million, the penalty was £452 million. This increase in the penalty rate is the severest yet and is almost double the overspend. This cut in block grant is returned directly to the Exchequer, and to meet that expenditure the burden must be put on to ratepayers, otherwise essential services will have to be cut yet again and there will have to be further job losses.

Most shire counties have targets below the GRE figure for 1985–86, but this type of penalty has forced them to keep their figures below GRE. That makes a nonsense of the Government's own GRE system.

I have always believed that at some stage the Government would make the GRE the key target figure. If the rumours are correct, that seems to be the path that the Government will now follow. We shall hear the announcement next week. If that is so, while it will benefit many shire counties, including Lancashire, which spends below GRE—given that the penalty to spend at that figure would be too high—it will penalise councils such as Burnley in my borough.

Burnley's cash target is 50 per cent. above its GRE, and it is one of the 13 councils that have a cash target so much above GRE. If the Government are to contain expenditure within the GRE figure, it stands to reason that authorities spending over it will be more heavily penalised. I accept that the rate of grant above GRE is progressively lower, but as the scheme continues I have no doubt that the position will worsen. That will place Burnley and many other authorities in serious difficulties, and it will result in more cuts, more job losses and an inability to deal with problems such as housing, the elderly and all the others with which local government is trying to deal.

I have always believed that Government have a right to fix the total amount of expenditure that councils should be able to spend, but at present that amount is far too low. Local government and Parliament have the right to argue about that amount, but, even more important, local government should be given the freedom to spend the money that it believes is necessary to maintain services.

If the GRE system is to be strengthened and improved, it must be more clearly understood. At present, it is neither understood nor fair. Several times before my election to the House but as leader of the council, and since my election as a Member of Parliament I have met civil servants on the issue. They failed to explain how they arrived at the figures. People in local government do not accept that the system is either fair or right and there must be key changes.

My hon. Friend the Member for Greenwich (Mr. Barnett) referred to a number of factors, and certainly a key one for a non-metropolitan district is the housing factor E7. That is crazy and puts Burnley in an unfavourable position compared to our neighbouring authority, the borough of Blackburn. I cannot see why there should be such a difference. One great problem of the late penalty set out in the third report is that councils have to take it into account after the end of the financial year and after they have fixed their budgets. In Burnley's case that means the council has to find an additional £80,000 for this year. That is the equivalent of 1p on the rates.

It is time the Government devised a much fairer system for local government and allowed democratically-elected local representatives to deal with the problems and services in their areas. I could say a lot more but another of my hon. Friends wishes to speak. I hope that the Government will make changes in the way that they tackle these problems.

9.12 pm
Mr. John Fraser (Norwood)

The Minister argued in this debate that somehow rate capping and penalties increased the efficiency of councils. But the game was given away by one Conservative Back Bencher after another. They talked about the pet projects of Labour councils, but what the Government are really about is to use the House as a court of appeal from decisions of elected local councillors. It is no function of ours to decide how an elected local authority should conduct its affairs.

The Minister made a comparison between Wandsworth and Lambeth. The reason why Wandsworth has a low rate is partly because it does not incur penalties, and partly because Wandsworth, within its power, took a political decision to sack people on a very great scale, to abolish services, to cut back on services for the elderly and the young, and to cut back on housing. Those were political decisions, and there is no way a Minister is going to force Labour councils to take decisions of that sort except in the most excruciating circumstances. All this is certainly not going to increase the efficiency of any local authority.

There is no evidence to suggest that the Minister is in any way capable of getting a local authority to change the way it behaves. If that were the case, I would have people coming to me in Lambeth saying that as a result of rate capping and penalties the repair service and housing benefit administration were more efficient, and the admission of people to homes for the elderly was better. There is no evidence that the interaction of what the Government are proposing and what the local authority does leads to an improved service at a lower cost.

What we will have is an increase in inefficiency, because as one gets industrial action or reaction to the Government proposals, as councils are locked in battle with the Government, as penalties pile up and as people are sacked—which is inevitable if cuts are made—what will follow is a lower quality of service and a lower standard of efficiency. There is no link between efficiency and these proposals. It is simply that the Government want to substitute their political judgment for the judgment of elected councillors. The consequence will be a combination of cuts, chaos and confrontation at a cost to the ratepayers,

Even on the present figures of rate capping in Lambeth, on the Government approved level of expenditure of £113million we suffer a penalty of £1.6 million. That is not a penalty on councillors; it is a penalty on the ratepayers. I cannot see the logic of that sort of arrangement. The Government revised the amount of money we can spend in Lambeth to £122 million. Then we were penalised on that Government-approved level of expenditure to a total of £11 million.

The illogicality of the system is at its most acute in relation to urban aid projects. Lambeth council is picking up projects approved by central Government, and time-expired projects in the current year amount to £1.5 million. The Government's failure to review £800,000 of urban aid programme expenditure means that Lambeth will lose £660,000 in grant because it is carrying on with time-expired projects. Next year that figure could be £1.1 million. We end up with a confrontation between Government and councillors in which there can be no victor, only victims.

Taking up the suggestion made by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), I suggest that in the short time which remains the Government should tell the district auditor that the Government have already stood to benefit by £113 million in grant lost to Lambeth, that in the current year alone the Government can expect a profit of between £1.6 million and £20 million in penalty on the figures contained in the orders and that in view of that very large gain to the Government it is about time that the auditor stopped his depredations and left Lambeth council to make its own political judgment about the level of services to be provided in Lambeth without the Government interfering in this overbearing way with penalties and rate capping.

9.15 pm
Mr. Jack Straw (Blackburn)

The debate has been notable for the fine speeches made by my hon. Friends the Members for Manchester, Central (Mr. Litherland), for Liverpool, Walton (Mr. Heffer), for Greenwich (Mr. Barnett), for Norwood (Mr. Fraser) and by my good friend from Lancashire, my hon. Friend the Member for Burnley (Mr. Pike). It has also been notable that at no stage has any representative of what is described as the Social Democratic party been present.

Mr. Waldegrave

As the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) put in a rare appearance today, is it not disappointing that he could not stay among us a few minutes longer?

Mr. Straw

The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) represents a Scottish constituency, although he may not do so for much longer, but, as ever, I share the Minister's concern.

Mr. Simon Hughes

As the hon. Gentleman knows, my colleague and hon. Friend the Member for Woolwich (Mr. Cartwright) speaks for the Social Democratic party on local government. My hon. Friend was in hospital yesterday and is recuperating today. Otherwise, he would have been here. For his sake, it is right that I should put that on the record.

Mr. Straw

I know that the hon. Member for Woolwich (Mr. Cartwright) is an assiduous attender and we send him our commiserations, but I should point out to the hon. Member for Southwark and Bermondsey (Mr. Hughes) that there are other members of the Social Democratic party.

In January this year, the Minister for Local Government in what he described as his maiden speech in a rate support grant debate described the system as well nigh incomprehensible and … understood only by the initiated. He went on to say: I accept that the system is byzantine in its complexity and that it is probably fully comprehended only by those who have a taste for scholastic theology."—[Official Report, 16 January 1985; Vol. 71, c. 411.] It is also of interest to those with a taste for error, and our debate today has been punctuated by information about the errors in the report. My hon. Friend the Member for Copeland (Dr. Cunningham) pointed out that a major error of £30 million in the 1982–83 settlement is being institutionalised in the third supplementary report. There is a straightforward solution to errors of that kind which even the Government might accept. Even at this late stage, they should recompense the shire authorities which have been losing for so long without disadvantaging other authorities. We commend that solution to the Government. My hon. Friend the Member for Wansbeck (Mr. Thompson) also pointed out that the figure for Northumberland should be £110 million and not £111 million.

We all appreciate the complexities of the system. Indeed, some complexity is inevitable in any system of grant redistribution. Nevertheless, it is incumbent upon Ministers to ensure that the reports are as accurate as possible; and, when inaccuracies are brought to their attention, they should withdraw the reports until they have been corrected.

There is a third item, which I raise on behalf of my hon. Friend the Member for Newham, North-West (Mr. Banks), who is chairing a meeting of the Greater London council. This is the first debate on rate support grant, abolition or rate capping that he has missed. Ministers are familiar with the argument. The information in the third supplementary report for 1982–83 is based on the first return submitted by the London borough of Newham some time ago. It submitted a revised return which was certified by its external auditor, Arthur Young. Newham believes that it will suffer severely if its grant entitlement is not based on that revised return. Although the Secretary of State has said that he hopes that the third report will be the final one, I hope that, if he is satisfied with the representations made by Newham, he will be willing to bring forward a fourth supplementary report to accommodate the difficulties that Newham has raised.

Behind what the Minister described as scholastic theology and the complexity and statistical trickery of the rate support grant system lie consequences for local authorities and the people they represent which are simple, straightforward and brutal. The report is part of the crude, politically biased mechanism by which the Government impose their will on local communities and their representatives regardless of those communities' will.

No Government have prayed democracy in aid more than this one and no Government have undermined democracy more than this one. The Government continually fail to comprehend that the essence of democracy is the right to choose, the right to say, "No", the right to disagree. In theory, people have those rights but, in practice, when the people and their representatives try to exercise them, the rights are cut away and the representatives are cut down. Great local authorities are abolished—seven are to be abolished by the Act that received the Royal Assent today—because their voters chose to elect Labour councils. There is no other reason. When the remaining local authorities try to meet the needs of their communities, they are penalised and punished for exercising their democratic rights.

Increasingly, the Government's motto is, "You can do anything you like, provided that we agree." The Minister revealed himself when he described 90 per cent. of authorities over target as Labour and said, "Old habits die hard." What arrogance. Does he not understand that the Labour party is in the habit of caring about communities and of being willing to spend money on them? We are willing to invest in those communities. We have the habit of Socialism and we shall not throw it away just because the tanks of Marsham street driven by the Minister are driven in the way of those authorities. It was revealing when the Minister dismissed the will of those Labour-controlled authorities and their electors by saying that old habits die hard.

Under the first supplementary report for 1985–86, the severest ever penalties are imposed on local authorities—apparently 90 per cent. of them are Labour controlled—which exceed their targets. For every £1 of alleged overspend, £2 is taken away in penalties. To pay for an alleged overspend of £278 million, the Treasury takes back £550 million. So grotesque has the system become that the Treasury now has a vested interest in its continuance. Whatever Department of the Environment Ministers may say, the Treasury wants authorities to spend over their targets, for overspending reduces the public sector borrowing requirement—and it is at the shrine of a diminishing PSBR that the mad monetarists still in charge of the Government worship.

We object root and branch to the target and block grant system which penalises individual authorities for choosing a level at which they should spend. The system is made all the more outrageous by the Government's chosen methods. As I reminded the House, at least the Minister has acknowledged that the system is Byzantine and incomprehensible. The Secretary of State, who, as ever, disagrees with his Minister, told the Committee only last year that the system, which the Minister describes as Byzantine and incomprehensible, provides robust and objective tests. Would that the Secretary of State were telling the truth about the system. There is nothing objective either about targets or GREA. Time and again the system's objectivity has been bent in pursuit of partisan political goals.

Some of my hon. Friends may know of a cosmetic range called Max Factor. It was even the subject of some smutty rhymes when I was at school. The Government use a cosmetic to disguise their true intentions, which is called the E7 factor. The report, at paragraphs 18 and 19, waxes eloquent about the E7 factor in language which I am sure its authors scarcely comprehended. My colleagues can take it from me that the gobbledegook disguises a simple and straightforward fraud on Labour-controlled and higher-spending authorities.

In the Housing Act 1980 local authorities were for the first time allowed to make profits from council tenants. Conservative non-metropolitan districts have taken advantage of that with alacrity. Some authorities, such as Epping Forest, South Oxfordshire, Tandridge and Wansdyke, use profits from their council tenants to pay for between one fifth and one third of expenditure from the general rate fund. Therefore, council tenants pay rents both for their houses, and for the bin and environmental services of all the ratepayers in their area. In effect, council tenants are subsidising richer owner-occupiers.

The position is even worse. To ensure that the Tory shire districts get the best from the rate support grant system, and that they escape penalty, the E7 factor assumes that none of those authorities makes any profit from its housing rent for the purpose of giving it rate support grant. Ratepayers in those areas are, therefore, subsidised twice. Should there be any danger of the Tory shire district reaching its target, the council can increase its rents still further, because expenditure from additional profits does not count against targets. It is an utter scandal. It is not surprising that when a minute marked "Confidential E7 development work" about items that might be politically embarrassing, which was sent from the Parliamentary Under-Secretary of State to an official in the Department, was leaked, the Government's embarrassment was extensive.

Today both the Minister and the Parliamentary Under-Secretary of State said that 74 per cent. of authorities had been able to live within their targets. However, they have ignored the fact that the rules are designed to enable Tory shire districts to escape. If we weight the authorities by spending, a quite different picture emerges. Conservative authorities such as Essex, Harrow, Enfield and Hillingdon would suffer the consequences of penalties on their expenditure. If the Minister wishes to listen to me, I can answer the question that he has just put to his hon. Friend the Parliamentary Under-Secretary, as I lip read. Fifty-nine of the 116 major spending authorities—the London boroughs, metropolitan districts and shire counties—are subject to penalty and target. That is a measure of the harm and hurt of the Government system.

The system is so ludicrous that even the Government know that it is likely to collapse under its own weight. The system, which was designed to increase the popularity of the Government, has proved disastrously unpopular, as they discovered in the shire county elections two months ago, and subsequently in their first loss of control of the Association of County Councils. The hapless Minister and the Under-Secretary of State have been set to work to find the Holy Grail and to redeem the tawdry pledge made 10 years ago by the Prime Minister that she would abolish domestic rates.

Tonight, the Minister has been uncharacteristically coy about this work. I note that I have had no reply to a letter that I sent to the Prime Minister almost a fortnight ago seeking answers to simple questions about the studies. I wanted to know when it would he published, whether there would be a Green Paper, and whether it would contain lists of winners and losers. Perhaps at the last minute, as with the social security reviews, the Government will get cold feet and suppress the facts upon which the decisions could be made. Perhaps we shall have to wait until the Conservative party conference for all this information. Whoever will be the new Secretary of State for the Environment—the fact that there will be a new one is certain—will be honing his speech which he will give to the masses there assembled. Will it be the Minister for Local Government? Is he taking a holiday in September? Will he leave his telephone number with No. 10 just in case?

All that is for the future. What of next year? The Secretary of State has repeatedly expressed his desire to sweep away the target system, and the leaks suggest that that may be announced next week. But I warn my hon. Friends and local authorities not to rejoice prematurely. We must all beware Ministers bearing gifts. Unless the Chancellor and the Secretary of State have suddenly abandoned the habits of a political lifetime, most local authorities will be thrown out of the frying pan into a raging fire. If in place of target and penalty we shall have GREA and penalty, the results for all but the shire counties will be significantly worse. The grant-related expenditure assessments of most London boroughs and metropolitan districts are lower than their targets. Therefore, the consequences of basing penalty on GREAs rather than on targets would be even worse.

Moreover, to use GREAs in this way would be a categorical breach of the undertakings given to the House when the GREA system was established in the 1980 Act. The previous Secretary of State for the Environment, now the Secretary of State for Employment, said on 1 April 1980: It is not suggested that it"— the needs assessment— prescribes a specific level to which an authority ought to spend …I want to make it clear that that was not the purpose. We are seeking to find the fairest way to distribute public money to local authorities."—[Official Report, Standing Committee D; 1 April 1980, c. 941.] The Secretary of State had said earlier: My Department will not be in the business of saying how much each authority should spend, where it should or should not make cuts or on what it should spend money. Local authorities are autonomous. They fix their rate systems."—[Official Report, Standing Committee D; 27 March 1980, c. 840–41.] On the basis of those undertakings, the House accepted the principle of GREA in 1980.

The main question that we must ask is: what has been achieved by all the mess, misery and chaos of the past six years? It has certainly not helped the Government's popularity nor, sadly, the Secretary of State's career. In what way has it improved the welfare of the nation, our economy or even unemployment, for which the Government now profess concern? The answer is that no benefit has been achieved. Ministers weep crocodile tears about domestic and business ratepayers, but they know that rates have increased by 80 per cent. above the rate of inflation because of their cuts in rate support grant. In government, Labour's policies produced lower rates, and would have continued to do so had we remained in government. In so far as business rates have increased, the Government know that there is not a shred of evidence to support their claim that rates increases have caused the loss of jobs.

It was, after all, this Government who ordered the £50,000 study from the University of Cambridge on the effects of rates upon the location of employment. It was that report which confirmed not just what we have been saying but what many reputable independent firms of surveyors have been saying—that there is no relationship between rate levels and the loss of jobs.

The Government can, of course, dredge up the comments of Conservative business men who say that rates are a burden, but they have had the report for six months and produced not a paragraph of proper refutation of its conclusions.

The report concluded that there was a failure to detect a locational effect of rates, which probably indicates that no such effect exists. The report went on to say that in contrast to the negative conclusion concerning rates, the study draws attention to different factors that have a large and measurable effect upon location, in particular manufacturing and employment trends, the mix of industries, the size of factories and the extent to which an area is urbanised". The report not only said that but went on to say that Labour authorities—the authorities spending more and therefore rating more—might be the ones that were creating jobs. The report went on to say: If high rates are used to finance high local authority spending, it is likely that a local authority's own workforce will be larger than it would otherwise have been. If this is the case, a high level of rates will be associated with a high level of local employment. This is the opposite of the conventional argument that high rates are harmful for local employment". The conclusion of the report is that it is Labour councils which have been protecting jobs and the Conservative Government who have been destroying them.[Interruption.]I am sorry to discomfort Conservative Members with the truth, but they should read the report. I know that they do not ever wish to have facts to illuminate their prejudices, but if they want to know the truth about rates and jobs they should read the Department's own report.

Until two weeks ago the Government could at least claim the merit of consistency. They could claim that they have been saying again and again that they were against public spending; that it was bad for Britain and had to be cut. But even that alibi, that excuse, has now gone. It has been shot away by the Chancellor of the Exchequer in his panic speech in Oxford after the trauma of Brecon. He now tells us, after all this, that the Government are in favour of public spending. I quote from the report in the Conservative Party News Service, where the Chancellor is recorded as saying: Our public spending record is a good one. It is the middle way". He went on to say: we do spend more where it is needed. On doctors. On nurses. On each pupil at school". It is true that the Public sector as a whole, the local authorities, are now spending more on each pupil at school than in 1979, but that is no thanks to this Government. Had this Government had their way, and had their expenditure plans worked out as they intended, expenditure per pupil would have dropped by £55 per head in real terms between 1980 and 1985. It has risen by £115 per head only because local authorities, led by good Labour groups, have put the needs of the children of their areas above the harsh and brutal spending plans of the Government.

For that record of increasing spending on each pupil at school, the Chancellor of the Exchequer—the man who now claims credit for the improvement—has sought to brow-beat authorities with every weapon at his disposal to get them to reduce their spending. What audacity; what hypocrisy.

At today's prices, expenditure per pupil was planned by this Government to fall from £1,130 in 1980–81 to £1,085 in 1984–85; in fact, it has increased from £1,050 to £1,065. If that increase in expenditure on pupils at school is a good thing, and if the Government now claim credit for such an increase, why have the Government repeatedly, and by these orders tonight, sought to pile penalty after penalty on authorities which have been seeking to do no more than that which the Government now proclaim? An answer from the Government is required.

We have a Government who are bereft of ideology, principle and purpose. The orders achieve nothing but vindictiveness upon local authorities and hurt for the communities that they serve. They are worthy of the Ministers responsible for them, and we shall oppose them.

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

It is pleasant to return to a rate support grant order debate. For some reason, I have missed one or two. Nothing seems to have changed very much in my absence, and certainly not the speeches of the hon. Members for Copeland (Dr. Cunningham) and for Blackburn (Mr. Straw). At the end of his remarks, the hon. Member for Blackburn entered into his PESC speech, his public expenditure speech. Perhaps there will be a reshuffle of those on the Opposition Front Bench in due course.

One notable absence is that of the hon. Member for Newham, North-West (Mr. Banks), who is chairing his great council almost for the last time. My right hon. and hon. Friends and I have missed his moderate and quiet analyses, his tact in dealing with the issues before us and his courtesy to all and sundry. The only differences in the speeches of the hon. Members for Copeland and for Blackburn since I last heard them is that their tongues sink rather deeper into their cheeks each time they make them.

We have had the speeches about the end of civilisation, democracy and local government as we know it. We had a classic version from the hon. Member for Greenwich (Mr. Barnett). The problem for Labour Members is that democracy refuses to come to an end, as does local government, and the world goes quietly on. In the prediction game, the predictions made by Conservative Members seem, on the whole, to come rather more nearly true.

In one of these debates a couple of years ago the hon. Member for Blackburn said that rates would increase in Kensington and Chelsea by 40 per cent. In fact, they increased by 9 per cent., and this year they have been reduced by 9 per cent. The actual results this year seem to be rather closer to what the Government said would happen than the predictions of the hon. Members for Copeland and Blackburn and their right hon. and hon. Friends. We have heard their dire predictions about collapses of local authorities and the rating system, but 74 per cent. of all local authorities were able to meet their targets and 88 per cent. of them came within 2 per cent. of their targets. Only 14 authorities exceeded their targets by more than 5 per cent.

That is not too bad and the outturn was not too far from what we predicted. The net result is that total local authority spending has been held steady in real terms. The very long-term trend to which my right hon. Friend the Minister for Local Government referred, which we have slowed since 1979, has now been stopped.

In a philosophical soliloquy the hon. Member for Blackburn asked, "What has it all been for?" The answer is that we have done that for which we were elected. We have succeeded in slowing down and stopping the overall growth in local authority expenditure.

Mr. Straw


Mr. Waldegrave

No, I shall not give way. The hon. Gentleman has only recently concluded his speech and he did not leave me quite as much time as we agreed upon. I shall press on. The purpose of the exercise has been expenditure restraint.

We have had some splendid speeches from my hon. Friends. I have in mind my hon. Friend the Member for Norwich, South (Mr. Powley), my hon. and learned Friend the Member for Leicester, South (Mr. Spencer) and my hon. Friend the Member for Leicester, East (Mr. Bruinvels). My hon. Friend the Member for Norwich, South said once again, and rightly, that the penalties on high-spending authorities are all part of the process of putting pressure where it should be, which is on the high spenders, the profligate authorities, so that more responsible authorities can be treated more fairly. That is what the orders are all about and that is the purpose of our restraint on local authority spending. I am grateful for the support of my hon. Friends.

I sympathised with several of the arguments of the hon. Member for Southwark and Bermondsey (Mr. Hughes), one of which was for stability. The objective of all my right hon. and hon. Friends and myself is to make all the improvements that must be introduced into the system. The Audit Commission's report has been quoted at us and I accept its criticisms on the capital control side and on the complexities of the system. I accept that stability must be one of our objectives.

The other side of the coin has been presented throughout the debate. It has been said that we must have specific changes to the local authority system that will provide perfection. That argument was not advanced by the hon. Member for Southwark and Bermondsey, who stood four square with the view that it would be better for the procedures to be slightly simpler and for there to be an element of rough justice if we could achieve more stability. That is a fair criticism of the present system.

In directing themselves to the 1982–83 final report, the hon. Member for Copeland and my hon. Friends the Members for Tiverton (Mr. Maxwell-Hyslop) and for Halifax (Mr. Galley) all referred to "the mistake". I shall not shelter behind the word "anomaly". In the difficult decisions that my right hon. Friends have to make, that is a classic example of the tension that exists when trying to perfect the system at the cost of importing further instability. When that mistake was discovered and discussed with local authorities way back in 1982–83, after we had made the point that there would be a disregard in that year—the hon. Member for Blackburn will remember that there was a GRE exemption that year and that it therefore mattered how GRE related to targets—there was no continuing pressure from local authorities to make changes.

It is fair to say that the Association of Metropolitan Authorities and some authorities have been urging us to correct that mistake. That can be done only at the cost of importing further instability into the system elsewhere. Today we are being urged to make changes and shift money in mid-year. That would be difficult for local authorities. We must find a balance. That was a difficult decision for my right hon. Friend the Secretary of State, and that is why he came down on the side that he did. It was a reasonable decision.

The hon. Member for Blackburn made a point about Newham on behalf of his hon. Friend the Member for Newham, North-West. As the hon. Gentleman is aware, my right hon. Friend the Secretary of State has a statutory duty to use the best information available to him. When two outturn figures are given to him, he has a difficult judgment to make. I shall draw my right hon. Friend's attention to what the hon. Gentleman said and he will reconsider the matter. I do not give a commitment that he will change his decision.

On the 1985–86 report, my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) asked about the Hounslow change. That was one of the improvements that caused the instability. It is a factor that must be remembered when people are urging us further to refine the GRE factors. There was a change which had an effect on some authorities, including Hounslow.

My right hon. Friend the Secretary of State has carefully considered Hounslow's request. The 1982–83 precedent is not a fair one to use. The matter about which my hon. Friend asked is not a mistake; it is a change derived from the improvement. It would not be right to "safety net" the changes as was done with the earlier anomalies.

I am not convinced by my hon. Friend's arguments. When we are urged by delegations—I see a great many of them—to make further changes and exact adjustments to the system, that always results in an unexpected change elsewhere. That is one of the arguments for not making too many changes from year to year. I know that my right hon. Friend the Secretary of State appreciates that fact.

We have begun to slow down the growth of local authority expenditure which has been continuing year in, year out for 30 years. It was, on average, 3.5 per cent. higher than inflation throughout the 1960s. We began to slow it down after 1979. Until this year, we had a real average increase of about 1 per cent. That is still formidable. We were teased by the hon. Member for Copeland for not having done more. We were asked whether we were proud of our record in controlling spending. I do not think that we are. We should have liked to have done more. That is what we were elected for. This year, we have stabilised it.

Attention has now turned—it should have turned earlier to some extent—to how to obtain value for money out of the existing spending. There are no slashing cuts in overall resources. There must be an inexorable search for value for money so as to deliver services from stable resources.

The Audit Commission's report has been mentioned today. I have heard some astonishing things said about the auditor by people who, with respect, should know better. I was astonished, for example, to hear the hon. Member for Norwood (Mr. Fraser) say that my right hon. Friends should tell the auditor this or that. He may have been pulling our leg, because he is aware that my right hon. Friends cannot legally tell the auditor, X, Y or Z. He is independent, and it would be a fundamental infringement of one of the points of his constitution, which is so often prayed in aid in those matters, if we were to interfere with the auditor's independence. I am sure that the hon. Member did not mean that. If he wants to withdraw it" I shall be happy to give way to him.

Mr. John Fraser

I am not suggesting anything about the auditor's statutory functions. However, it is open to the Government to represent to him that a massive profit has been made by the Treasury out of these machinations, and that should be taken into account when he makes his final decision.

Mr. Waldegrave

The auditor has a statutory duty as to what to do if he believes that there has been illegal behaviour in a local authority. If we were to start making the political points that the hon. Gentleman suggests that we should make, I hope that the auditor would not open our letters but simply return them to us.

I am sorry that I was not here to hear the speech of the hon. Member for Liverpool, Walton (Mr. Heffer), but my right hon. Friend the Minister for Local Government has reported on it to me. I gather that the hon. Gentleman also wanted us to repeal the legislation in which the statutory independence of the auditor is enshrined. That is a serious suggestion. I hope that that is not the policy of the Labour party. If it is, it is a new policy. The late lamented Mr. Anthony Crosland was among the foremost in defending the independence of the auditor. If I have misrepresented the hon. Gentleman, I shall give way.

Mr. Heffer

I did not say anything of the kind. The hon. Gentleman had better read what I said. Do not local authorities have statutory obligations? Do they not have to carry out certain functions based upon legislation? They are choosing not to carry out the law because of the Government's policy.

Mr. Waldegrave

I have not heard any suggestion from the hon. Gentleman's local council that it has gone to court to say, for example, that the targets have prevented it from carrying out its statutory duty. There is a clear statutory duty on the auditor to pursue any allegation of illegal behaviour, and there is nothing that my right hon. Friends can, should or will do to interfere.

The Audit Commission has made recommendations to the local authorities about value for money. Often value for money can be achieved to increase the services elsewhere or to give money back to the ratepayer. It is up to the judgment of the local authority to decide which of those courses to follow.

My right hon. Friend the Minister for Local Government asked for the view of Labour Members as to why there are such huge differences in spending—for example, £126 per pupil on school cleaning in one authority and £31 in another. This cannot be because there is that much more cleaning to do. The Audit Commission does not believe that. There is the example of vans that are serviced every 10 miles. Nobody can pretend that that is anything other than bad management.

One authority is able to fill all but 0.5 per cent. of its housing stock, whereas other authorities have 5 per cent. of their housing stock vacant. This is bad management and a waste of resources. Any elected official is a trustee of other people's resources, and it is a serious matter if he is not using properly the money that is entrusted to him.

In its recent report on further and higher education colleges, the Audit Commission estimates total possible savings without damaging services at between £125 million and £150 million a year. That money could pay for 75,000 more students, or could be given back to help local industry. The Audit Commission found some lecturers teaching only 10 hours a week. In one college, it estimated that slack management cost £235,000 a year. Bad debt management cost £70,000 in another.

However, there are other colleges that are doing well and it is right to congratulate them. The good colleges are not necessarily in Conservative authorities. I can quote a good college in a Labour district, Wakefield district college. It is a model of what can done with such a college. It is open for 48 weeks in a year while most are open for only 36 weeks. Courses are tightly managed, achieving excellent exam results while pushing pupil-teacher ratios of 8:1 which is more generous than for a full research university, to 14:1 which is more as it should be. The college has a 96 per cent. retention ratio on its courses. What is wrong with that? We must ask why, if Wakefield can do that, others cannot.

Mr. Barnett


Mr. Waldegrave

I have only a few more minutes, and the hon. Gentleman made a long speech, so I shall not give way.

The hon. Member for Southwark and Bermondsey (Mr. Hughes) quoted from The Guardian. I read The Guardian, too. In today's edition of The Guardian Maureen O'Connor says that Newham's 3,000 surplus secondary school places are not only bad for the school, because they are distorting the size of the school, but cost the borough about £ 1 million a year, just in wasted resources. I know that I have the hon. Members for Copeland and for Blackburn with me on this point. The hon. Member for Blackburn has a long and honourable record on value for money. He was quoted in the Daily Telegraph of 6 June 1984 as having said the following at a Chartered Institute of Public Finance and Accountancy conference in Brighton: There is a private joke in the Labour party that the two main obstacles to socialism are Margaret Thatcher and the Camden Housing Department, to which I might add the Islington Building Works Department, certainly when I was its Chairman. That is very engaging and open. The hon. Gentleman continues: All of us have had some personal experience of a public service which has been rude, or inefficient, or incompetent which has appeared in short to be serving itself rather than the public. If the public sector as a whole had apparently been less self-serving, less complacent and more efficient, then the climate for cuts and privatisation would have been altogether far less favourable. That is a very honest and straightforward thing to say. Let me press the hon. Gentleman a little bit further.

I calculate that the Audit Commission shows that there could be savings of about £1 billion a year, and it has looked at only one quarter of local spending so far. Regardless of whether that should go back to the ratepayer or the business man—that is the political divide between us—nobody in the Opposition will try to argue that those savings are not there for the making, because they are, and they should be, and it is a disgrace that they are not.

Mr. George Walden (Buckingham)

Will my hon. Friend give way?

Mr. Waldegrave

With respect, I must complete my speech.

We have heard the usual accounts of the Liverpool problems. The Labour council seems to be sleepwalking towards disaster. I understand that as a result of Mr. Scargill sending for the leader of the Labour party last week, the unfortunate hon. Members for Copeland and for Blackburn are now being sent off in their turn to talk to Mr. Hatton and his cronies in Liverpool. They may take some advisers with them—I recommend that they take the hon. Member for Birkenhead (Mr. Field), who knows how to deal with Militant, or perhaps the hon. Member for Knowsley, North (Mr. Kilroy-Silk), who hopes that he knows how to deal with Militant. Perhaps with the two of them as bodyguards they will get on.

I hope that the hon. Member for Blackburn will share with Liverpool councillors his experience as chairman of the Islington building works department, so that he can explain about searching for value for money. Let me repeat the figure. For every £10 million of saving there would be £22 million more grant available to Liverpool. It is within the council's capacity to find its own salvation. I should like to explore further—

Mr. Heffer

Will the Minister give way?

Mr. Waldegrave

I must complete my speech. I want to explore one further area—

Mr. Heffer


Mr. Waldegrave

I shall not give way to the hon. Gentleman.

I want to explore with Opposition spokesmen one further area of potential agreement. I do not expect the hon. Member for Blackburn to support the Rates Act. He was bitterly opposed to the 19 per cent. rate cut that we delivered for the ratepayers of Greenwich, the 25 per cent. cut for Southwark and the 32 per cent. cut for Leicester. My hon. Friend the Member for Dulwich (Mr. Bowden), my hon. and learned Friend the Member for Leicester, South and my hon. Friend the Member for Leicester, East gave robust and welcome support to the benefits that have been achieved for their ratepayers.

However, I think that we may agree with the hon. Member for Blackburn in our views of the utterly disgraceful campaign waged by some Labour rate-capped councils. The hon. Gentleman was the victim of some of it. He was ridiculed by one of Ms. Margaret Hodge's propaganda sheets. He was a threat to local democracy because he had used local politics as a stepping stone to this place. Some people must look with amusement at the way in which some leaders of the London Labour party are scrabbling their way into this place, doing exactly the sort of thing that they criticised the hon. Gentleman for doing.

In the campaign not only were there absurd claims and not only was the hon. Member for Blackburn called a threat to democracy. The campaign was not just seeking to prevent the House from having the benefit of the many people who have served in local democracy, many of whom we have heard today, including my right hon. Friend the Minister for Local Government, who was a local councillor. It was that the whole campaign, which was certainly a fiasco, was not entirely a comic fiasco. Nobody will challenge me in saying that it was a fiasco. Certainly the SDP will not challenge me, for Councillor Anne Sofer wrote yesterday: the great anti-abolition and anti-rate capping campaigns now echo sadly like tunes from last year's pop festival—the first played out and the second an expensive flop. What the London public sees now, when it looks at the London Labour party, is a bunch of squabbling incompetents". That is the SDP's view.

I end with a more objective source. Stewart Lansley, a former Labour councillor, is now above politics—he has become a researcher for LWT—although, perhaps for old times' sake, he still contributes to New Socialist, a small circulation magazine. He writes: far from creating a crisis for the Government, Labour has manufactured a crisis of its own. He went on: The responsibility for the…Labour…party's failure to measure up to the challenge lies not merely with local leaders but with the party leadership and the national executive. Neil Kinnock offered no leadership, and no strategy, save capitulation. That is only the Leader of the Opposition's local government policy, not even his defence policy.

Question put and agreed

Resolved, That the Rate Support Grant Supplementary Report (England) (No. 3) 1982/83 (House of Commons Paper No. 504), which was laid before this House on 11th July, be approved.

Motion made, and Question put, That the Rate Support Grant Supplementary Report (England) 1985/86 (House of Commons Paper No. 478), which was laid before this House on 4th July, be approved.—[Mr. Kenneth Baker.]

The House divided: Ayes 263, Noes 202.

Division No. 279] [10 pm
Adley, Robert Cranborne, Viscount
Aitken, Jonathan Critchley, Julian
Amery, Rt Hon Julian Crouch, David
Amess, David Currie, Mrs Edwina
Ancram, Michael Dickens, Geoffrey
Arnold, Tom Dicks, Terry
Ashby, David Dorrell, Stephen
Aspinwall, Jack Douglas-Hamilton, Lord J.
Atkins, Rt Hon Sir H. Dover, Den
Atkins, Robert (South Ribble) Dunn, Robert
Baker, Rt Hon K. (Mole Vall'y) Durant, Tony
Baker, Nicholas (N Dorset) Edwards, Rt Hon N. (P'broke)
Baldry, Tony Eggar, Tim
Banks, Robert (Harrogate) Emery, Sir Peter
Batiste, Spencer Evennett, David
Bellingham, Henry Eyre, Sir Reginald
Bendall, Vivian Fairbairn, Nicholas
Benyon, William Fallon, Michael
Bevan, David Gilroy Farr, Sir John
Biffen, Rt Hon John Favell, Anthony
Biggs-Davison, Sir John Finsberg, Sir Geoffrey
Blackburn, John Fletcher, Alexander
Blaker, Rt Hon Sir Peter Fookes, Miss Janet
Body, Richard Forman, Nigel
Bonsor, Sir Nicholas Forsyth, Michael (Stirling)
Boscawen, Hon Robert Forth, Eric
Bottomley, Peter Fowler, Rt Hon Norman
Bottomley, Mrs Virginia Fox, Marcus
Bowden, A. (Brighton K'to'n) Franks, Cecil
Bowden, Gerald (Dulwich) Fraser, Peter (Angus East)
Braine, Rt Hon Sir Bernard Freeman, Roger
Brandon-Bravo, Martin Fry, Peter
Bright, Graham Gale, Roger
Brinton, Tim Galley, Roy
Brooke, Hon Peter Gardiner, George (Reigate)
Brown, M. (Brigg & Cl'thpes) Garel-Jones, Tristan
Browne, John Glyn, Dr Alan
Bruinvels, Peter Goodhart, Sir Philip
Bryan, Sir Paul Gorst, John
Buchanan-Smith, Rt Hon A. Gow, Ian
Buck, Sir Antony Gower, Sir Raymond
Budgen, Nick Grant, Sir Anthony
Burt, Alistair Greenway, Harry
Carlisle, Kenneth (Lincoln) Gregory, Conal
Carttiss, Michael Griffiths, Sir Eldon
Chalker, Mrs Lynda Griffiths, Peter (Portsm'th N)
Chapman, Sydney Grist, Ian
Churchill, W. S. Ground, Patrick
Clark, Hon A. (Plym'th S'n) Gummer, John Selwyn
Clark, Dr Michael (Rochford) Hamilton, Hon A. (Epsom)
Clark, Sir W. (Croydon S) Hamilton, Neil (Tatton)
Clarke, Rt Hon K. (Rushcliffe) Hanley, Jeremy
Cockeram, Eric Hannam, John
Colvin, Michael Hargreaves, Kenneth
Coombs, Simon Harris, David
Cope, John Haselhurst, Alan
Corrie, John Havers, Rt Hon Sir Michael
Couchman, James Hawkins, Sir Paul (SW N'folk)
Hawksley, Warren Rost, Peter
Hayes, J. Rowe, Andrew
Hayhoe, Rt Hon Barney Rumbold, Mrs Angela
Hayward, Robert Ryder, Richard
Heath, Rt Hon Edward Sackville, Hon Thomas
Heathcoat-Amory, David Sayeed, Jonathan
Henderson, Barry Shaw, Giles (Pudsey)
Hickmet, Richard Shaw, Sir Michael (Scarb')
Hicks, Robert Shelton, William (Streatham)
Higgins, Rt Hon Terence L. Shepherd, Colin (Hereford)
Hill, James Shepherd, Richard (Aldridge)
Hirst, Michael Shersby, Michael
Hogg, Hon Douglas (Gr'th'm) Silvester, Fred
Holland, Sir Philip (Gedling) Sims, Roger
Holt, Richard Skeet, T. H. H.
Hordern, Sir Peter Smith, Sir Dudley (Warwick)
Howarth, Alan (Stratf'd-on-A) Smith, Tim (Beaconsfield)
Howarth, Gerald (Cannock) Soames, Hon Nicholas
Howell, Rt Hon D. (G'ldford) Speed, Keith
Howell, Ralph (N Norfolk) Spencer, Derek
Hubbard-Miles, Peter Spicer, Michael (S Worcs)
Hunt, David (Wirral) Squire, Robin
Hunt, John (Ravensbourne) Stanbrook, Ivor
Hunter, Andrew Stanley, John
Irving, Charles Steen, Anthony
Jenkin, Rt Hon Patrick Stevens, Lewis (Nuneaton)
Jessel, Toby Stevens, Martin (Fulham)
Johnson Smith, Sir Geoffrey Stewart, Allan (Eastwood)
Jones, Gwilym (Cardiff N) Stewart, Andrew (Sherwood)
Jones, Robert (W Herts) Stradling Thomas, J.
Joseph, Rt Hon Sir Keith Sumberg, David
Key, Robert Taylor, Teddy (S'end E)
Kilfedder, James A. Temple-Morris, Peter
King, Roger (B'ham N'field) Terlezki, Stefan
King, Rt Hon Tom Thompson, Donald (Calder V)
Knight, Greg (Derby N) Thompson, Patrick (N'ich N)
Knight, Dame Jill (Edgbaston) Thorne, Neil (Ilford S)
Knowles, Michael Thornton, Malcolm
Knox, David Thurnham, Peter
Lang, Ian Townend, John (Bridlington)
Latham, Michael Tracey, Richard
Lawler, Geoffrey Trotter, Neville
Lawson, Rt Hon Nigel Twinn, Dr Ian
Lee, John (Pendle) van Straubenzee, Sir W.
Leigh, Edward (Gainsbor'gh) Vaughan, Sir Gerard
Lennox-Boyd, Hon Mark Viggers, Peter
Lewis, Sir Kenneth (Stamf'd) Waddington, David
Lloyd, Peter, (Fareham) Wakeham, Rt Hon John
Lord, Michael Waldegrave, Hon William
McCurley, Mrs Anna Walden, George
MacKay, John (Argyll & Bute) Walker, Bill (T'side N)
Maclean, David John Walker, Rt Hon P. (W'cester)
Major, John Wall, Sir Patrick
Marland, Paul Waller, Gary
Mates, Michael Ward. John
Mather, Carol Wardle, C. (Bexhill)
Maude, Hon Francis Warren, Kenneth
Meyer, Sir Anthony Wells, Bowen (Hertford)
Mills, Sir Peter (West Devon) Wells, Sir John (Maidstone)
Moate, Roger Wheeler, John
Monro, Sir Hector Whitfield, John
Moore, John Whitney, Raymond
Morris, M. (N'hampton, S) Wiggin, Jerry
Moynihan, Hon C. Wilkinson, John
Needham, Richard Winterton, Mrs Ann
Newton, Tony Wolfson, Mark
Normanton, Tom Wood, Timothy
Norris, Steven Woodcock, Michael
Page, Richard (Herts SW) Yeo, Tim
Pollock, Alexander Young, Sir George (Acton)
Powley, John Younger, Rt Hon George
Prior, Rt Hon James
Renton, Tim Tellers for the Ayes:
Rhodes James, Robert Mr. Tim Sainsbury and Mr. Michael Neubert.
Roberts, Wyn (Conwy)
Robinson, Mark (N'port W)
Abse, Leo Archer, Rt Hon Peter
Anderson, Donald Ashdown, Paddy
Ashton, Joe Gould, Bryan
Atkinson, N. (Tottenham) Gourlay, Harry
Bagier, Gordon A. T. Hamilton, James (M'well N)
Barnett, Guy Hamilton, W. W. (Central Fife)
Barron, Kevin Hardy, Peter
Beckett, Mrs Margaret Harman, Ms Harriet
Bell, Stuart Harrison, Rt Hon Walter
Benn, Tony Hart, Rt Hon Dame Judith
Bennett, A. (Dent'n & Red'sh) Hattersley, Rt Hon Roy
Bermingham, Gerald Heffer, Eric S.
Bidwell, Sydney Hogg, N. (C'nauld & Kilsyth)
Blair, Anthony Holland, Stuart (Vauxhall)
Boothroyd, Miss Betty Home Robertson, John
Boyes, Roland Howell, Rt Hon D. (S'heath)
Bray, Dr Jeremy Howells, Geraint
Brown, Gordon (D'f'mline E) Hoyle, Douglas
Brown, Hugh D. (Provan) Hughes, Dr. Mark (Durham)
Brown, N. (N'c'tle-u-Tyne E) Hughes, Robert (Aberdeen N)
Brown, R. (N'c'tle-u-Tyne N) Hughes, Roy (Newport East)
Brown, Ron (E'burgh, Leith) Janner, Hon Greville
Bruce, Malcolm John, Brynmor
Buchan, Norman Johnston, Sir Russell
Caborn, Richard Jones, Barry (Alyn & Deeside)
Callaghan, Rt Hon J. Kennedy, Charles
Callaghan, Jim (Heyw'd & M) Kilroy-Silk, Robert
Campbell, Ian Kirkwood, Archy
Campbell-Savours, Dale Lambie, David
Carlile, Alexander (Montg'y) Lamond, James
Carter-Jones, Lewis Leadbitter, Ted
Clark, Dr David (S Shields) Leighton, Ronald
Clarke, Thomas Lewis, Ron (Carlisle)
Clay, Robert Lewis, Terence (Worsley)
Clwyd, Mrs Ann Litherland, Robert
Cocks, Rt Hon M. (Bristol S.) Livsey, Richard
Cohen, Harry Lloyd, Tony (Stretford)
Coleman, Donald Loyden, Edward
Concannon, Rt Hon J. D. McCartney, Hugh
Conlan, Bernard McDonald, Dr Oonagh
Cook, Robin F. (Livingston) McGuire, Michael
Corbett, Robin McKay, Allen (Penistone)
Cowans, Harry McKelvey, William
Cox, Thomas (Tooting) MacKenzie, Rt Hon Gregor
Craigen, J. M. McNamara, Kevin
Crowther, Stan McTaggart, Robert
Cunliffe, Lawrence McWilliam, John
Cunningham, Dr John Madden, Max
Dalyell, Tarn Marek, Dr John
Davies, Rt Hon Denzil (L'lli) Marshall, David (Shettleston)
Davies, Ronald (Caerphilly) Martin, Michael
Davis, Terry (B'ham, H'ge Hl) Mason, Rt Hon Roy
Deakins, Eric Maxton, John
Dewar, Donald Maynard, Miss Joan
Dixon, Donald Meacher, Michael
Dobson, Frank Meadowcroft, Michael
Dormand, Jack Michie, William
Douglas, Dick Millan, Rt Hon Bruce
Dubs, Alfred Miller, Dr M. S. (E Kilbride)
Duffy, A. E. P. Mitchell, Austin (G't Grimsby)
Dunwoody, Hon Mrs G. Morris, Rt Hon A. (W'shawe)
Eadie, Alex Morris, Rt Hon J. (Aberavon)
Eastham, Ken Oakes, Rt Hon Gordon
Edwards, Bob (W'h'mpt'n SE) O'Brien, William
Evans, John (St. Helens N) O'Neill, Martin
Ewing, Harry Orme, Rt Hon Stanley
Fatchett, Derek Park, George
Faulds, Andrew Parry, Robert
Field, Frank (Birkenhead) Patchett, Terry
Fields, T. (L'pool Broad Gn) Pavitt, Laurie
Fisher, Mark Pendry, Tom
Flannery, Martin Penhaligon, David
Foot, Rt Hon Michael Pike, Peter
Forrester, John Powell, Raymond (Ogmore)
Foster, Derek Prescott, John
Fraser, J. (Norwood) Radice, Giles
Freeson, Rt Hon Reginald Randall, Stuart
Freud, Clement Redmond, M.
Garrett, W. E. Rees, Rt Hon M. (Leeds S)
George, Bruce Richardson, Ms Jo
Gilbert, Rt Hon Dr John Roberts, Ernest (Hackney N)
Godman, Dr Norman Robertson, George
Robinson, G. (Coventry NW) Skinner, Dennis
Rogers, Allan Smith, Cyril (Rochdale)
Rooker, J. W. Smith, Rt Hon J. (M'kl'ds E)
Rowlands, Ted Snape, Peter
Ryman, John Soley, Clive
Sedgemore, Brian Steel, Rt Hon David
Sheerman, Barry Stott, Roger
Sheldon, Rt Hon R. Strang, Gavin
Shore, Rt Hon Peter Straw, Jack
Short, Ms Clare (Ladywood) Taylor, Rt Hon John David
Short, Mrs R.(W'hampt'n NE) Thomas, Dafydd (Merioneth)
Silkin, Rt Hon J. Thomas, Dr R. (Carmarthen)
Thompson, J. (Wansbeck) Wigley, Dafydd
Thorne, Stan (Preston) Williams, Rt Hon A.
Tinn, James Winnick, David
Torney, Tom Woodall, Alec
Wainwright, R. Young, David (Bolton SE)
Warden, Gareth (Gower)
Wareing, Robert Tellers for the Noes:
Weetch, Ken Mr. Frank Haynes and Mr. Sean Hughes.
White, James

Question accordingly agreed to.