Rates

HC Deb 23 April 1986 vol 96 cc284-7

5. Mr. Hickmet

asked the Secretary of State for the Environment what is his assessment of the effect of the imposition by local authorities of high rates to finance expenditure above statutory limits upon the local economy and employment; and what steps his Department has taken and is proposing to take to curb high rate rises.

The Minister for Environment, Countryside and Local Government (Mr. William Waldegrave)

I have no doubt that the excessive rates imposed by some councils can have serious consequences for the local economy and for employment opportunities. The rates of the very highest spenders are, and will continue to be, curbed by rate capping. In the longer term, we have published proposal to replace the present rating system in the Green Paper "Paying for Local Government".

Mr. Hickmet

I thank my hon. Friend for his reply. Have not Left-wing authorities such as Liverpool and Lambeth deliberately pursued spending policies that are designed to sabotage local government? Has not that prompted feeble-minded authorities, such as Scunthorpe in my constituency, to overspend to the tune of 46 per cent. and to support Arthur Scargill in his attempt to close down the steelworks in my constituency, with the loss of 10,000 jobs? Does that not indicate the type of spending programmes that Left-wing authorities are prepared to pursue?

Mr. Waldegrave

The first two councils that my hon. Friend mentioned sought conflict for the sake of conflict, regardless of the damage to ratepayers, to local business, or to anybody else. It is noticeable that Scunthorpe is 60 per cent. over the average for shire district councils. For example, it is 162 per cent. over the average in its expenditure on sports and recreation, but I doubt whether its services are 162 per cent. better. There is, therefore, tremendous room for them to make savings and bring practical help to local business.

Mr. O'Brien

Has the Minister made any assessment of the effect of the abolition of the West Yorkshire metropolitan county council on rates in West Yorkshire and of the effect of the reduction in rate support grant, which has led to a substantial increase in the rates that are paid by ratepayers in West Yorkshire? Has the Minister assessed the Government's actions that have caused such high rates in West Yorkshire?

Mr. Waldegrave

I have made a detailed assessment of the fact that the outgoing West Yorkshire metropolitan county council fiddled the books last year and thereby made the rates this year seem much higher. If it had rated at a proper level last year, the rate increases in the successor district councils would have been perfectly reasonable.

Mr. Nicholls

Is my hon. Friend aware of how far that process has gone in the alliance-controlled Devon county council? In the education department alone staffing has been increased by 10 per cent. That has resulted in a rates increase of about 400 per cent., plus loss of grant. That is the price that was demanded for the abolition of the remaining grammar schools. Is my hon. Friend able to imagine what effect that has had on the local economy?

Mr. Waldegrave

One of the most marked effects of having hung councils or, even worse, Liberal-controlled councils—this may be an extraordinary and rather shaming fact for the high spenders on the alliance Benches to have to acknowledge—is that they manage to lose control of expenditure even more effectively than does the Labour party. The facts show that the rate increases in the hung councils and the Liberal councils in the shire counties are higher than the rate increases in both Labour and Conservative-controlled councils.

Mr. Simon Hughes

Will the Minister accept that he has given a very misleading answer? Calderdale, which is a balanced council, has imposed this year a 41 per cent. rates increase, of which 2 per cent. was charged by Calderdale. The rest was charged by the joint boards and quangos that were set up by the Minister's Department. At the same time, boroughs such as Kensington and Chelsea, which hardly need a reduction, have had a 26 per cent. rates decrease, while people in Hove are paying no rates at all. How can that be a successful product of the Government's new rating policies as they affect the country?

Mr. Waldegrave

I shall be canvassing next week in Kensington and Chelsea, and I shall make use of the hon. Gentleman's useful remark that the Liberal party's view is that the rates in Kensington and Chelsea should be increased. It was the creative accounting, to use the technical term, of the outgoing metropolitan counties that caused the problem in Calderdale. The figures show that hung councils and Liberal councils are higher raters than either Labour or Conservative councils. That must be very shaming for the Liberal party.

Mr. Spencer

Is my hon. Friend aware that last year, in its publication "Ratewatch", the CBI said that some councillors were either, at best, ill-informed or, at worst, naive and absurd? In view of the efforts of the Labour-controlled city councils and the alliance and Liberal county councils, which have increased the rates by almost 40 per cent. this year, does he not think that the latter, description is more accurate and that it fully justifies the proposal to have non-domestic rates fixed at national level?

Mr. Waldegrave

It is true that the behaviour of some of these councils is every day making it easier for us to argue that we need the radical reforms that we have put forward.

Mr. Tony Banks

When will the Minister stop using the big lie technique of saying that there is a direct link between rate levels and business failures? The Minister surely knows that the major reasons for business failures in Britain are the state of order books, which depends on the state of the economy, interest rates, and so on. They are all factors that are influenced entirely by Government policies. If the Minister really thinks that there is a direct correlation, why does he not analyse the 7,000 company bankruptcies and the 15,000 liquidations last year to see whether rates were a factor in those failures? If he will not do that, will he start analysing the failures that will continue to flow from Government policies, to see what the correlation is?

Mr. Waldegrave

The hon. Gentleman is not a very effective representative of the new grey Labour party. The truth is that as a result of Government policies interest rates are now falling and in many areas the unavoidable business cost that is increasing is the business rate. There is no question about that, and I shall be happy to analyse it. Indeed, a number of chambers of commerce and others have sent us good material on the critical effect that rates can have in marginal situations.

Mr. Holt

My hon. Friend can take heart from the fact that my constituency, which enjoys the highest unemployment and the highest rates in Britain, is looking forward to the day when the Secretary of State rate caps it, or, better still, gets rid of Cleveland county council altogether. That has no friends in my constituency.

Mr. Waldegrave

I have to disappoint my hon. Friend. At the moment we have no further proposals for local government reorganisation to put before the House, although there are some in Bristol who feel about the county seat of Avon as my hon. Friend does about Cleveland county council. My hon. Friend is right. In the short term the best thing to do is to get a Conservative council back to bring effective help to local businesses.

Mr. Straw

Why does the Minister not have the guts to admit that rates have risen by three times the level of inflation this year and twice the level of inflation in the seven years of Conservative Government because of the £17ʷ5 billion cumulative cuts in rate support grant for which the Government are responsible? Does he not understand that it is an outrageous slur against the outgoing councillors of West Yorkshire to suggest now what he has never suggested in the past 12 months, that rates have gone up in West Yorkshire by 28.3 per cent. because of some kind of fiddling by them. Rates have gone up in West Yorkshire, the West Midlands, Tyne and Wear, South Yorkshire, Merseyside, Greater Manchester, and in Conservative shire counties by 17.6 per cent., because of the Government's policies in cutting the rate support grant.

Mr. Waldegrave

The hon. Gentleman is wrong. In two of the ex-metropolitan county areas in particular—Merseyside and West Yorkshire—a critical factor in the high rates this year was creative accounting by outgoing councils. This is not the first time that I have said what I did today about West Yorkshire. I have repeated it on many occasions because it is true. The hon. Gentleman tries, as usual, to obfuscate the issue. The fact is that Labour authorities mean higher spending. I regret that we are seeing an increase in real terms in expenditure in many Labour authorities and, I fear, a few Conservative authorities. That is why the rates are increasing so much.