Rates

HC Deb 25 February 1986 vol 92 cc833-908 4.54 pm

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

I beg to move: That the draft Rate Limitation (Prescribed Maximum) (Rates) Order 1986, which was laid before this House on 13th February, be approved.

This year, as last, the rate limits to which we are seeking the House's approval fulfil the single most important aim of our rate-capping policy—to protect the ratepayer. Rate-capped authorities and their supporters poured scorn on the leaflet we produced in autumn 1984 which carried this message in its title. They responded with a flood of propaganda and howls of outrage. But the message was true. And it remains true for ratepayers in rate-capped areas in 1986–87.

Because of the effects of the transfer of services after the abolition of the Greater London council and the metropolitan counties, we cannot this year compare the local rate with the local rate last year. But in five of the rate-capped authorities, the general rate—that is, the total paid by ratepayers—next year should be lower than in the present year and in two cases should be a virtual standstill on the 1985–86 rate.

The average domestic householder in Islington will save £134 next year and a householder in Haringey will save £80. The Labour party treasurer will be delighted to know that he will be saving £11,000 on the Southwark party offices. The hon. Member for Blackburn (Mr. Straw) will have an extra £20 in his pocket.

Rate bills should fall for the second year in succession in three of the rate-capped authorities — Southwark, Islington and Lambeth—and in all cases the rates bill will undoubtedly be lower than it would have been if authorities had been allowed to spend next year as they wished.

The average householder in Islington will be saving a massive £502 compared with the rate Islington has told us it wants to charge, while another well-known Islington inhabitant, Arsenal football club, will be saving £38,000 on its Highbury ground. The Labour party would otherwise by paying an extra £72,700 which, I am told, it can ill afford, and the hon. Member for Blackburn an extra £120. The University of London, which faces an annual rate bill of around £14 million, will be saving £200,000 on the senate house and University college alone, thanks to the restraint we have imposed on Camden.

Mr. Frank Dobson (Holborn and St. Pancras)

Is it true that the University Grants Committee grant to the University of London, which represents a reduction in the amount of funding to the university, will be considerably greater than the saving the Minister has just mentioned?

Mr. Waldegrave

The hon. Gentleman rightly says that the University Grants Committee has much less money than it would like to spend, but if he thinks that is helped by Camden putting up the rates to spend on its objectives, he seems to me to be farther off beam.

When we debated the equivalent order last year, we did so in an atmosphere — putting it at its mildest — of controlled hysteria. Very few Members were present in the Chamber, and all the Opposition Members were hysterical, although not my hon. Friend the Member for Leicester, East (Mr. Bruinvels), who was his usual calm self. The Labour-controlled authorities selected for rate capping had sworn a policy of intransigent opposition both to the operation of the rates legislation and to their general obligations to set a lawful rate — and indeed to the policy of the Opposition Front Bench. Opposition Members once again terrified the House with predictions of the dire effects of rate-capping and the horror that should strike the heart of Government at the prospect of the authorities' defiance.

The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore), that well-known exponent of understatement, declared in the debate: The Secretary of State is creating a tragedy and a constitutional crisis that he, this Government and the Department of the Environment will live to regret till the end of time".—[Official Report, 25 February 1985, Vol. 74, c. 82.] The Government and my Department are flattered that the hon. Member should regard us as immortal. This is encouraging.

Needless to say, what happened was rather different. The policy of united confrontation—now no more than a footnote to history—collapsed in disarray. By July 1985 all of the rate-capped authorities had seen reason and set a rate. Nevertheless, some of them took so long to do so that they attracted the unwelcome attentions of the district auditor.

Mr. Allan Roberts (Bootle)

The Stonefrost report recommended that to avoid illegality the city of Liverpool should increase its rate. I recommended as strongly as I possibly could to the Liverpool labour group that it should avoid illegality by increasing the rate. Furthermore, Environment Ministers urged Liverpool, in speeches in this House, to avoid illegality by increasing the rate. Why is the Minister for Environment, Countryside and Local Government now rate-capping Liverpool and preventing it from having the option in the next financial year of avoiding illegality and cuts in services?

Mr. Waldegrave

If the hon. Gentleman looks at the order he will see that we are recommending a rate increase for Liverpool.

The public utterances that we hear this year are all different. Councillor Knight, the leader of Lambeth, has said that this year his council will levy a rate within the rate limit, that it will not impose a deficit budget and that it will set a rate before the beginning of the financial year. The hon. Member for Copeland (Dr. Cunningham) must have explained the facts to him. Liverpool city council is on record as having given similar assurances. However, in Liverpool's case it was not the hon. Member for Copeland, whose communications with the council are just a little strained, who explained the facts to the council. On this occasion it was the gnomes of Zurich. Liverpool city council gave commitments to the bankers of Switzerland.

When it came to the statutory processes that are involved in the second year of rate limitation, the culmination of which we are debating today, the policy of a united front against the Government and in defiance of the Rates Act 1984 was a very dim memory. Far from refusing to have anything to do with the Act, quite sensibly, the majority of the authorities — Camden, Greenwich, Hackney, Lambeth, Lewisham, Liverpool and Newcastle—took the opportunity offered by the Act to apply to my right hon. Friend the Secretary of State for the Environment for a redetermination of the expenditure level that he announced for them last July. They discovered that the procedures worked perfectly fairly.

My right hon. Friend announced in December that as a result of the applications that he had received, the expenditure levels for seven authorities, upon which rate limits were to be based, had been increased. After my right hon. Friend's announcement in December of proposed rate limits, all the authorities concerned took the opportunity to comment on the proposed limits. One authority — Newcastle—agreed to the proposed maximum. That is why Newcastle is not included in the order.

My hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold) and I have had meetings with eight of the authorities to discuss their representations on the proposed rate limits. My right hon. Friend has considered all the representations that the authorities have made but he considers that, in all the circumstances, an increase in any of the proposed limits is not appropriate.

Let me make clear to the House the purpose of our exchanges with the rate-capped authorities. Some authorities claim that by proceeding with today's draft order we are deliberately frustrating their attempts to negotiate with us in some way, on a higher rate limit. That is wrong. The Secretary of State's function is to seek to reach an agreement with the authorities over a different maximum. In doing so, he will consider the representations made to him by the authorities in order to discover whether it is possible to reach agreement on a higher maximum. If, after due consideration, he concludes that it is not possible to reach agreement, it is no part of his role to go on haggling until everyone is exhausted. Against that background my right hon. Friend has considered all of the representations that have been put to him and has decided to proceed with today's draft order.

Mr. Simon Hughes (Southwark and Bermondsey)

Is the Minister able to say whether one London borough—Southwark—which did not apply before the provisional rate was set in December but which decided to apply for consideration by the Government on the day before the final date, 21 January can draw from the fact that there was no change in the rate limit that was provisionally announced in December the conclusion that, had it applied between October and December, there would have been no increase in the maximum level at which it would have been allowed to set its rate? The Minister knows that all the other boroughs had their rate levels increased, following an application at that stage. Could Southwark have gained that benefit had it applied at an earlier stage?

Mr. Waldegrave

The information that Southwark gave to us was fully considered. If it had put different information before us over a longer period, we would have considered it. It is difficult to answer a hypothetical question, but those authorities that gave us the greatest amount of time in which to consider the issues behaved in the most sensible manner.

In the event, it will undoubtedly be claimed that the resulting rate limits that are contained in the order imply the usual draconian and unreasonable cuts. However, I urge right hon. and hon. Members to remember that the House has had the benefit of speeches of that kind on many occasions. Last year we were told that services in the affected areas would be decimated and that thousands of jobs would disappear.

The most memorable example of this type of claim was the series of advertisements that was placed in the press by the Association of London Authorities. Its most imaginative advertisement featured at the top a life-sized photograph of a rat. Underneath it ran the headline One of the few beneficiaries of rate-capping. The text of the advertisement went on to say that rate capping would lead to cuts in a whole range of services: meals on wheels, day care for the mentally and physically handicapped, street lighting, public health inspection, waste disposal, street cleaning, renovation of poor housing and pest control.

Less colourfully, as is his wont, the hon. Member for Norwood (Mr. Fraser) who wound up for the Opposition this time last year claimed that his local authority, Lambeth, would be able to live within the rate limit only by sacking employees. He begged to know what would happen to the 4,000 pensioners, the 5,000 people in Lambeth with home helps, the 1,500 people receiving meals on wheels and the 1,700 people who attend luncheon clubs. What has happened? I checked the matter and found that all 17 of Lambeth's pest control officers are still in post. The ill-fated rate-capping road show, supported by Lambeth ratepayers to the tune of £54,000, has proved to be so unenticing to the people of the borough that it has been abandoned. The cost to Lambeth ratepayers will be much higher. That little venture will cost them about £117,000.

Mr. John Fraser (Norwood)

Is the Minister aware, first, that the Government were successfully sued by Lambeth borough council for having got its expenditure limits wrong last year and that they were increased by £8 million? Secondly, is he aware that Lambeth received a substantial sum of money from the Greater London council? That sum of money was very helpful and came from the distressed borough fund. Thirdly, is he aware that a great deal of money came to Lambeth because of the change in the housing subsidy arrangements? Housing subsidies were made available from a sinking fund. That made quite a difference. Why does the Minister have to decide these matters rather than the voters of Lambeth?

Mr. Waldegrave

We had that argument in principle about the Rates Act 1984. The Government's view is that in some of these areas the self-balancing mechanisms of local democracy do not provide a fair balance, and we are putting before the country fundamental reforms for the longer term in order to meet the underlying problems.

Mr. Tony Marlow (Northampton, North)

We heard earlier today in answer to questions to the Department of Health and Social Security that 51 per cent. of the population of Liverpool and 57 per cent. of the population of Manchester are on housing benefit. It is all very well talking about the voters, but it is the taxpayers, not the voters, who pay.

Mr. Waldegrave

My hon. Friend addresses the central purpose of the reforms that we have put before the country in the Green Paper. We are trying to bring into closer balance in the longer term those who pay and those who use local services. That must be the way forward.

When my hon. Friend the Member for Mitcham and Morden and I held meetings with the rate-capped authorities during the last few weeks we made the point of asking each authority what cuts in services they had made during the last year. Not one authority claimed that it had made large cuts in services or jobs. On the contrary, a number of them spoke with pride of the fact that they had got through the year without making cuts and that in some areas there had been a growth in provision.

My right hon. and hon. Friends may want to know what this paradox means. First, it means that last year we faced a cynical and hysterical campaign about cuts. That campaign had no basis in fact.. In fact, so cynical was the campaign carried out by one borough, Islington, that the leader of the council received complaints from her own public relations unit that it had been asked to put out misleading publicity on the effects of rate capping on jobs and services.

Secondly, the fact that rate-capped authorities have escaped without making cuts this year means that those authorities had large reserves of ratepayers' money, some part of which we have compelled them to return to their rightful owners. But that cannot continue for ever. The cry that we now hear from the rate-capped authorities is that the rate limits that we have proposed for next year will require them to make savings in spending—and about time, too.

The aim of rate capping is to force economies in spending on the excessive spenders in order to restore a more reasonable balance between the interests of ratepayers and the provision of services. If it is vital for all authorities to secure good value for money in the provision of services, is it not doubly important for rate-capped authorities, many of which face very severe problems, to make the necessary value for money savings that they can? All of these authorities, which caterwaul about cuts, have plenty of room for savings. The examples may by now be over-familiar, but that will not prevent me from referring to them again and again until the message gets through. There is the Islington housing clerk who sits at home on full pay—£150 a week —doing nothing because of "blacking" by the National and Local Government Officers' Association which the council will not resist.

There was a £200,000 overspend by Islington on the publicity budget, and £20,000 was spent on subsidising council employees to brew real ale. Lambeth was paying people £2 an hour for the delight of coming to hear Mr. Knight and his colleagues make their speeches. [Interruption.] The normal argument is to say that these are small figures, and I think I hear an hon. Member saying that very thing. Here is a figure that is not small. The authorities covered by this order are owed £57 million in rent arrears. That is a scandalous waste of money which could be used to deal with the real problems of those boroughs. What is more, the figures for so-called cuts that authorities are claiming for next year are almost invariably measured against budgets from which, in reality, no economies have been sought this year and which include proposals for real growth next year. Even those authorities that knew as early as last July that they were selected for rate capping again in 1986–87 appear to have made no effort whatever to make the one cut that is necessary—to cut their coats according to their cloth.

Rate-capped authorities and others have also supported spending this year with payments made by the GLC from its so-called "stress borough" programme to which the hon. Member for Norwood referred. It is clear that all the London rate-capped authorities have used this money to support the existing level of spending in the full knowledge that that source of funds would disappear, and after last July, that all but one were selected for rate-capping again in 1986–87. A number of authorities have said that we should not contemplate setting a final rate limit given the uncertainties, as they see it, surrounding the costs that they will inherit after the abolition of the GLC. We reject that argument. The question is whether any of the remaining uncertainties need to cause rate-capped authorities any concern.

The London Residuary Body today resolved the major uncertainty by announcing its levy and charges for 1986–87. For some months the LRB has been discussing with boroughs its proposed budget, as have the residuary bodies in the metropolitan county areas. My hon. Friend has considered carefully the implications of the residuary body budgets for the rate limits he has proposed.

Another uncertainty is the destination of GLC balances. That uncertainty can only work in favour of rate-capped authorities in London, and all London authorities can look forward to some share in the distribution of remaining GLC funds, whatever the outcome of the present action being brought by the City of Westminster. This benefit will be over and above their income from rates and grants. Thus, the argument about uncertainty falls.

It is against that background that my right hon. Friend has laid the Order we are debating. The rate limits it contains are reasonable and fulfil the aims of the House when it passed the Rates Act two years ago. As my hon. Friend the Member for Northampton, North (Mr. Marlow) has said, the Government are committed to protecting hard-pressed ratepayers who have no effective lever to restrain the high spending of their local authorities. Until proper local accountability is secured, and as long as a handful of local authorities continue to push up spending with no thought about the effects on those who finance their extravagance, central Government will have to act to restrain their excesses. For those reasons I commend the order to the House.

5.12 pm

Dr. John Cunningham (Copeland)

The House is being asked to approve an order to control the rates and budgets of 11 elected local authorities. Those authorities were elected by almost 2.5 million people. The authorities are Basildon, Camden,. Greenwich, Hackney, Haringey, Islington, Lambeth, Lewisham, Liverpool, Southwark and Thamesdown. The combined budget of those authorities totals £1,103.5 million. Newcastle upon Tyne was also designated under the Act, but has chosen to set a rate below the maximum the Secretary of State would have imposed, thus retaining some of its independence.

Twenty other local government bodies have their budgets and precepts controlled from Whitehall. They include six police authorities, six fire authorities and six passenger transport authorities in Tyne and Wear, west Yorkshire, south Yorkshire, Greater Manchester, Merseyside and the west midlands. The Inner London education authority and the London fire authority have their precepts limited by Government control. That illustrates the expanding nature of the creeping centralism of this Tory Government.

I make it clear that the Labour party remains fundamentally opposed to this attitude towards local government in general and to this Act in particular. In govenment, we shall abolish it. It remains my view that Whitehall and Westminster are ill-equipped to deal with these matters. This House is not the place to fix the rates of any one elected local authority in Britain, let alone to those of 11 councils all at the same time, as this order proposes.

The British people do not believe that civil servants and Ministers are well enough informed or have the understanding, let alone the right, to enforce decisions that should be taken in our town halls. Increasingly, evidence shows that better, more effective and more efficient decisions can be taken locally, and those conclusions are substantiated by the reports of the Audit Commission.

In introducing this order the Minister of State made a calm speech and projected a reasonable manner. It was as if all is well and there are no problems. That was the general impression that one gained from his speech, and that was the mood and message he wanted to convey not just to the House but to the country. I reject all that, and I also reject Government claims for this Act and its effects. Those claims have always been unfounded, as are the ideas behind the legislation, which we regard as untenable.

In announcing his decisions on 13 February, the Secretary of State in a press release from his Department said: For the second year running, our policy has succeeded in protecting ratepayers. It is worth examining that claim for a moment. Which ratepayers have been protected and at whose expense?

Mr. Marlow

Will the hon. Gentleman say how the Labour party would control local authority spending, or does it not believe that local authorities should be controlled in any way? Will the hon. Gentleman also say how he would protect those ratepayers who are charged savagely increasing rates in those local authority areas where the majority of people are in receipt of housing benefit?

Dr. Cunningham

I thought I had made it clear at the beginning of my speech that we do not accept the provisions of this Act and we shall abolish it. I deliberately said that at the beginning of my speech in order to avoid the sort of intervention we have just had. We do not believe that local authority rates should be set in Whitehall, fixed by Ministers, or controlled by Westminster. We have made that clear since the Second Reading of the Bill which became this Act, and I shall make it clear at every available opportunity. We shall return those freedoms and rights to democratically elected local authorities of whatever political control.

Mr. Marlow

Who will protect the ratepayers?

Dr. Cunningham

I am dealing with the Government's claim that they are protecting the ratepayer. That is wholly false. Last year in Britain average domestic rates rose by 9.5 per cent., virtually twice the rate of inflation. This year the rises in many cases will be much higher than that. The major reason why rates have risen so much under this Government—by over 140 per cent. — is the massive and consistent reduction in rate support grant. Rate support grant has been reduced from 62 per cent. of councils' current expenditure under the last Labour Government, to about 46 per cent. now. No Conservative Minister can honestly claim to have protected ratepayers.

The deliberate intention of the Prime Minister's policy has been to switch national burdens from taxpayers and from high income earners on to the rates. That has been the policy and will continue to be the Government's policy. As we saw in the rate support grant report, approved by the hon. Member for Northampton, North (Mr. Marlow) and others just a few weeks ago, that remains the Government's intention.

This year, to disguise the implications of the policy, the Government have robbed the county councils of at least £220 million, which is the figure that has been produced by the Association of County Councils. That sum has been taken from the shires to help rate-capped authorities, and that is shown by the Government's figures. In 1984–85, London authorities' share of total grant-related expenditure was 18.6 per cent. In 1985–86, their share was increased to 19.7 per cent. In 1986–87, it is projected to increase to 20.5 per cent. The share of metropolitan areas outside London has remained static. However, there has been a corresponding fall over the same period in the non-metropolitan areas' share of total grant-related expenditure, which has fallen from 56.2 per cent. to 54.5 per cent. These figures have been produced by the Government in response to my questions.

Government figures show also that the percentage of block grant given to rate-capped authorities has increased in 1985–86 compared with the previous financial year. The Government have been transferring resources from non-rate-capped authorities to rate-capped authorities. That is the effect of the Act. That is what we said when the Bill, as it then was, was passing through the House. That is what is happening and that is what continues to happen, and that is why the Government's claim that they are protecting ratepayers is false. The Government are protecting one small group of authorities at the expense of all local authorities. As they are reducing the size of the cake in addition, it cannot be said that ratepayers are being protected. Ratepayers are being betrayed by the Government's policy.

Mr. Waldegrave

I understand that the hon. Gentleman would like to have much more total grant as he would like to have more public expenditure under every head, as would his party. I am grateful for his confirmation, which is rather important and which is now on the record, that we have protected what he has described as a small group, which we are now debating.

Dr. Cunningham

The Minister's use of "protected" is interesting in this context. It is right that under the Rates Act resources have been brought back to designated authorities. However, their rates increased in the first place because large sums were taken from them. Until the last financial year the GLC, for example, had received no grant from the Government. That is the principal reason for the position of designated authorities being so bad.

Mr. Marlow

The hon. Gentleman said that the Government have switched their revenue raising to local government, from central taxation to the ratepayer. We all know that. What the hon. Gentleman has not said is how he would intend to protect the ratepayer from the extravagant local authority, particularly in those areas where the majority of people are receiving public support through housing benefit.

Dr. Cunningham

The debate is focused upon Government policy, not Labour party policy. However, the Labour party remains content that decisions on local expenditure in the form of rates should be determined at local elections through the ballot box. It is not in the least frightened or concerned that the Labour party in local government will have to put its record to the test and ask voters to decide the issue. The reality is that the Tory party is running away from that long-held principle in our democratic society. It is undermining the principle that local communities can elect local authorities to serve them and then make a judgment of their performance at the appropriate time by voting. That has always been our position and it remains so.

This is the second year in succession in which county council ratepayers have been lumbered by Tory party policy. For 1986–87, the finance precepts in the shires demonstrate the argument that I am advancing. I shall refer to some Conservative-controlled county councils to underline that high rate increases do not occur only in Labour-controlled authorities. Conservative-controlled Berkshire has announced a 13.1 per cent. increase in its precept for the coming year. Conservative-controlled Buckinghamshire has announced a 30 per cent. increase while Conservative-controlled Dorset, Hereford and Worcestershire, Lincolnshire and West Sussex have announced increases of 20 per cent., 10.9 per cent., 22 per cent. and 19 per cent. respectively.

Mr. Allan Roberts

Is my hon. Friend aware that Conservative-controlled Sefton council is heading for a massive 26 to 30 per cent. rate increase? It would be interesting to know why Liverpool has been rate-capped at 15 per cent. while Conservative-controlled Sefton, which is next door, is being forced by the Government, through the RSG settlement, to increase its rate by 26 to 30 per cent.

Dr. Cunningham

I am grateful to my hon. Friend for that intervention. I shall deal with the issue which he has raised later in my remarks.

Against the background which I have set out, it is easy to demonstrate that Conservative claims, which have been reiterated this afternoon, about protecting ratepayers are false. Lower rates, if they exist in rate-capped authorities, are being financed by higher rates in the shire counties. The basis of rate capping is an above-average increase in expenditure targets for designated authorities, which brings budget and target closer together, thereby reducing penalties and earning the authorities considerably more RSG than in the previous year.

In the current year, there was an average increase in targets for authorities designated under the Act of 16.4 per cent., compared with a national average increase of only 6.2 per cent. This more favoured treatment resulted in an additional £116.5 million of grant going to designated authorities. These tactics cannot be sustained, nor can the claim that the Government are protecting ratepayers pass even the most cursory scrutiny. The claim is clearly untrue. There are especially strong arguments this year—

Mr. Waldegrave

The hon. Gentleman seems to be trying to argue in every direction and to have his argument in every way. He claims that the Government are transferring more grant to meet city problems, which I understood was a policy which he supported and which helps ratepayers in the city areas. He then claims that those ratepayers are not being helped. I am slightly confused about which side of the argument he is on. The hon. Gentlman veers from one side to the other.

Dr. Cunningham

I have no doubt that the hon. Gentleman is confused.

Mr. Waldegrave

I am confused only by the hon. Gentleman's argument.

Dr. Cunningham

Support for the Act from the author of "The Binding of Leviathan" demonstrates his confusion perhaps better than anything else. The Government are claiming that by helping a tiny proportion of ratepayers to a marginal extent they are protecting ratepayers in Britain as a whole. I say that all the evidence demonstrates that that claim is false. As long as the Act remains in operation, such claims will remain false. They will remain false also for as long as the Government persevere with their expressed policy of cutting RSG year after year. If the Minister cannot understand that, I am sorry. As he has been an Environment Minister for such a long time, he has no excuses for not understanding my argument.

There are especially strong arguments this year why the interim provisions of the Act should have been implemented. A number of authorities, including Liverpool, asked the Secretary of State to set interim maxima for the rates, as he could have done, pending discussion and, we hope, the solution of a number of problems. The Minister has claimed that the uncertainty is being resolved, but that is not the view of local authorities. There is much uncertainty over budgets for the coming financial year for the metropolitan authorities because of the problems associated with the abolition of the GLC and the metropolitan councils. The fact that these problems remain within four or five weeks of the authorities going out of existence demonstrates how ill-prepared the Government were and how ill-thought-out the legislation was for the regrettable abolition of the authorities.

There is an acknowledged error in the block grant calculations for 1986–87 which has a major effect on London boroughs and may well have an effect on other authorities. At least two authorities are about to start legal proceedings against the Secretary of State. There is an injunction covering the GLC funding to boroughs which the Minister of State mentioned in his speech. The Government, we argue, are being unnecessarily hasty in placing the order before Parliament, given the important, unresolved matters. There is no good reason why interim provisions should not have been used while these matters were being resolved.

It is worth reminding the House that many of the councils affected are among those which represent the most disadvantaged boroughs and communities. For example, on eight measures of relative deprivation, Camden appears in the top 50 six times. Greenwich appears three times, Hackney six times, Haringey five times, Islington six times, Lambeth six times, Lewisham five times, Liverpool six times, Newcastle four times and Southwark seven times. These authorities and communities have particularly difficult and deep-seated problems. Many of them are inner-city communities. These authorities are being penalised and prevented by the Government and the legislation from getting on with the job that they seek to do. The boroughs were chosen for designation on an arbitrary and unfair basis. The criteria that were used to make the designations were at best unfair and at worst nonsense. For example, comparing the increase in cash growth for those authorities with that of the Conservative-controlled county council of Buckinghamshire, Buckinghamshire's increase in expenditure can be seen to be larger over a period of years, than those of many of the authorities designated. Simply by choosing particular criteria, the Secretary of State is able to trap the authorities that he wants to trap and leave out of the control of the Act the authorities that he does not want to designate.

The spending targets for individual authorities have been completely discredited and the Government have announced that they intend to abandon them. The Minister of State told the House that all would be well and that because nothing very serious happened last year the situation would be the same in the coming financial year. Because of the uncertainties I have mentioned, it is far too early for anyone, including Ministers in the Department, to give any clear impression of the likely effects on local services and jobs in the coming financial year.

The Minister's equanimity and sanguine approach are not shared by local authorities—including the officers in the local authorities — and are not shared by many voluntary organisations in London and the metropolitan areas. Funding for the voluntary sector is now in a very serious plight. Uncertainty about that funding has meant that many organisations have already had to issue redundancy notices to their staffs. There are two main methods by which voluntary organisation are currently funded through the GLC and the metropolitan counties. The transitional funding arrangements for schemes within single boroughs and districts and joint arrangements for cross-borough district schemes after abolition have been discussed. For both these arrangements, the resources available are massively reduced compared with current spending levels.

A total of £66 million worth of bids for transitional funding were submitted to the Department of the Environment by local authorities in October 1985. Only £20 million has been allocated, with wide variations between areas in their levels of allocations. Most rate-capped boroughs received only 27 per cent. of their bids. For example, in Hackney the bid is £5.6 million, but the provisional allocation is only about one fifth of that sum. In Southwark the bid is £2.7 million, but the allocation is less than £500,000. In Camden the bid was £4.4 million and the allocation was only just over £1 million. The same situation obtains in Lambeth.

I am sorry that the Minister of State does not appear to be listening to me, but it is important to get an up-to-date view from the voluntary organisations since the Government made promises to the voluntary organisations and they made promises in another place, which enabled them to get the abolition Bill through that House. It was on the basis of those promises that much of the legislation was agreed. The Government have now comprehensively reneged on their promises.

I spoke today to Mr. Martin Hall of the London Voluntary Service Council. He said: The Government is showing frightening complacency with regard to the fate of voluntary organisations. The Richmond scheme in London for funding London-wide voluntary bodies, is moving very, very slowly. There are currently applications from 700 GLC funded London-wide bodies, 510 of them in the non-arts field of voluntary work. At the conclusion of a meeting to be held tomorrow, a total of only 130 applications will have have been dealt with. There is to be a further meeting of the Richmond scheme on 20 March when a maximum of a further 80 will be considered. Another meeting has been arranged, but is not planned to be held until 17 April when perhaps a further 80 applications will be considered. Of course, 17 April is long after the date when the GLC will have ceased to exist.

In other words, at most 40 per cent. of the applications from voluntary bodies will have been dealt with nearly three weeks of the new financial year already past. What future does that offer for the voluntary organisations and the people that they employ?

On transitional funding, only 22 London boroughs out of the 30 which submitted bids, have had complete notification of approved projects. The Department of the Environment has so far rejected 32 projects, 16 of them in the London borough of Camden alone.

That is the sorry state of affairs with respect to transitional funding to the voluntary sector. Councillors in many of the boroughs controlled under the order are expected to find the shortfall in cash to make up for what is happening as a result of the abolition. That is simply not on. It is not possible and Ministers know that.

I said that Liverpool, in particular, had sought an agreement from the Minister to the publication of an interim order. Liverpool city council has written to the Secretary of State on several occasions, asking for a redetermination of its rates limit. Why have the Government consistently refused, given all the problems that Liverpool has faced, to talk about that possibility? It is scandalous, given the other difficulties that the city council faces, that the discussions have not even taken place.

Discussions on Merseyside about transitional funding and what is to happen, have reached a pretty sorry state, as the Local Government Chronicle recently reported. The Local Government Chronicle quoted County Councillor Keva Coombes, who said: The co-ordinating committee has been split 3-2 on practically every issue. The only thing they agreed on is that Wirral MBC should keep the register of performing animals in Merseyside. The only agreement It appears that there are no performing animals in Merseyside although politicians did not lose the opportunity to make a few gibes at their opponents. That is amusing and entertaining, but it shows that the Government's policy of reaching agreement with the boroughs to take on the responsibility and to find the money to finance those projects is not working within five weeks of the authorities going out of existence.

Despite all that, we learn from the Financial Times and elsewhere that the Government intend to tighten their grip even further, eroding more freedoms and removing flexibility from local authorities, acting under the instructions of the Treasury. We believe—I hope that the Minister will deny this and I shall happily give way to him — that legislation already exists to take further control of local authorities' capital receipts. The Government are now apparently proposing a massive new series of curbs to remove the flexibility enjoyed by local authorities on capital, creative accounting, housing repairs and non-prescribed capital expenditure; and, if that is dragged into prescribed expenditure, it will produce massive difficulties for local authorities with major housing repair problems.

We understand that schemes of deferred purchase, leasing and the cascade arrangements are all likely to go. All those things will create major new difficulties for local authorities. When the hon. Lady, the Under-Secretary of State, replies, will she tell the House whether, despite all the objections, the Government intend to enforce their new accounting procedures on local authorities? They will again remove flexibility and impose further controls from the centre. As Ministers are aware, those proposals have been bitterly opposed by the Chartered Institute of Public Finance and Accountancy. I understand — perhaps Ministers will confirm this — that the chairman of the Audit Commission has also written to the Secretary of State bitterly opposing those proposals. We should like some answers to those questions. I am sorry to see that the Secretary of State does not know, but perhaps Ministers could clarify the point amongst themselves and talk quietly with the Box. We can then have an answer when the hon. Lady replies.

The Minister said something about the events of last year. I agree with him. Many of the most calamitous claims of people in local authorities were not well-founded. Some people's fears were not borne out. That does not mean that it has been easy for local authorities. It would be wrong and foolish to conclude that because that happened last year, it will happen in the future, especially in view of the additional controls that we believe the Government intend to use.

In addition, during the past 12 months there has been an unprecedented volume of litigation. Councils have been taking the Secretary of State to court again and again. The Government, committed to reducing the role of the state, are increasing and expanding the role of the state in affairs which would be far better left to local authorities.

The order is unsupported by any explanatory material. In the documents available to the House there is no justification for what the Government propose.

I can, perhaps, sum all this up by quoting Mr. Malcolm Grant, the senior lecturer in law at the University of Southampton who said—I agree with him—about the Rates Act 1984: Rate capping cannot be regarded as more than a short term expedient. It represents an extreme attempt to maintain control over a block grant system which is fundamentally flawed. The block grant arrangements have manifestly failed in their objective to provide a rational means of financial support for local government services which will balance the needs and resource of the different local government areas. That much is widely recognised, not least by the Audit Commission, by the Comptroller and Auditor General, and"— finally and belatedly— by the Government".

The Opposition have an entirely different view of what the local authorities' role and priorities should be. As Conservative Members have expressed an interest in our views, let me make them clear. We believe that elected local authorities should be major representative political institutions in a plural democratic society. They should provide valued public services for the protection and well-being of all citizens. They should be a means for people to participate in self-government at local level. Of course, there is and always will be tensions between central and local authority. How we deal with those tensions is an important test of how well we govern.

In the absence of a written constitution, the relationship between central and local authority has never been clearly defined. That means that significant changes imposed by the Government have been able to be enforced. Local accountability has, far from being enhanced, been continuously eroded.

In recent years, we believe that that relationship has become unbalanced, with central Government taking more powers of discretion and control away from local government, reducing its role and freedom.

We believe that the country faces a fundamental choice. Is local government to be vested with genuine local autonomy and its own responsibilities and distinct legitimacy, based on elections and the ability to raise independent revenue, or is it merely to be the agent of central Government? The Labour party remains committed to genuine elected local government with its own revenue-raising powers, the income from which should be free from central control.

We remain determined to enhance freedom. the role and the functions of local government. We shall modernise and restructure local authorities. We shall strengthen the position of elected local councillors. We shall work for a constructive and developing partnership between a Labour Government at Westminster and local councils to improve the quality and range of community services for all our citizens.

It is for those reasons, and because of the shambles that the Government have created, that we ask the House to reject the order.

5.47 pm

Mr. David Amess (Basildon)

I welcome the opportunity to explain why I support the rate limitation order as it affects my constituency, and remind the House of just how successful the new town of Basildon is. Without fear of contradiction, I can say that I am privileged to represent what is today regarded as the finest and most dynamic town, not just in the south but in the whole of the United Kingdom. All roads lead to Basildon. The development corporation has done a magnificent job under Dame Elizabeth Coker and Mr. Douglas Galloway's stewardship in transforming the dreams and aspirations of thousands of displaced Londoners into the reality of a new town. Not everything they have done is perfect—I fully appreciate the resentment and anxiety felt by original Basildonians — but, given the task that it was, the development corporation has achieved much of which to be proud.

The development corporation's task is not completed. I ask the Minister to repeat to the Minister responsible the fact that I believe that it is too soon to wind up the corporation on 31 March. I am also worried by the representations that I am receiving about the number of compulsory purchase orders that have been imposed in the Laindon area. I hope that the development corporation will be allowed to continue a little longer.

Basildon has the largest covered shopping centre in Europe, which has brought many new jobs and increased prosperity to the constituency. It is also planned that Basildon shall have the largest covered sports stadium in Europe. Such a prestigious sports centre would be used to stage many great sporting events. During the past 12 months two new police stations have been opened in Laindon and Pitsea. When I was elected to the House, Basildon had the worst crime rate in Essex, but I am delighted to say that that is no longer the case. In the past year we have enjoyed a great reduction in the number of crimes committed, while the police have enjoyed the best crime prevention and detection rate for the whole of Essex. Great credit should go to those responsible for that wonderful achievement.

Basildon has excellent communications and these have been enhanced by the opening of the M25, the future expansion of Stansted and the prospect of the Channel tunnel. The best news for Basildon is that over the past 12 months unemployment has fallen by 5.8 per cent. There are many reasons for this, but the role of the development corporation in attracting new business cannot be undervalued. However, there are still not enough jobs for those who wish to work, nor will there be if high rates are allowed to continue to destroy jobs, especially in small businesses.

This is the second consecutive year in which Basildon's rates have been capped. The present context for the rate capping is different from that of last year. Last year's limit was met with a mixture of relief and disappointment by my constituents. The council had wanted to increase rates by 33.66 per cent. but instead there was a rate increase of 17.59 per cent. This year my constituents are delighted by the fact that the limit has been set at 4.8 per cent., which is less than the rate of inflation. A number of businesses and many families who have recently arrived in my constituency will stay on the promise that the burden of rates will be reduced. They are pleased that the Government have shown good faith this year.

Last year Basildon district council, along with all the other rate-capped authorities, did not use the Government's appeal procedure—a collective Socialist view was taken on the appeals procedure. The council embarked on a massive public relations exercise to discredit the Government's action with its "Let's defend Basildon" campaign. All of this was launched at the ratepayers' expense. This year the council has adopted a much quieter approach. I understand that out of the 12 capped authorities, seven have appealed against the decision and all have received more money.

It is noticeable that Basildon was not one of the authorities to appeal in spite of the fact that the authority maintains that it has been unfairly capped. The leader of the council has claimed that there is no appeal procedure. I wonder whether the Minister would comment—now or when she replies — on what interpretation could be placed on the actions of an authority that has claimed that it is being treated unfairly but yet refuses to use the appeals procedure. I wonder whether it has anything to do with the fact that the authority has substantial reserves of more than £3 million and did not even spend up to its budget of last year.

The Audit Commission report on Basildon highlighted a number of interesting points and showed that considerable savings could be achieved. The report showed that Basildon spends 197 per cent. more on steet sweeping than other comparable authorities—we must presumably vacuum our roads. Basildon spends 164 per cent. more on parks and open spaces, 142 per cent. more on sports and recreation and 122 per cent. more on concessionary fares. This is all very nice until one remembers that somebody has to pay for these services.

Perhaps the most extraordinary and damaging expenditure was that spent by the council on public relations. By any standards it must be regarded as going over the top for a district council to need to employ 12 people in its PR department. That service cost £307,800. There was more to this than meets the eye. I am indebted to the organisation Campaign Against Council Corruption for bringing various matters to my attention. The organisation found out that the local authority responded to an advertisement in Marxism Today and decided to employ a PR company at a further cost to the ratepayers of £146,000. When questioned, the authority stated that there was no ulterior motive and that no bias would be shown in its dealings with the PR company.

CACC asked the PR company, Union Communications, about its services and it eagerly sent a letter stating what a marvellous company it was and how it worked closely with constituency Labour parties— for instance, in Basildon. The company said it had shown Basildon council how to increase the Labour vote by 10 per cent. This is abosolutely disgraceful. I am sure the House will understand that with this sort of nonsense continuing at ratepayers' expense my constituents—

Dr. Cunningham

I am grateful to the hon. Gentleman giving way, especially since he has spent a large part of his speech making allegations and attacks on an elected Labour council. In view of what he has said, how can he explain the Audit Commission's view that Basildon is a well-run authority? How does he explain that the electors of Basildon continue to elect a Labour council?

Mr. Amess

I am delighted that the hon. Gentleman has drawn my attention to these matters.

Dr. Cunningham

Answer.

Mr. Amess

I will certainly answer. Union Communications came after the audit report. I had a completely different interpretation of the Audit Commission's report on Basildon. We spent 150 hours in Committee discussing the Rate Bill and I remember that it was clearly shown that the Audit Commission considered that there were many areas in which the local authority could find savings without affecting all the necessary services of Basildon. The hon. Gentleman has referred to my attacks on an elected Labour authority yet the first quarter of my speech was spent stating what a fine town I represented. I wonder whether the hon. Gentleman can also defend the unmitigated and never-ending attacks that have been made by the council on the duly elected Member for Basildon.

Dr. Cunningham

The hon. Member will not be that for much longer.

Mr. Amess

The hon. Gentleman says that I will not be the hon. Member for much longer, but I would remind him that in 1983, four weeks before the general election, in the local elections, I lost the one Conservative councillor in Basildon. The Labour party got 52 per cent. of the total votes cast. Four weeks later I was elected Conservative Member of Parliament for Basildon. If I were the hon. Member for Copeland — much as the Labour party intend to continue sending what it considers front line speakers to my constituency —I would not bank on the result in 1988.

If ever there was an example of a local authority speaking with a forked tongue it is that of Basildon over its involvement with City institutions. The local authority, which never loses an opportunity to castigate the City, has now established a company called BEDCO. The company has been paid, under section 137 of the Local Government Act 1972, a grant of £65,000 a year for employment initiatives. Basildon community trust has had £380,000 paid to it for grants for three years for various bodies. BEDCO has announced that it wants to borrow £15 million from City institutions for various projects, for example Basildon astrodome, which has recently featured in the media. Furthermore, the council wants a borrowing facility with City institutions of £14 million—£8 million for a theatre on a deferred purchase scheme, and £6 million to develop various community facilities. The council's official spokesman said that all those enterprises would be embarked on at no extra cost to ratepayers. That is absolute nonsense. My constituents would eventually face huge interest charges, and future generations of ratepayers would have to bear debts. That is disgraceful, irresponsible action.

The council faces a wages and salaries bill of £10.7 million. Seven hundred thousand pounds is to be spent on developing computer technology, yet staffing levels will remain constant. Last year the welfare rights advisory service spent nearly £350,000. The local authority, instead of concentrating on mastering the provision of services for which it is responsible, seeks to interfere in areas where it has no power to act. There is a cabin in Fodderwick car park which houses the so-called self-support group, monitoring something over which it has no power.

The latest issue of Link contains a questionnaire asking people whether they are satisfied with the provision of their children's education. It is many years since the district council was responsible for educational provision, which is now provided by Essex county council, which was not consulted about the questionnaire. That is further evidence of the disgraceful public relations exercise on which the council has embarked. There was never any input from the five elected Labour county councillors in educational matters. They have only now become interested because some worried parents came to my surgery and because they wish to take advantage of the teachers' dispute for electoral mileage.

Mr. Dobson

The hon. Gentleman referred to local authority expenditure on promoting the take-up of welfare benefits. Does he think that everybody in is constituency is receiving the benefits to which they are entitled? If some people are not, who is responsible for improving the take-up?

Mr. Amess

I would like my constituents to take advantage of the benefits available to them. I do not think that the district council is giving my constituents the right information about the benefits to which they are entitled, and I shall demonstrate that. The information is misleading them. It is the responsibility of the authorities administering the benefits to——

Mr. Dobson

But those authorities are doing nothing.

Mr. Amess

Then we must encourage them to circulate more information. The district council should concentrate on mastering the provision of the services for which it is responsible before interferring in other areas.

I shall now demonstrate my point. From 1 April, Essex county council will abolish home help charges—[HON. MEMBERS: "Hear, hear."] I note that that meets with applause from Opposition Members. Yet Basildon council's welfare rights service is apparently confusing people by telling them to stop paying now. There is no overall control on Essex county council because at is a hung council, and we are quickly seeing the increased spending consequences of not having firm political control of the council.

I have heard it argued that the money spent on welfare rights could be better spent on at least 20 extra social services workers controlled by the responsible authority and providing much needed, constructive assistance in Basildon. The cynical attitude of Basildon council was highlighted when a discussion document was leaked from the Labour group about its problem of coping with a constituency which was becoming more Conservative in its voting pattern. The conclusion amounted to possible recommendations to the Boundary Commission to rejig seats in such a way as to keep the local authority under Labour control. That is disgraceful cynicism.

The White Paper on the reform of local government finance has been warmly received in my constituency, as it is fair to both private and commercial ratepayers. In Basildon my right hon. Friend the Secretary of State for the Environment is seen as a much younger version of Moses coming down from Mount Sinai carrying two tablets of stone—the Local Government Bill to outlaw political propaganda on the rates, and this rate limitation order. They will be bitter tablets for local authorities that have abused and wasted ratepayers' money, but for my constituents those tablets will act as a positive elixir, giving much needed relief. I hope that the House will take those tablets tonight and vote for the order.

6.6 pm

Mr. Ernie Roberts (Hackney, North and Stoke Newington)

Rates are supposed to meet local needs, and it is not for a Government to exercise arbitrary authority over local authorities about how they should set about meeting those needs.

The people of Hackney are the poorest, most deprived people in Britain. According to the Department of the Environment analysis, which is based on five counts, Hackney is one of the worst 10 boroughs in Britain. It has 15,000 people on housing lists, 8,000 empty houses and flats in need of repair, 5,000 one-parent families, the highest infant mortality rate and the greatest number of unemployed in London—25 per cent., or one in four of the adult population. It is the lowest paid area in London, it has the highest number of mentally ill people and schizophrenics, and a high percentage of old-age pensioners, many of whom suffer from a lack of heating in their homes. The Government are responsible for all those problems. What is more, money can solve them. That is my answer to Ministers, including the Prime Minister, who say that one cannot merely throw money at problems. Money needs to be thrown into Hackney and at those problems if they are to be solved.

The order will limit the lives, health and happiness of tens of thousands of Hackney people. The rate support grant seeks to even out social problems throughout Britain and to provide a fair share of the nation's public expenditure. However, the Government are cheating and depriving the people of Hackney. Their previous rate-capping exercise was so damaging that they had to return some £116 million to some boroughs. That was about equal to a 6.2 per cent. increase.

Hackney got only a 3.5 per cent. increase from the Government, which is less than the 5.2 per cent. inflation rate. That is how much of a blind eye the Tory Government turn to the people in Hackney, which is the most deprived borough. Hackney borough council says that this limitation order will force a cut in rate expenditure of some 11 per cent. That will mean cuts in services and jobs in the area.

The borough treasurer has estimated that the borough will need £150 million to take over the Greater London council's functions and run normal services. The order means that the council will get only £128 million. That means piling more poverty on top of that which already exists in the area. The Government are abolishing the GLC, but they are not giving Hackney borough council the money that it needs to carry out properly the jobs previously done by the GLC. The Government continue to throw more and more responsibilities on local authorities without providing the finance necessary to do the job.

Every local authority needs financial reserves and working balances. The Government have said that that is not necessary for Hackney borough council, yet in November 1985 they were advised that the council was £2.2 million overdrawn on the general rate fund. The borough treasurer estimates an overspend of £2.9 million in 1985–86, and that restoring the working balances will require an additional £5 million in the budget for 1986–87.

Hackney's poverty has meant that its borough council is going on to the money market to borrow some £50 million to pay private contractors to do building and the other necessary jobs. It is scandalous that the Government are forcing a local authority to try to deal in that way with urgent social problems such as poverty and deprivation. That will mean greater indebtedness for a borough that is already massively in debt.

For my part, I demand that this Tory Government stop oppressing the poor of Hackney. It is their responsibility to provide the money so that the poverty and deprivation can be overcome. I know that they are turning a deaf ear to what I am saying, but they will have to pay the consequences in the next general election when the people of this country and of Hackney will get rid of them and their rotten policies, which are causing this deprivation and poverty.

6.12 pm

Mr. K. Harvey Proctor (Billericay)

I discovered on Friday that the hon. Member for Hackney, North and Stoke Newington (Mr. Roberts) and I share the distinction of representing nuclear-free zones, for all the good that they do for our constituents. I always advise my constituents, when they travel down to my constituency, to catch a fast train and not a stopping one so that they do not have to stop at Brentwood, which is not a nuclear-free zone.

Mr. Jack Straw (Blackburn)

That would be on the wrong line.

Mr. Proctor

The hon. Gentleman realises that my constituency is well served by railway stations and lines. There are two railway lines to my constituency. One goes to Billericay and the other goes to Basildon, through Laindon, which is part of my constituency.

The hon. Member for Copeland made it clear that, if a Labour Government were elected, they would abolish the Rates Act 1984 and make orders such as this unnecessary. In response to an intervention by my hon. Friend the Member for Northampton, North (Mr. Marlow), the hon. Gentleman claimed that he does not believe in curbing rates.

Mr. Allen McKay (Barnsley, West and Penistone)

He did not say that.

Mr. Proctor

He went down that road.

Mr. McKay

No. He did not say that.

Mr. Proctor

Tony Crosland made it quite clear that the party was over with regard to local authority spending. The views of the hon. Member for Copeland clearly mean that the party will begin again if a Labour Government are ever returned. That will represent a penal cost to ratepayers. The announcement comes just a few days after the Leader of the Opposition made it clear that the taxpayer would be clobbered for the Labour party's expenditure programme.

Why is it important that we deal with local authorities? Why have the Government had to come to the House with measures to deal with local authorities' expenditure biils? They spend rather a lot. Local authorities spent £39 billion in 1984–85, or 11 per cent., of gross domestic product. They employ 3 million, or 14 per cent., of the work force. The idea that Parliament can wash its hands, in a Pontius Pilate act, of what local authorities do is just not on.

The hon. Member for Copeland also said that it is not easy for local authorities. It is not easy for ratepayers, taxpayers, industries and entrepreneurs in my constituency to create job opportunities when Basildon district council is on their neck. Two thirds of my constituency falls within the Basildon district council area. My hon. Friend the Member for Basildon (Mr. Amess) represents the rest of the council's area.

The order would provide a maximum rate of 52.75p for Basildon in 1986–87. That compares with 50.33p in 1985–86—an an increase of 4.8 per cent., which is just below the current rate of inflation. The maximum has been set because Basildon is a high-spending council. The authorities have been selected for a second year of rate limitation because they spend more than 20 per cent. of grant-related expenditure and are budgeting to spend more than 1 per cent. over target or have increased spending by more than 30 per cent. since 1981–82. Basildon was budgeting to spend more than 66.8 per cent. above GRE in 1985–86 and is 1.5 per cent. over target in 1985–86. It therefore falls well within the parameters laid down by my right hon. Friend the Secretary of State.

Mr. Straw

The hon. Gentleman shows great expertise in the record of Basildon council and why it has been rate-capped. Basildon has increased its expenditure by 48 per cent. since the new systems came into force in 1981. The adjacent Conservative-controlled council of Brentwood has increased its spending by 80 per cent. in the same period, according to the Government's figures. Why is Basildon rate-capped when Brentwood is not?

Mr. Proctor

Basildon, unlike Brentwood, is a very high spender. The hon. Member for Blackburn (Mr. Straw) is talking in terms of percentages. If one looks at the rates paid compared with Basildon, one sees that Brentwood is lower. In absolute terms, Basildon is a high spender and these orders and rate capping were intended to trap and contain a certain number of high-spending local authorities. If the order is approved, as I hope that it will be, Basildon district council will be unable to fix a higher rate than that prescribed in the order 52.75p. However, it can fix a lower rate. There is nothing to stop it.

I first want to underscore the comments made by my hon. Friend the Minister when he opened the debate. He said that last year there was a great hysterical outcry from councils about the effect of rate capping. The leader of Basildon district council and the Labour group, Councillor Tinworth, sent a letter to each of my constituents in the Basildon district council area. He said that the objective of the Government was to force our council to cut back services to the tune of £1 million or more. That's a horrific cut, and it could be catastrophic. Councillor Timworth went on to show a number of areas where he thought the council would have to cut or severely restrict services.

That was a self-fulfilling fear by the leader of the Labour group. The one act that the council performed as a result of looking at the budget again was to close the swimming pool in Billericay. The swimming pool was council-run and had been open for only three or four years and it was closed as a politically punitive act by Basildon district council because it thought that there was no political advantage in Billericay. The nine councillors in Billericay are Conservative, so the Labour group did not think it would take control of the seats in Billericay. Therefore, the council thought it could close the swimming pool with impunity and blame the Government. I shall look later at the "caring" attitude of Basildon district council in denying my constituents in Billericay the right to go to their swimming pool and to leave closed such a new capital asset with the standing charges continuing month after month and year after year. It is a diabolical party political act that has been perpetrated on my constituents.

My hon. Friend the Member for Basildon (Mr. Amess) referred to a number of areas where the council has been excessive in its spending. He referred to information. The public relations department of Basildon district council seems to have been a major growth area in recent years. In 1983–84, the council spent £180,000 on it and employed nine members of staff. It is now proposing to spend £310,000 in 1986–87 and employ 12 members of staff. That is not the end of it. There are other areas where expenditure on information is to be found. For example, £88,850 is to be spent on the advisory services, welfare and legal advice.

My hon. Friend the Member for Basildon referred to union communications and the amount of ratepayers' money spent on what is effectively a party political act. Because certain people do not have the resources to get up and campaign around the constituency, they sit at home, using ratepayers' money and union communications to project the Labour policy of the council.

Mr. Amess

I wonder whether my hon. Friend will agree that the so-called PR exercise that the council indulges in always has the same message. It says, "Vote Labour", it is critical of the Government and it disgracefully claims credit for things which it has not organised, funded or exercised any control over.

Mr. Proctor

The council is welcome to its view, but it should campaign at its own expense or use money that it has raised politically. The money should not come from the ratepayer because that is not right. The amount of money in the different budget headings on information comes to over £500,000 for 1986–87. That is a monstrous waste of my ratepayers' money.

Mr. Dobson

Does the hon. Gentleman not recognise that the Government spend a little money here and there on propaganda campaigns? For example, does he think that it is sound spending to advertise the youth training scheme? The Government are not presenting a balanced view of it in the television advertisement. He and his hon. Friend the Member for Basildon (Mr. Amess) talked about the oddity of the relationship between the Basildon district council and union communications. What does the hon. Gentleman think about the relationship between this Tory Government and Saatchi and Saatchi, which has received a substantial number of public contracts?

Mr. Proctor

The hon. Member for Holborn and St. Pancras, when he is on the Front Bench, and his colleagues who speak on youth training matters, seem to support the youth training scheme. The hon. Gentleman has now nipped a row back to the Back Benches, has taken off his collective Front Bench responsibility and started to attack the youth training scheme. I would have thought that every hon. Member who wants to encourage training would want the widest possible spread of information on such matters. That is quite different from the type of Labour party propaganda that is coming through our letter boxes, appearing in newspapers and on leaflet after leaflet from the public relations office of the Basildon district council.

My hon. Friend the Member for Basildon also mentioned expenditure on computers. It is right for local authorities, Basildon district council included, to spend money on computers. In 1986–87, it proposes to spend about £700,000 on computers, compared with a figure in 1985–86 of only £65,000. That is correct. However, the staffing levels are stable. The council is not introducing computers to try to reduce the staffing levels; it is having computers as well as the staff. The Basildon district council spends £7.2 million on salaried staff and £3.5 million on manual staff. Staffing takes 25 per cent. of the total budget of the local authority expenditure. Those are sizeable sums and I have no doubt that savings could be made in some areas.

In more modest terminology, I cannot for the life of me understand why Basildon district council is running an EEC course for women which costs £21,700. I should be interested to know the attitude of the Equal Opportunities Commission to that expenditure. I am not reassured when I am told that half the expenditure — presumably, another £21,700—comes from the European Economic Commission. That just underlines the stupidity of such courses.

Basildon district council has closed and kept closed the Billericay swimming pool and said that it is saving £80,000 to £100,000 in a full year, but I cannot understand why at the same time it has announced a tree planting scheme which will cost £1 million over 10 years. I accept that trees should be planted, but we must take account of priorities. My hon. Friend the Member for Basildon and I are fortunate in having constituencies that are well-endowed with trees. Basildon district council does not have the right priorities.

Mr. Allan Roberts

Is the hon. Gentleman aware that, when the right hon. Member for Henley (Mr. Heseltine), who has recently resigned as Secretary of State for Defence, was the Secretary of State for the Environment and the Minister with responsibility for Merseyside, his major contribution was to plant a tree for every job lost on Merseyside?

Mr. Proctor

I am not aware of that action. I am sure that the trees will grow and be of value to the people who live on Merseyside.

Mr. Roberts

The hon. Gentleman has the jobs and the trees.

Mr. Proctor

We have some jobs and trees, although the unemployment figures in Billericay and Basildon are far too high. The good news from Basildon about the reduction in the unemployment rate is not enough. We want unemployment in Billericay and Basildon to decrease, and I believe that every hon. Member would say the same.

I am sorry to keep referring to my swimming pool in Billericay, but the reasons for the closure are curious. The Labour council says that it is all the fault of my right hon. and hon. Friends on the Front Bench and that I should direct my criticisms towards them. If I thought for one moment that it was their fault, the lives of my right hon. and hon. Friends would be uncomfortable until my swimming pool was reopened, but I can acquit my colleagues of the blame.

The saving from closing the swimming pool is expected to be £80,000 to £100,000 in a full year. More than £3 million is currently available to benefit the ratepayers by a rates reduction and/or by reopening the swimming pool in Billericay. That amount includes £1,496,000, which is the revised estimate, showing that the net expenditure for 1985–86 is nearly £1.5 million less than the original net estimate of £13,662,000. There is, therefore, about £1.5 million of underspending.

In addition, there are two special funds. As part of the process of closing the accounts for the 1984–85 financial year, Basildon district council found it possible to establish special funds under schedule 13 of the Local Government Act 1972. Such funds have been invested and the balances as at 31 March 1986 are estimated at £545,000 for the general expenditure reserve account and £275,000 for the repairs and renewals fund, totalling £820,000.

In addition, the direct labour organisation has a fund. Surpluses have been paid into the fund. The accumulated surplus as at 31 March 1985 was £295,000. The estimate for March 1986 is as high as £325,000. That amount is available as well. There is also a special item because the council made an out-of-court settlement with a construction company because of defective works on council dwellings, and this adds a further £470,000.

In total, £3 million in the reserves is available for allocation. There is also additional rate support grant through the block grant mechanism, which has increased from £873,000 to £1,268,000, giving an extra £395,000. This makes a total of about £3.3 million.

The policy executive of Basildon district council meets tonight to discuss those figures. I do not believe that it is necessary for the council to maintain those high balances. In the total budget for 1986–87, there is already an item for more than £1,700,000, providing for inflation, and a further £350,000 for contingencies. Clearly, if the political malice of the Labour leaders of Basildon district council is put aside, there will be enough money, first, to reopen Billericay swimming pool next week — it would cost £80,000 to £100,000—and, secondly, to reduce the rate demand by at least 10p in the pound. This will galvanise entrepreneurs, industry and commerce in my constituency and that of my hon. Friend the Member for Basildon into providing more job opportunities.

Like the hon. Member for Copeland (Dr. Cunningham), I do not believe that the rating system is perfect. Unlike him, I believe that we should congratulate the Government on bringing forward a Green Paper which attempts to tackle the problem from which the Opposition are running away.

Mr. Allan Roberts

What will happen in the next election?

Mr. Proctor

The hon. Gentleman would be surprised at the number of votes that will be garnered on that issue during the next general election. We shall see in the next election who is right and who wins the argument.

Mr. Allan Roberts

Will the hon. Gentleman give way?

Mr. Proctor

I have given way once to the hon. Member for trees. I am coming to my conclusion and I have been speaking for longer than I expected.

May I ask the Under-Secretary: is rate capping, in the way in which it is handled at the moment, rather a blunt instrument? What consideration has been given to the attitude of those people who believe that selectivity might be introduced by rate-capping various heads of expenditure or budget areas in a council's expenditure pattern?

I believe that reform of the rating system is long overdue. Under the present imperfect system rate capping is necessary to protect the ratepayers of Basildon, Billericay and Wickford whom I represent. I am delighted to be able to support the order.

Several Hon. Members

rose——

Mr. Speaker

The hon Member for Billericay (Mr. Proctor) drew attention to the length of his speech. He was interrupted several times. I draw the House's attention to the fact that a considerable number of hon. Members wish to take part. If we can have reasonably brief speeches I will be able to accommodate them all.

6.40 pm

Mr. Simon Hughes (Southwark and Bermondsey)

As the Minister said at the beginning of the debate, it is not surprising that, compared with the identical debate a year ago, the steam, some of the heat and much of the passion has gone out of this subject. A year ago we were asked to pass an order about rate capping. It was the first time that the Rates Act 1984 had been used to fix the rates of local authorities. At that time two Opposition arguments were put forward. My hon. Friend the Member for Woolwich (Mr. Cartwright) and I put then the arguments that pertain equally today. They were arguments of principle and arguments of practice. In different ways all of us tried to show the probable outcome of what the Government were seeking to do. The arguments of principle remain the same and they are now stonger than ever.

In some cases rate capping has an apparent advantage and an appeal when it reduces rates and people directly benefit in their pockets. However, the disadvantages of the rate-capping system, its arbitrariness and the fundamental anomaly of the setting by Parliament of the budgets of local authorities, which by their nature should raise and spend money and decide on their priorities, are still evident.

I make no bones about the fact that, as last year, on behalf of my colleagues, I oppose rate capping. I oppose the principles of the Rates Act, in spite of the fact that rates in my constituency will be reduced as a result of the order. I oppose those principles not only in principle but in practice, because they are part of an increasingly muddled system of local government finance. There is no logic to the system of which rate capping forms a part.

While rates are to be held down in some borough and district councils — eight London boroughs and three other councils—the shires are paying the cost. We heard the screams a few weeks ago of ratepayers in the shire counties of England and Wales who were having to pay because of the manipulation of a system of local government finance, which annually allows the system to be adjusted to suit the needs and the wishes of central Government.

I suspect that the position next year will be more difficult. I would be grateful for a hint from the Minister about what shall be done. The criteria have so far being linked to targets, but targets have now gone. If the Minister proposes that rate capping should continue for a third year, a different system must be devised. I am intrigued to know what that system will be.

My greatest objection is that the Government are interfering with the decisions of local authorities. It comes as no surprise that the Government are doing so mainly in London in the year when we are only three months away from local elections, which will determine the political future of the 32 London boroughs for the next four years.

Rate capping must never be considered in isolation. The debate is the last in a series during the past weeks and months. The rate support grant orders, the debates about the ILEA precept, the precepts imposed by the joint police boards and by London Regional Transport and the levy which will come from the London Residuary Body, all add up to central Government's imposition of control mechanisms on local government expenditure.

The practice this year is different. First, last year there was hyped-up protestation from representatives of the Labour party whose councils were affected. This year all the councils affected are Labour-controlled. They said last year that it would be impossible to comply with rate-cap limits without cuts in jobs and services. That has not been the case. It is tragic that many Labour councillors' reaction to the Government-imposed rate limits was that phoney war, leading to delayed rate setting and tens of thousands of pounds, possibly hundreds of thousands of pounds, being lost from council budgets, which has reduced the money available to be spent this year.

It comes as no surprise that the national leaders of the Labour party— as always, after the event—have now been forced to say that the campaign and budget strategy adopted by those Labour authorities was misconceived and not in the interests of the people whom the councillors were elected to represent.

We have lived through that and this year we are addressing rate capping in the light of that experience. I hope that the Government will also learn, because it is not only Labour authorities that must take the responsibility for what happens in the months ahead.

The second difference from last year is that we are now living on the verge of the effects of the abolition of the Greater London council and, in Liverpool's case, the abolition of the metropolitan county of Merseyside. No one knows the real cost of the abolition of. those authorities. The figures that the Government have added into the equation of the cost will not reflect the real costs. The hon. Member for Copeland (Dr. Cunningham) was right to highlight the fact that the funds of the voluntary sector will be the hardest hit. On other occasions in the House I have raised matters of urban aid and of law centres, which are not covered by the budget of the Department of the Environment. Many voluntary bodies do not know whether they will receive enough money to survive. They do not know whether they will receive any grant, because the grant source is no longer available. They may fold early because of uncertainty, or later because the money will not be there. To pretend that abolition has not cost money is wrong, because the truth will out and it will become apparent that it will cost much more than the £100 million predicted and that services will suffer accordingly.

The third difference is that last year we were discussing 13 authorities, nine in London and four outside. This year we are discussing 12, including the new authorities of Liverpool and Newcastle. Newcastle has negotiated an arrangement and is not covered by the order, so we are left with 11 authorities, eight in London and three outside. It is likely that, because of the Local Government Bill, this year's rates will be fixed by 1 April. The Minister knows that I do not oppose that duty.

We all recall the difficulties and the costs resulting from the late fixing of the rates last year. However, it will not be good enough to learn the cost of last year's late rate setting months after the elections in May. We need to know in good time—within a matter of days or at most weeks —of the courts' decisions in the Lambeth and Liverpool cases and what the costs will be for ratepayers in those boroughs in which the district auditor has said that there were substantial losses. I hope that the Minister will give an assurance that, as soon as the court cases are decided—I appreciate that that may include an appeal—we shall quickly have an adjudication on the other losses, so that ratepayers can soon judge the results of what happened last year.

Having turned the screw once last year, the Government are trying to turn it a second time. The difference is that, however easy it might have been for councils to cope with the first turn of the screw, inevitably it will be more difficult to cope with problems adequately after a second turn. We must remember that with all the boroughs about which we are talking, except possibly the two out-of-London local authorities, although not Liverpool, we are talking about areas with substantial poverty, deprivation and hardship for many. Liverpool has been appallingly mismanaged in the past couple of years. It has had the worst kind of financial incompetence and mismanagement that any local authority could have had. Only now is the Labour leadership saying that publicly—as ever, harmfully late for the people of the city. The mismanagement goes on, but I hope that it will soon be brought to an end by the combination of a variety of financial pressures and by the results of the coming elections, which will pass judgment on what has happened in the past few years. That does not mean to say that Liverpool will be able to cope if the Government are not more generous. Rate capping and the use of balances in previous years mean that it will not be possible to set rates at the limit that has been imposed without cuts in services and increases in prices. I hope that the Minister will accept that that is not acceptable for the many people in the city who are already not getting the level of services that they want.

I presume that the Minister will confirm that so far this year the Labour-controlled Liverpool city council has done nothing about fixing a rate. Not one budget document has been circulating and there has been no official consultation or consideration, publicly or in committees, of the possible rate, with only a month to go. It appears as if the councillors wish to behave like ostriches — perhaps believing that in a week or two they will not be responsible for setting the new rate. That may be one result of the court case.

While internal party fighting is going on, with certain people concentrating more on putting their case to Walworth road tomorrow, schools are running out of basic necessities, lifts in high-rise blocks are not working because the council has not paid the bills, and children's homes do not have sheets on the beds and cannot buy new ones because the council is not honouring its financial commitments. All the time, the deputy leader of the council has a chauffeur-driven car and £300,000 has been spent on propaganda— a real loss of £750,000 to the ratepayer. The arts for example, the Liverpool philharmonic orchestra—are in jeopardy, the employees of agencies at the moment looked after by the county council are at risk. I hope that sanity will come, and that when it does, the Government will respond with some compassion, because the people of Liverpool are at present the victims.

The hon. Member for Hackney, North and Stoke Newington (Mr. Roberts) referred to his borough and constituency, and the conditions there are desperate. There have been no special grants for housing, much of which is appalling and needs a great deal of work. The borough needs housing subsidy and money for social services, and with very high levels of need, such as in single-parent families, there are enormous pressures on social services and the like. I hope that the Government do not expect Hackney to borrow this year to spend what it could not spend last year. I said last year that I did not believe that Hackney could cope adequately with the imposed rate limit. It has been trying, but this year it will be less able to cope with the Government's new limits.

The two boroughs about which I know most are both south of the river—Southwark and Lambeth. There is no doubt that Lambeth teaches us one lesson above all. That is that the people of Lambeth, although they have shown no great affection for the Government and their policies, nevertheless are clearly of the view that the Labour authority has wasted an enormous amount of money.

The South London Press shows that the £54,000 spent on consulting ratepayers in the campaign of the past few weeks has produced empty halls with hardly a handful of members of the public appearing. However it continues: Cllr. Knight says the absence of angry ratepayers confirms their support for the no cuts policy. The probability is that the absence of ratepayers from the meetings, which has caused the meetings to be aborted as a campaigning plank, shows that the ratepayers have no confidence in the campaigning tactics or policies of Councillor Knight and his friends.

Mr. John Fraser

I hope that the hon. Gentleman will agree that the real test of the popularity of the council rests not with the South London Press but with the ballot box. At the by-elections there has been overwhelming support for the Labour party.

Mr. Hughes

I recall a by-election in the Vauxhall constituency last year that had the largest electoral turnout in a by-election in Lambeth borough since the last general election. I also recollect that my friend and colleague Mr. Mike Tuffrey was elected, taking the seat from the Labour party.

Mr. Stuart Holland (Vauxhall)

The simple fact is that, out of five or six by-elections at borough level, the Labour party increased its share of the vote and gained a vote of around 50 per cent., which the Liberal party did not. He should recognise that he is playing a cheap trick.

Mr. Hughes

I am willing to stand by the judgment of the electorate in May, and I confidently predict that my party will gain more seats in Lambeth from its present position than the Labour party will from its position. We already have some seats, so we are not starting from nil.

My borough of Southwark has an enormous problem over and above the problems of other boroughs. We have the largest amount of ex-GLC housing stock, which is in need of massive amounts of money being spent on renovation and repairs. The limit that it has been allowed this year does not reflect even pay and price increases over the past year.

Mr. Straw

Is the hon. Member in favour of rate capping?

Mr. Hughes

If the hon. Member for Blackburn (Mr. Straw) had been here at the beginning of my speech, he would know that, not only am I not in favour of rate capping, but, like him, I am not even in favour of it although it benefits us personally by putting down the rates that we have to pay on our homes in Lambeth and Southwark.

Southwark's reserves have been all but spent. If the Government's rate-capping limits are to be abided by, and expenditure is held down to last year's level in cash terms, there will be draconian effects on the people at the bottom end of the social scale, who are desperately in need of more services. Through their elected representatives they should be allowed to decide what level of services should be provided. The Department of the Environment has to bear the consequences of the fact that people will have worse housing, social services and other public services next year because of the Government's policies than they would have done if more money had been raised. There is one way in which Southwark could have increased its income, but one cannot suddenly increase the collection of rate arrears. appalling though they are, in a matter of months. A relaxation to take account of that would have been welcome.

There is no adequate compensation for the abolition of the GLC. We shall find that, even with the tightest budgetary control—the budget may not be in the hands of the Labour party after May — there will be great difficulty in doing anything like retain the key essential services, let alone the non-statutory ones, that I hope that the Minister, when she was in local government, would have fought to defend.

If we had gone for re-determination a little earlier in Southwark, we might have done a little better. I have no doubt that our local authority could have managed the books much better as well. It does not change the principle of the debate, however, that rate capping, having been wrong in logic from the beginning, is more harmful in practice as time goes on. It is more harmful in the second year than it was in the first. After this year I hope that Ministers will be persuaded, even if they were not last year, that this should be the final year in which the Government seek to use the powers they gave themselves in the rates legislation and will realise that it is folly to take away from local representatives the power to decide the level of services that their people want and to which they are entitled.

6.59 pm

Mr. Simon Coombs (Swindon)

I apologise to the House for the fact that I was unable to hear the opening speeches. I am grateful for the opportunity to intervene in the debate because this issue affects my constituents significantly.

This time last year in the equivalent debate my lips were sealed in that I was one Bench nearer the front than I am now. One of the advantages of having moved backwards geographically is being able to move forward to take part in this debate.

The embarrassment to which I have to admit is occasioned by the fact that the borough council, two thirds of whose area I represent, is even in the list of rate-limited authorities. Swindon is not an area of inner-city deprivation, as are some of the other listed authorities. Indeed, I am grateful to the local government information unit for its production of facts and figures which show that many of the authorities under discussion today have those problems.

Why then should Thamesdown be listed among those authorities affected? I do not wish to give the impression to the House that unemployment in Swindon is any less a problem for those affected by it than it is in other parts of the country. If a person is unemployed, he is unemployed. If he has bad housing conditions, he has bad housing conditions, and naturally we all wish to see something done about it. The authority, part of which I represent, and similarly Basildon, cannot be compared in any reasonable way with those other affected authorities in the list, so why Thamesdown? Why is Thamesdown the highest rated authority in the country? To answer that question, it is necessary to go back quite a long time and I shall do so.

Swindon borough council, as it was before reorganisation 12 years ago, was directed by a town clerk, David Murray John, who had the foresight to recognise that a town based upon a single industry, the railways, could not for ever survive in that form and that if the inevitable decline in the railway industry, which he foresaw as long ago as 1950, was to be coped with by the local community, it would be necessary to take major steps to bring in alternatives for job creation.

Thus it was that Swindon borough council, without the help of Government money, undertook the role of a development agency. A number of generations of new industry have been brought to the town—in the earliest period, Pressed Steel Fisher, now an Austin Rover body pressing plant, then at a later stage Plessey and Garrards, producing well over 10,000 jobs.

Gradually the industrial nature of the town changed. Thus in recent years Swindon has developed a reputation as a high-tech town. The M4 is known as the silicon valley, the corridor of high tech which stretches from London to south Wales, and Swindon has been a part of that. The new companies have come in—National Semi conductor, Intel, Logica and so on—at the same time as the head offices of companies moving out of London.

It is worth reflecting why so many companies have moved their head offices from London to Swindon. The reason is very simple. They were enabled many years ago to move to an area where rates were much lower—but not so now. Burmah Oil, Anchor Food, Hambro Life—now Allied Dunbar—and other major companies have moved into the borough, which is now called Thamesdown. They were grateful at the time to do so, but now they begin to question the wisdom of what they have done.

The era of Swindon as a development agency can now be put in the past. Many hon. Members will be aware that firms are now seriously considering moving to Swindon even though there is no Government assistance for them to do so. Many large companies will consider moving to an assisted area in south Wales or in the north-east because they know that they will get substantial help from Government to do so. However, they also look at Swindon because it is an attractive area in terms of its geographical location and excellent communications and because there is a wide variety of private sector housing available in and round the town. They look at it and say, "Yes, Swindon is an attractive place to consider moving to."

I contend that the time has now gone when Thamesdown borough council could justify the enormous levels of expenditure on development. No longer is it necessary for Thamesdown borough council to think of itself as a development agency without benefit of Government help. The time has come when the momentum for change and growth is self-induced. There is, therefore, no reason for Thamesdown to continue such high expenditure. There are now so many jobs in new companies that public expenditure at the level which brought Thamesdown within the scope of this order is no longer necessary.

Mr. Dobson

Are there not now more people unemployed in Swindon, when the hon. Gentleman says the spending should stop, than there were when the spending was commenced?

Mr. Coombs

The hon. Gentleman has a point. but he is wrong. I am saying not that the expenditure should cease, but that it should come from a different quarter. I am suggesting that there is now such a momentum of private enterprise capital coming into the town as to make it unnecessary for Thamesdown borough council to continue with its high spending policies. I find it embarrassing to have to try to explain to other hon. Members why it should be necessary, given that Swindon is a rapidly expanding area with private enterprise companies queuing up to come to the town, for the local authority to go on hammering the ratepayers as it does.

Mr. Straw

If I may say so, the hon. Gentleman is making a rather more thoughtful speech than some that we have heard from the Government Benches. But why is he criticising Thamesdown so much for increasing its expenditure when it has increased by only 104 per cent. since 1979 while central Government spending has risen by 125 per cent.? On any basis Thamesdown has not been a high spender.

Mr. Coombs

I am grateful for the hon. Gentleman's helpful and thoughtful intervention. I would not for a moment want to justify high central Government expenditure, any more than I can possibly justify high local government expenditure. My view is that public expenditure has increased, is increasing and ought generally to be reduced. I hope that I have established that there is a momentum in Swindon that should be allowed to continue without further intervention.

I wish to examine a few other aspects of the activities of the local council. The council regards other areas of expenditure under only one heading: is it desirable? Almost invariably the majority decision of the council is yes. If it moves, it is worth spending money on it; if it does not move, it is still worth spending money on it. At a time of high financial stringency it simply will not wash to spend money upon anything. The ratepayers are not very happy about it.

It is unfortunate that the council has approved the expenditure at £15 million on a major new leisure centre, but has told those who want to improve their homes by means of non-mandatory grants that there is no money in the kitty. That is the wrong order of priorities. I should dearly love the council to change its policy. There must surely be room for manoeuvre within a budget of about £15 million. However, Thamesdown district council's propaganda might lead one to think that there is no room for manoeuvre.

Before the borough was rate limited last year it mounted a propaganda campaign of considerable proportions. There is another Bill before the House that deals with political propaganda campaigns. However, this particular propaganda campaign was accompanied by a point blank refusal to discuss with central Government whether Thamesdown was properly rate-limited. Time and again I asked the controlling Labour group to talk to the Government about it, but it refused to do so. Time and again my right hon. Friend the Secretary of State for the Environment expressed his willingness to meet the local authority, but it refused to do so. There was a deafening silence about negotiations for an increase in the level of expenditure. A propaganda campaign was waged instead. Unremitting hostility was shown not only towards the Government but even towards the potential recipients of money that it was claimed would no longer be available. Voluntary bodies were told that there could be no guarantee that funds would continue to be made available after the local authority had been rate-capped.

I have received many letters from voluntary bodies in which they said that this could not be right, that surely the Government were not saying that their activities must be brought to a halt. The Government are saying nothing of the kind. They are merely saying that the borough's overall level of expenditure should be restrained. However, the borough chose to put fear into the hearts of those who were trying their best, on a voluntary basis, to do a good job in very difficult circumstances. The borough was rate-limited, but not one voluntary body suffered in the least.

It is interesting that this year there has been no propaganda campaign by the local authority. Its bluff was called and its cover was blown. Its empty threats of disaster were shown to be nonsense. We have heard no such threats this year. Indeed, in the certain knowledge that the House will approve the order, the borough has announced that a bonanza of new money will be made available to the voluntary bodies. I welcome that announcement because they will be worthy recipients of this money.

Is it not curious, however that a double-edged sword should be used by this borough? It is frightening people, but at the same time it is giving them more money. It is threatening them with no future but at the same time it is pouring money into their pockets, which will help to ensure their future. And the threats continue. I was present last Friday at the opening of a new bus service for the disabled. It is to be funded by urban aid money, which I welcome. Every local authority knows when it enters into an urban aid project that central Government money is not available on an open-ended basis. Therefore it is quite wrong, cruel and hypocritical for the borough to tell those people that it has no idea where the money will come from when the central Government grant ends. That should be rammed down the throats of those who are prepared to act in so intolerable and cruel a way.

What will be the effect of rate limitation upon the ratepayers of Thamesdown? A rate of 54.68p in the pound means that they will enjoy a cut of about 4.per cent. in the borough rate. That has to be set against the mammoth rise of 26 per cent. that is to be imposed by the county council. At a time of financial stringency, the Lib-Lab alliance in Wiltshire has gone ahead with major new spending plans. There is no shortage of money—

Mr. Allan Roberts

Will the hon. Gentleman give way?

Mr. Coombs

Perhaps the hon. Gentleman will allow me to finish my sentence. We are told that there is no shortage of money, but a 26 per cent. rate increase has been imposed by the county council. This is said to be the right way to go about things. At a time of financial stringency there is to be additional expenditure of £2 million.

Mr. Roberts

Does the rate increase have nothing to do with the reduction in the county council's rate support grant?

Mr. Coombs

I am amazed that the hon. Member for Bootle (Mr. Roberts) can be so naive. Of course it has. That is why I said that this is happening at a time of financial stringency. One would have expected a rational and sensible county council to control the level of expenditure, not to go in for excessive new expenditure. —[Interruption.] The hon. Gentleman might listen to the answer when he has asked a question. He might even learn something, although I doubt it. I am already receiving letters of complaint from industry. It recognises the effect that this agglomerated rates increase will have, and it is only a matter of time before domestic ratepayers join in the chorus of complaint.

Mr. Stuart Holland (Vauxhall)

Will the hon. Gentleman take into account the fact that his right hon. Friend the Chancellor of the Exchequer admitted in an answer to me that the effect of rates on the total costs of United Kingdom commercial and industrial companies is less than 1 per cent.?

Mr. Coombs

I am very happy to do so. However, a rates bill of nearly £1 million a year, although it may be peanuts to the hon. Member for Vauxhall (Mr. Holland), represents a considerable burden for large companies in my constituency. The hon. Gentleman smiles, but he does not have to pay those bills. Those who do are extremely unhappy about it. A 26 per cent. rates increase that may be reduced to a 22 per cent. rates increase will be seriously regarded. He should not smile or make light of it for one moment.

Mr. Holland

As he is so fluent and articulate, will the hon. Gentleman comment on the effect of corporation tax on companies? He has a point: smaller firms generally pay higher taxes. However, it is not simply a question of rates, which they pay proportionately; it is also a question of corporation tax. Because of tax rebates, big business pays next to no corporation tax. The fiscal crisis comes from that, not from the imposition of rates on small firms.

Mr. Coombs

I am grateful to the hon. Gentleman. He has made a fair point. I am delighted to be a supporter of a Government who are progressively reducing the level of corporation tax. I hope that that process will continue throughout the lifetime of this Parliament.

I regret that rate limitation is needed. I wish that these councils recognised the need for self-control. It is sad that central Government should have to impose control upon them, sometimes arbitrarily.

It seems unlikely that any such se lf-control will be manifested by any of the authorities we are discussing. The extreme Left is running things in most, if not all, of those authorities. Ordinary people in Swindon say to me, "If you think that Liverpool is bad, wait until you see what will happen to the Labour party in Swindon in the next few years." I appeal to the Government not to be deflected from their course. If we want to see the Hattons, the Knights and the Grants rampant, the way to go about it is to vote against this order. That is a terrifying thought, not only to hon. Members on the Government side but to most Opposition Members who are as frightened of their friends as we are. I hope that the House will support and confirm this order.

Several Hon. Members

rose——

Mr. Deputy Speaker (Mr. Harold Walker)

Order. Mr. Speaker earlier made an appeal for brief speeches. I hope that that appeal will not be ignored.

7.21 pm

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

I am the first speaker in this debate representing a metropolitan district outside London that has been rate-capped as a result of this order. For the first time, the Liverpool metropolitan district has been selected in this order for rate capping.

Everybody is conversant with the social problems that cause anxiety in Liverpool. Deprivation is well known, and umpteen social surveys over the year have registered the fact that Liverpool is one of the most deprived cities, not only in Britain but in Europe.

Even the right hon. Member for Henley (Mr. Heseltine) recognised that when he visited the city in 1981. When he addressed the Conservative party conference that year, he was forced to the conclusion that problems such as those that exist in inner-city Liverpool could be addressed only by large increases in public expenditure. Even the right hon. Member for Wanstead and Woodford (Mr. Jenkin), now no longer on the Front Bench, and his hon. Friend the Member for Eastbourne (Mr. Gow), when they visited Liverpool in June 1984, made it quite clear that they could confirm that housing conditions there were among the worst that they had seen anywhere.

However, Liverpool is to be rate-capped. Rate capping for Liverpool is inequitable and anomalous. The decision to rate-cap Liverpool is based on the decision of the city council on 14 June 1985 to raise its expenditure level: to £265 million. That was the so-called illegal budget. As everybody knows, and quite irrespective of the political arguments that have flowed over this problem in Liverpool, on 29 November 1985, the budget was levelled at £222 million. This was done by capitalising the maintenance and repair account, and by the use of special funds. If Liverpool had set its expenditure level of £222 million in June 1985, it would not have been rate-capped. I ask the Minister to confirm that. It is being rate-capped on a quiteb artificial figure.

To rate-cap Liverpool is totally unreasonable. For the next financial year, Liverpool's expenditure has been determined at £274.6 million. That is only 5.1 per cent. above the grant-related expenditure level decided by the Government. It is the lowest figure above GRE of any of the authorities mentioned in this order. The next lowest is Islington which is 12£5 per cent. above its GRE and a number of authorities that appear in this order are 59 per cent. above their GRE. I say again that it is quite unreasonable to rate-cap Liverpool when it is only 5.1 per cent. above GRE.

When the Minister is replying, perhaps she will address herself to the comments of the former Secretary of State for the Environment, the right hon. Member for Wanstead and Woodford. On 25 July 1985, he said: For authorities not previously selected, I am proposing the same criteria as I used this year: I am selecting authorities whose budgets this year are more than 20 per cent. above grant-related expenditure and more than 4 per cent. above target." —[Official Report, 25 July 1985; Vol. 83, c. 1316.] As I have said, Liverpool is only 5.1 per cent. above its GRE. I want to look at the implications for Liverpool of the abolition out of political vindictiveness of Merseyside county council. Taking into account the appropriate share of this year's county precept, the rate limits for the new joint boards allow a precept increase of over 50 per cent, but the rate limit covering the services of Merseyside county council that are transferred to Liverpool, is to be a mere 7 per cent. What is sauce for the goose should surely be sauce for the gander, but then, of course, the Government do not like Liverpool. The expenditure of the joint board is much in excess of the GRE, far more than in the case of the city of Liverpool. That is another example of inequitable treatment.

The Government are fond of saying that they want to keep the rates down. One might feel that they had an argument if, after all these exercises that we have gone through, the rates were being kept down. But in Liverpool the rate limit, which has been set at 232.09p in the pound, is an 18 per cent. increase next year for the ratepayers of the city, and indeed for the business people that hon. Members on the Government side seem to be so worried about. It means an 18 per cent. increase even to reach the limit decided by the Government. [Interruption.] The ratepayers in Liverpool would hardly think it generous, but they are beginning to understand why we have this problem. That reason was referred to by my hon. Friend the Member for Copeland (Dr. Cunningham) who is the shadow spokesman on these matters. He pointed to the reduction in rate support grant from 61 per cent. of revenue to 47 per cent. of revenue this year. That is the real reason why we are having rate increases.

Liverpool city council will be allowed to spend £274.6 million next year, but that will not meet the needs of the people of Liverpool. That does not take into account the expenditure that will be necessary to sustain the services which the Merseyside county council has provided over the past 10 or more years. The city's capital programme has been determined provisionally, and it allows for £24 million for county services with an extra £2 million for grants to arts bodies, to voluntary organisations and to property such as the Croxteth hall and country park. These sums will be inadequate even to deal with the statutory obligations that are to be transferred to Liverpool city council as a result of the political vindictiveness that has led to the abolition of the Merseyside county council.

The Tories who send Members to this place to represent Merseyside districts, which will feel the pinch when services are lost with the abolition of the Merseyside county council, should ask themselves why. It is no use arguing that the Liverpool city council should become responsible for assisting the philharmonic hall, the philharmonic orchestra, Liverpool ice rink, Croxteth hall, the Liverpool playhouse, the Empire theatre and Liverpool airport and provide funds to assist umpteen voluntary organisations, and argue at the same time that the Government's legislation makes any extra resources available to those who live in the great city of Liverpool.

Transitional arrangements for voluntary organisations allow for central Government funding of £375,000. However, if Liverpool is to pick up that sum for that purpose, it will have to find an additional £455,000. Voluntary organisations are hammering on the door of the city council, and quite rightly because they often supplement Merseyside's social services. They do marvellous work for those who live in the city. However, they cannot expect the council to be able to provide the funds that have been removed from the city as a result of the Government's diktat.

Mr. Michael Fallon (Darlington)

The hon. Gentleman has mentioned some of the services that Liverpool runs, including an ice rink. Why does he expect ratepayers and taxpayers in all the other counties, shires and districts of Britain to finance Liverpool's ice rink? Is it not about time that Liverpool started to contribute to our economy instead of drawing away from it?

Mr. Wareing

The Merseyside county council, whether under Tory rule or Labour rule, has always provided funds for the Liverpool ice rink. I shall explain why ratepayers and taxpayers in other areas should make a contribution. The hon. Gentleman may even go to church and he might even regard himself as a Christian. He may have heard the adage "Am I my brother's keeper?" The closure of the ice rink would do nothing to deter a rising level of youth delinquency that arises from unemployment in the area. Scores of young people benefit from the ice rink and its closure would have considerable social implications in areas of desperately high unemployment on Merseyside. The consequences would be even more unfortunate than the closing of the philharmonic hall.

Mr. Fallon

rose——

Mr. Wareing

I do not want to enter into a dialogue with the hon. Gentleman.

Mr. Fallon

I understand that the closure of the ice rink might have the consequences that the hon. Gentleman is suggesting. What I do not understand is why Darlington ratepayers and taxpayers should help finance Liverpool's ice rink. What is Liverpool doing for Darlington?

Mr. Wareing

Those of us who believe in the redistribution of income and progressive taxation understand that the rich and richer than average will by those means help to provide for those who are weaker and poorer. I am sure that there are those in Darlington who are being subsidised by the tax policy of previous Government. The hon. Gentleman is advancing an absurd argument.

Liverpool city council is being asked to provide moneys for services which have been transferred to it as a result of the abolition of Merseyside county council. It even has to face debt charges on museums and art galleries, which will go to an unelected quango in a similar way to the art galleries and museums of metropolitan London. It is wrong that the city council should have to pick up that bill.

Sir Ian Percival (Stockport)

The hon. Gentleman knows that I have many constituents who have businesses in Liverpool and who are therefore affected by Liverpool's rate although they do not have a vote in the area and do not have any say in its rating policy. He is aware that they do not have a business vote in Liverpool.

Mr. Allan Roberts

Does the right hon. and learned Gentleman want them to have two votes? Is his policy one person, two votes?

Sir Ian Percival

The hon. Member for Bootle (Mr. Roberts) is missing the point. He should know that I am not to be put off by such silly talk. The hon. Member for Liverpool, West Derby (Mr. Wareing) knows what I am talking about. Many of my constituents pay rates on business premises in Liverpool and they do not have a vote in the areas in which their businesses are situated. He is arguing that the rate-capped sum which has beer set for Liverpool will lead to a rate increase of 18 per cent. and that that will not be a sufficient increase. What des he think the increase would be instead of 18 per cent. if a limit had not been imposed?

Mr. Wareing

The answer to the right hon. and learned Gentleman's question is that the rate support grant should never have been slashed in the first place. I have a feeling that his constituents use the Liverpool philharmonic hall and the playhouse and Empire theatre to a disproportionate extent. They are the people who use the facilities that are now to be paid for almost entirely by the Liverpool ratepayers. Those who live in Southport and the Wirral benefit disproportionately from certain services that are provided in Liverpool, and they are now to be brought to an end as a result of the Government's policy.

The determination of target expenditure is based upon the 1981–82 budget, and there have been many significant changes beyond the council's control since then. For example, the council has no control over its income. It has suffered losses in rent income because of the demolition of houses and the evacuation of families.

Mr. Eddie Loyden (Liverpool, Garston)

Is my hon. Friend aware that the effect of rate capping on Liverpool will be a shortfall of about £37 million and a loss of 800 jobs in an area where unemployment stands at 22 per cent.? It will lead to an abandonment of the housing scheme which was inherited from the previous Liberal administration, in the implementation of which not one brick was laid for the building of a council house.

Mr. Wareing

I recall that it was the hon. Member for Liverpool, Mossley Hill (Mr. Alton) who, as chairman of the Liberal-controlled housing committee in Liverpool for so many years, stopped council house building and boarded up 5,000 houses, which caused a loss of revenue to the city.

If the measure is passed, Liverpool city council will have seriously to review its housing programme. That programme provides homes for some of the 20,000 people with unmet housing needs in Liverpool and jobs for building workers in the city.

The subsidy arrangements for 1983–84 also meant that the loss of subsidy effectively offset any reductions in marginal expenditure. Therefore, the whole of the lost rent income served to increase net expenditure.

It must be remembered that Liverpool has traditionally been a regional provider of residential services through its social services department. Because of the fall in demand from outlying areas and other parts of the north-west for accommodation for children and young people, other local authorities reducing their expenditure do so at Liverpool's expense. That affects Liverpool's income.

The economic situation in Liverpool, largely caused by the Government's unholy monetarist policies, has led to an increase in free school meals. More and more families impoverished by the Government's economic policies are now dependent upon free school meals. That is additional expenditure for the Liverpool city council.

Governments over the past 10 years have determined that new law courts should be built in the city of Liverpool. Now that the new buildings are in use, St. George's hall, which was the traditional site of the Crown courts in the city, is now a financial burden on the city as it lacks Government assistance. St. George's hall is now closed, as the philharmonic hall and many other buildings may well be closed in the near future as a result of Government policy.

The loss of revenue to the city of Liverpool through the closure of St. George's hall in 1984–85 was £325,000. The compensating savings were less than £200,000. That meant a net loss for the city of Liverpool of more than £120,000.

There has been a reduction in the income from Manpower Services Commission agency courses at colleges of further education. That has also affected Liverpool city council's income. There have also been expenditure increases which were beyond Liverpool council's control.

For example, Liverpool city council is now responsible for providing 10 per cent. of the share of housing benefits. Incidentally, I noticed that the hon. Member for Northampton, North (Mr. Marlow), who is no longer in the Chamber, actually thinks that people who are on housing benefits ipso facto do not pay taxes. Of course they do, although the hon. Gentleman probably has not the slightest notion of that. He probably owns more than one house and I am sure he has no need of housing benefit.

It has been necessary in Liverpool to increase the number of maintenance grants and grants for clothing and footwear to pupils as a result of the deprivation caused by the Government's policies. Additional expenditure will have to be found, which again is beyond the city council's control, for the maintenance of the magistrates courts.

Since 1981, despite all these problems and the extra expenditure needed, the rate support grant lost to Liverpool has been £245 million. When the right hon. and learned Member for Southport (Sir I. Percival) worries about his ratepayers, he should direct his concern at his Government's Front Bench. The Government are responsible for the £245 million which the city of Liverpool has lost since 1981. That sum is the equivalent of a rate rise of about 130p in the pound.

The Government are apparently unwilling to meet the needs of the people of Liverpool. The Government have made promise after promise and exhortation after exhortation to the Liverpool city council but they have broken their promises.

The Government are fond of accusing the Liverpool city council of being irresponsible, but I remind them of a meeting that I attended—the first meeting between the former Secretary of State for the Environment, the right hon. Member for Wanstead and Woodford and the Liverpool city councillors. The right hon. Gentleman said that he would use his best endeavours to help the housing situation in Liverpool. I also read the right hon. Gentleman's letter of 29 June 1984 to the leader of the Liverpool city council, Councillor John Hamilton, in which he made a similar reference. However, when the housing investment programme was settled for 1985–86, it was settled at £31.5 million, which was £6.5 million less than before the former Secretary of State made his promise in 1984–85.

I ask the Government to move away from their studied indifference to the needs of the people of Liverpool. If they cannot, at this late hour, withdraw the statutory instrument or table an interim order, then, for goodness' sake, they should get together with the elected representatives of the city of Liverpool — while there still are elected representatives of the city of Liverpool—and work out a sensible housing investment programme. The Government should also look at the urban programme.

I have no great hope that the Government will do that, as they have been spending their time avoiding meetings. I laughed a little wrily when I heard the hon. Member for Swindon (Mr. Coombs) talking about the Secretary of State offering to go to Swindon to talk to the Swindon councillors. That may be marvellous, but the Liverpool city councillors have been trying to get the Secretary of State's officials to come together to discuss the issue.

When the Under-Secretary of State for the Environment replies to the debate, I hope that she will answer some of the questions that have been asked in connection with the city of Liverpool. I hope that the answers will be motivated by something more than political vindictiveness which I believe has been meted out deliberately to Liverpool city council as a lesson to the rest of the country.

Several Hon. Members

rose——

Mr. Deputy Speaker

Order. Before the hon. Member for Liverpool, West Derby (Mr. Wareing) commenced his speech, I appealed for brevity. I am sorry to have to repeat that appeal at the end of his speech.

7.48 pm

Mr. Gerald Bowden (Dulwich)

I know that my constituents and ratepayers will welcome the order and will be particularly pleased that my hon. Friend the Minister for Environment, Countryside and Local Government did not accede to the appeal from the leadership of Southwark council to increase the rate limitation.

The order marks a further step along the line to control the wanton and wasteful expenditure of Southwark council and the general mismanagement of so many of its services.

Southwark council receives payment of rates from some 30 per cent. of its residents. The remaining 70 per cent. are on some form of rate rebate. That means that they are not in any sense committed to the expenditure considerations of that council. Indeed, two thirds of the total rate bill is met by commercial, industrial and other rates and not by the domestic ratepayer.

There is something of a note of hypocrisy in Opposition suggestions that local government is autonomous, responsible and accountable. In my borough there is no link between those who pay the bills and those who spend the money. My right hon. and learned Friend the Member for Southport (Sir I. Percival) brought that point out when he talked of the people who pay rates but who do not have an opportunity to say how they are spent.

Ms. Harriet Harman (Peckham)

rose——

Mr. Bowden

I give way to my constituent.

Ms. Harman

Is it not a condemnation of the Government's policy that the huge increase in unemployment in Southwark has meant a huge increase in the number of people who cannot pay their rates? Should not the hon. Gentleman feel ashamed of that, rather than add insult to injury by denying such people the right to vote while casting them into unemployment?

Mr. Bowden

The hon. Lady makes a fair point, but where businesses have to pay high rates they move out. In one of the main streets of my constituency the number of "For Sale" boards and small businesses closing show that they are being driven out by high rates.

Mr. Allan Roberts

That is not true.

Mr. Bowden

It is true. I believe that I am better informed than the hon. Member.

Mr. Roberts

Does the hon. Gentleman admit that high interest rates are a greater burden on small businesses than high rates?

Mr. Bowden

They should not be compared. They are two separate burdens. One can be controlled by the local authority and this measure attempts to control it.

It is worth looking at the history of rate capping. It has been a great benefit to those of my constituents who pay rates. They have seen their rate bill decrease by about 25 per cent. over the past year—the borough rate by 11 per cent. and the GLC and ILEA precept by a further 14 per cent. That has been a great benefit to them and they welcome this further step in that direction.

It is instructive to compare what happens in a borough such as Southwark, which has a great deal of inner-city deprivation but also one or two desirable residential parts, with a borough such as Wandsworth which is not so far away. Wandsworth has a demography similar to that of Southwark. There is a tale of two boroughs which bears careful examination.

Both boroughs started from a similar base when they were both Labour-controlled in 1977. Southwark had a rate of 66p and Wandsworth a rate of 68p. Wandsworth was more highly rated than Southwark in 1977. The story began to change when a Conservative administration was elected in Wandsworth. I see that the hon. Member for Bootle (Mr. Roberts) has moved to the Front Bench. Ambition knows no end.

There has been an instructive development over the careful years of good housekeeping by a Conservative administration in Wandsworth. The two boroughs started at roughly the same level but in 1984–85 Southwark's rate was 260p in the pound and Wandworth's was 137p in the pound. Wandsworth started higher but its rates are now only just over half Southwark's. The administrations of Wandsworth, Lambeth and Southwark should be carefully compared to see what can be done in similar areas.

We can also compare the management of financial affairs. Wandsworth has rent arrears. The latest figure that I have heard quoted was about £3 million. Southwark's rate arrears amount to £23 million. There is some disgraceful mismanagement if rent arrears at that level are allowed to accrue.

Mr. Stuart Holland

Does the hon. Gentleman agree that a high proportion of the rent arrears in boroughs such as Southwark and Lambeth are due to the late payment of housing benefit by the DHSS? Is he aware of what those delays are? The boroughs have protested time and time again that they could not possibly take over those payments from the DHSS. That is one reason for the delay.

Mr. Bowden

I am sure that the hon. Gentleman has a good point, but I do not see that life is so different in Southwark and Lambeth, which are only three or four miles away from Wandsworth.

Mr. Holland

It is because DHSS offices in areas of especially high unemployment are under heavy pressure. The Secretary of State is laughing, but at least junior Ministers take the matter seriously.

Mr. Bowden

The hon. Gentleman may have a point but it does not explain the difference between £3 million and £23 million. A difference of that order cannot be the result of the DHSS offices' slowness.

We should also compare the way in which properties are managed. A loss of income results from empty properties. I believe the current figure in Southwark is about £4,000, whereas in Wandsworth it is infinitely less, at £1,000. Better management and organisation are required to ensure that available resources are properly used.

The difference in expenditure is reflected when it is put on a per capita basis. The cost of removing refuse in Southwark by its direct labour force is about £21.16 per head. That should be compared with Wandsworth where it is about £8.71 per head—about one third of the cost. There is more satisfaction about refuse collections in Wandsworth than there is in Southwark.

The same applies to expenditure on highways. In Southwark £36.09 per head is spent, whereas in Wandsworth it is £15 per head. There is something drastically wrong when there is such a difference in the figures. That has come about since 1978. Southwark has raced ahead and Wandsworth has reined in its expenditure.

That suggests that there is an opportunity for improvement. Services can be improved and costs cut at the same time. There is not necessarily a contradiction between those two principles. Those responsible for raising the rates and spending the money should address themselves to how that can best be done to achieve cost-effective services and value for money.

The hon. Member for Copeland (Dr. Cunningham) quoted a law lecturer at Southampton university. I always listen with great interest when a law lecturer is quoted. was struck by the words quoted: Rate capping is a short-term expedient". That is a fair judgment. It is an effective expedient, but only in the short term. In the long term, we must find a way to make local government more accountable, more responsive to those who pay for the services which they have a duty to provide and more cost conscious, and we must ensure that they obtain value for money.

Although rate capping is not the perfect answer, it is a workable expedient for the ratepayers of my constituency and other parts of London which are subject to the order. I welcome the order, an improvement in the rating system and the reforms adumbrated in the Green Paper. I give the order my warm support.

7.58 pm

Mr. Allan Roberts (Bootle)

Thank you for calling me at such an early stage in the debate, Mr. Deputy Speaker. I have been here almost throughout the debate. I am pleased to follow the hon. Member for Dulwich (Mr. Boden). I wish to say something about what the hon. Members for Basildon (Mr. Amess) and for Billericay (Mr. Proctor) said. They were in favour of rate capping. I listened carefully and listed the reasons that they gave, which were that Basildon council had run a welfare rights campaign and is good at publicity. The Government did not mind councils spending money on publicity, until they got good at it, because they have always spent money on publicity. It has increased the number of jobs in the area, it has campaigned against the two Tory MPs, it wins elections, it wants the best possible boundaries to enable Labour to win seats in the future, it will be re-elected, and it has closed the swimming pool. That is not a saving, so it must be a cut. It has planted a lot of trees and prudently has a large amount of reserves. That seems to be the basis of the justification for rate-capping Basildon. I wish to deal with all the other rate-capped authorities, the order and the way it operates.

We have heard that Liverpool has been rate-capped. Last year, Liverpool would not put the rates up and that put it into an illegal situation. The Government urged Liverpool to put the rates up, Stonefrost urged Liverpool to put the rates up, as did the Minister who will reply to the debate. Now the Government are forcing Liverpool to cut jobs and services or attain a legal budget The Government will not allow Liverpool to put the rates up more than a certain amount because Liverpool is being rate-capped. How did rate capping come to be, and what is it all about?

Rate capping is about cutting or attempting to cut public expenditure. It has an amazing history of maladministration. When the Government came to power they said that they would cut public expenditure and also intended to cut local authority public expenditure rather than central Government expenditure. The Government introduced a block grant system but that did not work. The Government introduced a system of targets and penalties whereby, if a council exceeded a target or spent more than Government wanted it to spend, or had rate increases more than the Government intended, they would penalise the council by taking grant from it. If the council put up the rates to compensate for the central Government grant being taken off, the Government would penalise that council even more by taking more grant from them.

That happened to the extent that some councils went out of grant—some of the London boroughs and the GLC did not receive grant. The Government had therefore lost their power in the legislation over the local authorities and could not dictate to them, so they introduced the idea of rate capping. Rate capping is direct central control of the day-to-day affairs of local authorities. It is an absolute disgrace that we are having this debate. Debates about Liverpool, Basildon or other local authority budgets should be taking place in the local authority's council chambers between the rival political groups on those councils. They would be determining what the local ballot box has traditionally determined, but the Bill destroys local democracy.

Until this Government, local elections were about one person, one vote, not one business person, two votes. One went to the bollot box to vote on the level of services in relation to levels of local taxation. Traditionally, in Conservative areas with Conservative-run councils, one got lower rates but poorer services. In areas run by Labour, one received better services and higher rates. However, if one did not agree with what the council did, one voted against it through the bollot box. That is what local elections were about, but they are not about anything now. The Government, this Chamber and the Whitehall computer are now saying what the balance should be between services and rate levels. In the process they have destroyed the traditional relationship between local and central Government.

Central Government has a role to play in determining the parameters in which local government functions. Government must lay down duties, responsibilities and statutory conditions on local government. Traditionally, the relationship was based on central Government putting duties and responsibilities on local authorities, determining what the central contribution should be for those facilities and fulfilling those duties. Freedom and democracy were shown by the fact that local government was free to do more and to provide better services to initiate and pioneer. Many local authorities were pioneers. They pioneered the manufacture of gas built large airports which made profits for the local community and established the police force. All these were achieved in advance of central Government and always with freedom, democracy and right of manoeuvre. The next Labour Government will restore that traditional relationship.

The devastating consequences of the order and the rate capping are not felt just in the rate-capped areas. I was on the Committee on the Bill which introduced rate capping; the Conservatives could only quote one leader of a Conservative council who supported the legislation. The Government could quote many leaders of Conservative minority groups in Labour councils who supported rate capping. The one Tory leader who was quoted was Ron Watson, the leader of Sefton council.

Mr. Robert C. Brown (Newcastle upon Tyne, North)

My hon. Friend is making a good point and I am grateful to him for giving way. Does he not agree that the average rate rise this year will run at 18 per cent. Oxfordshire will have a rise of 27.9 percent., Bedfordshire 33 percent. and Buckinghamshire 30 per cent.? These councils are not the wicked Socialist councils like Newcastle upon Tyne which the Prime Minister has continued to prattle on about. These are Tory shires and they are not going to forget this Government for what they have done to them.

Mr. Roberts

I agree with that. Sefton is a metropolitan district which used to pride itself on low rates and poor services. The council has cut services to the bone and has done everything the Government wanted, but the leader of that council was the one quoted by Ministers——

Mr. Deputy Speaker

Order. We must confine ourselves to the geographical areas covered by the order.

Mr. Roberts

I am doing that, and I am quoting the justification of the Government, in their rate-capping legislation, for rate-capping Liverpool and the other local authorities. The Government quoted the leader of Sefton council on the assumption that, if one rate-capped Liverpool and the others, the consequence of dealing with the so-called overspenders was that there would be money available to redistribute to the so-called underspenders. Suddenly the underspenders have found that that is not true. In the next financial year Sefton faces a 26 to 30 per cent. rate increase as a result of massive cuts in rate support grant not only to itself——

Mr. Deputy Speaker

Order. I may not know the area extremely well, but I think Sefton district council is separate from Liverpool district council. Will the hon. Gentleman discuss that?

Mr. Roberts

Mr. Deputy Speaker, you are being most unfair.

Mr. Wareing

On a point of order, Mr. Deputy Speaker, I would have your guidance. I believe that the area of Sefton was mentioned in an intervention from the right hon. and learned Member for Southport (Sir. I. Percival) during my speech. There are implications for those who live outside a rate-capped area.

Mr. Deputy Speaker

The fact that perhaps the occupant of the Chair was not so conscientious in his responsibilities as he might have been during the hon. Gentleman's speech is no justification for him now being lax. "Erskine May" clearly states on page 619 that when a statutory instrument is confined to a particular geographical area or areas, discussion of other areas is out of order.

Mr. Roberts

I am speaking about the geographical areas and about the implications for those areas. The consequences are that there is no money because of the rate-capping of Liverpool and the other local authorities. That is a consequence of what is happening in the geographical area. Therefore, other local authorities are suffering as a result. That theme has permeated the whole of the debate. Why it should be suddenly different when I am speaking I do not know.

I state quite clearly that one of the justifications for rate-capping in these geographical areas was that if the Government dealt with the overspenders there would be money left for the underspenders. That is not true. Rate-capping those areas has not saved any money or provided any money for the so-called underspenders; otherwise Sefton would not be facing a 26 to 30 per cent. rate increase.

Sir Ian Percival

Does the hon. Gentleman recognise that at least 44.88p on 14 per cent. of the 25 per cent. which is threatened, is the precept of the Merseyside passenger transport authority, over which we in Sefton have no control, and which would have been 55p, another 7 per cent., if the Government had not curbed it the week before last?

Mr. Roberts

Besides arguing that rate-capping would help so-called underspenders, it was argued that abolition would help them. The leader of Sefton council——

Mr. Deputy Speaker

Order. If we are still on Sefton, we had better move on. I hope that the House will not persist in ignoring my remarks. The position is clear: we debate what is in the order, and Sefton is not mentioned.

Mr. Roberts

On a point of order, Mr. Deputy Speaker. I am serious about the point of order. Throughout the debate, including the opening speeches of the Minister and my hon. Friend the Member for Copeland (Dr. Cunningham), reference has been made to the consequences of abolition and precepting on authorities. They are tied up with grant-related expenditures and rate-capping assessments. The consequences of rate capping in Liverpool cannot be separated from the abolition of Merseyside county council and the precepts, because——

Mr. Deputy Speaker

Order. I understand the hon. Gentleman's point of order. It is basically the same as the one with which I have already dealt. The position is absolutely clear. Page 619 of "Erskine May" states: Where the effects of an instrument are confined to a particular geographical area or areas, discussion of other areas is out of order. Sefton is not referred to in the instrument, and I hope that we have heard the last of Sefton during the debate. The hon. Gentleman will kindly confine himself to the areas specifically mentioned in the statutory instrument.

Mr. Roberts

Liverpool is on Merseyside, and I shall refer to Merseyside county council, and the consequences for Liverpool, which are the same as for the other districts in the area.

As a result of the abolition of Merseyside county council, which has led to the rate capping of Liverpool, the three precepts for all three joint authorities—the police, fire and passenger transport authorities —aggregate to 77p. That is 4p more than the 73p which the county council levied for all its services in 1985–86, which included highways, trading standards, waste disposal and the arts, most of which must now be provided by district councils, and will be included in the rates in 1986–87.

Therefore, all the district councils of Merseyside, especially Liverpool, must find both a precept, which the Government have determined because the passenger transport authority and the other joint bodies are rate-capped as well as Liverpool, and money in the rates for the other services that are being handed to them as a result of abolition. The Merseyside authorities are suffering not only from a cut in rate support grant, but from an increased precept from the non-elected passenger transport authority and the other joint bodies. The Government, not those bodies, decided on the precept because those bodies, the city of Liverpool, and other local authorities, are rate-capped.

If one studies how the rate-capped local authorities have been selected, one sees how arbitrary the selection procedure has been. That is no accident because the councils are all Labour-controlled. It is surprising that none is Conservative-controlled. The authorities have been chosen for spending above GREAs and targets, and the criteria used are unfair and nonsense. GREAs are intended to be a way of distributing grant, rather than a normative spending level. The Government made that clear when GREAs were introduced in 1981, and it was confirmed by the Department of the Environment to the Audit Commission in 1984 and the National Audit Office in 1985.

As GREAs are not the instrument through which to determine rate levels and rate-capping, why are they being used now, instead of other measures, to justify rate-capping those authorities? The reason is that, if GREAs are used, Labour-controlled areas fall into the penalty box. Spending targets for individual authorities have been completely discredited. The Government have been forced to abandon such targets for 1986–87 in both England and Wales, yet they continue to use them for this purpose.

The idea that the voluntary sector is not suffering as a result of the rate-capping proposals is absolute nonsense. The abolition of the metropolitan counties and the GLC means that the rate-capped authorities and others must pick up the bill for funding voluntary organisations—the arts and non-arts—which were previously funded by county councils. The Liverpool council for voluntary services has identified 90 organisations which are in immediate danger of closure. The position is now criticial. With fewer than six weeks to go, the council for voluntary services writes: We are seeking urgent support. Redundancy notices are now being issued and schemes being closed down. If swift action is not taken, yet again Merseyside will suffer substantial job losses and cuts in services.

The voluntary sector and local authority services are suffering, and rates continue to increase. The Government are destroying local government democracy and the reason for local elections. They are trying to suggest that they will solve the problems of rate-capped authorities by a Green Paper on the poll tax, which they intend to implement over four Parliaments, which means that it will probably never be implemented.

Mr. Loyden

I wish to stress my hon. Friend's point about voluntary organisations. I was always of the opinion, which is now being proved wrong, that the Tory party was in favour of voluntary organisations. At present voluntary organisations in Liverpool will stop functioning because of the abolition of the Merseyside county council. The Secretary of State is asking them to approach the city council, which is rate-capped and has a shortfall in its budget of £37 million.

Mr. Roberts

I agree with my hon. Friend. When the Government announced the rate support grant settlement, they said to some local authorities, in anticipation of rate-capping other authorities, that certain amounts of grant would be clawed back from overspending authorities. Many local authorities, in anticipation of that, have invented a new phenomenon called flowback. They are planning deficit budgets, as Liverpool did last year with its illegal budget, on the assumption that, because of the rate-capping orders, money which was to be given to local authorities will be taken from them and redistributed to underspending authorities.

One such local authority next to Liverpool. which I cannot mention, is expecting £1.9 million flowback from rate-capped authorities. It is contemplating a deficit budget in anticipation of receiving that extra grant, which it may not get. It is doing a Liverpool and it will break the law. I hope that the right hon. and learned Member for Southport (Sir I. Percival), whose council is busily trying to lose his seat to the Liberals at the general election, will take that message back.

8.17 pm

Sir Ian Percival (Southport)

Once upon a time there was a direct relationship between rates and the ballot box, because most people who paid rates voted. If they found the rates too high, they voted the controlling party out of office. A great deal has happened to change that and to strike at the hypothesis on which the case of the hon. Member for Bootle (Mr. Roberts) was based.

In Liverpool 51 per cent. of the residents do not personally pay their rates. I do not complain about that, but one cannot ignore the fact that that means that 51 per cent. of voters have no interest in keeping rates down. Their only interest is in maintaining services, and I understand that. It is idle to ignore that such changes have taken place.

A further change is that at present 60 per cent. of the rates are paid by people who do not have a vote.

Ms. Harman

Yes they do.

Sir Ian Percival

The hon. Lady will have a chance to speak. Many of my constituents have businesses in Liverpool, so they are directly interested in the rates there. As they do not live there, they do not have a vote. Nevertheless, they conduct businesses and, I am happy to say, provide jobs for some of the constituents of the hon. Member for Liverpool, West Derby (Mr. Wareing).

Between them, the business men pay 60 per cent. of the total rate but not one of them has a vote. So the relationship between rates and the ballot box has largely gone.

Mr. Dobson

Does the right hon. and learned Gentleman agree that the people he is concerned about could do something immediately to stop their disfranchisement by living in Liverpool?

Sir Ian Percival

That is a very silly intervention. I am sure that the hon. Member for West Derby is happy that some of my constituents pay rates in his constituency without being a burden upon it. They also provide jobs for his constituents.

Even despite these big changes, the system might work if we had the sense of responsibility about spending that we once had, and the same relationship between local and central Government. This does not exist any more; some authorities have been spending money like water.

Mr. Wareing

I remind the right hon. and learned Gentleman that, even under this Government, 47 per cent. of expenditure is financed by rate support grant, which comes out of taxation, so even those people who do not pay rates contribute indirectly by their payment of taxes such as VAT and Customs duties on alcohol and tobacco.

Sir Ian Percival

The hon. Gentleman has highlighted another contribution that my constituents make to his. They probably pay a great deal more income tax per head than his constituents. That is right, because taxes are progressive. They contribute more and some of it goes to his constituents. That makes no dent in my argument.

Despite these changes, the system would work if some responsibility were shown about spending. But some Labour-controlled authorities have deliberately set out to embarrass the Government by wasteful spending.

Ms. Harman

That is nonsense.

Sir Ian Percival

The hon. Lady may not like it, but they are currying favour with voters who do not have to pay rates, at the expense of their political opponents. This wasteful expenditure falls directly on my constituents through the precepts and because so many of them pay rates in Liverpool. I say on behalf of my constituents, thank goodness some curbs have been placed on this spending.

The hon. Member for West Derby who so courteously gave way to me, as he always does, said one thing with which I do agree. I am glad somebody said it and that it came from the Opposition Benches. The hon. Member for Southwark and Bermondsey (Mr. Hughes), who would not give way on a very important point about this two weeks ago, because he knew what the question would be and did not want to answer it, tried to blame everything on Labour mismanagement of Liverpool during the last two years. But the hon. Member for West Derby drew attention, very properly, to the fact that, for a decade before that, there was terrible mismanagement by the Liberals. The Labour party took over that legacy of those 10 years and, by gum, made it even worse. It ill behoves the Liberal spokesman to try to get away with it by blaming everything in the past on Labour.

However, we can blame what is happening now on Labour. That was one of the ironies of what the hon. Member for Bootle said when he complained about the precepts of the joint authorities. The joint authorities—I think that I am still in order geographically—represent the elements of centralised government which we could not abolish. What they are charging is not the result of abolition of a second tier. We could not abolish those. We could not abolish the passenger transport authorities for the time being. It may be that under the Transport Act, there might be separate schemes. The hon. Member for Bootle was complaining that these three joint boards are precepting for 77p as against 73p before. He says that that is very hard on Liverpool and on his own constituency —we must not mention that. We might make the same point about it if we were allowed to do so.

What a false point that is. All those three bodies are controlled by Labour politicians, who are spending all the money.

Mr. Allan Roberts

The proposed maximum precept is high because the authority has been denied entitlement to £25 million of block grant. The Government have taken the equivalent of a 14p precept off the joint boards by cutting their block grant by £25 million. The precept has been set not by Labour-controlled joint boards but by the Government.

Sir Ian Percival

They have been limited by the Government. Otherwise, they would have been even higher. That is what is so extraordinary about the hon. Gentleman's argument. What was his first point?

Mr. Allan Roberts

The bodies have received £25 million less in block grant.

Sir Ian Percival

I forgot it because it is such a bad point. The passenger transport authority could have spent anything up to £75 million and got a grant but it could not even keep its spending under that sum. It wanted to spend £103 million. The hon. Member for Southwark and Bermondsey and I were here listening to the arguments for that. I am not sure whether the hon. Member for Bootle was also present. The PTA wanted to spend £103 million. we stopped it, and kept the sum down to £81 million. That body did itself out of all chance of getting grant, and would have spent yet another £21 million if not stopped, which would have been yet another 7 per cent. on our rates.

My constituents are thoroughly glad that these limitations have been made. Those of them who pay rates in Liverpool are glad that their rates are to be kept within some sort of reason by this order.

8.26 pm

Ms. Harriet Harman (Peckham)

This is one of the most absurd debates that I have heard in the House because we have no business going through the circumstances of local authorities about which we know nothing.

I freely admit that I know nothing about local authority expenditure and the need for services in Southport but, by the same token, the right hon. and learned Member for Southport (Sir I. Percival) knows nothing about circumstances in Southwark, and it is not his business to vote in favour of an order that sets the rate in Southwark. The Government are asking hon. Members to vote on Southwark's rates when they have hardly been mentioned and when hon. Members know nothing about them and care even less. That is a disgrace.

For people in Peckham, the most important considerations are what sort of job they can get, how much they are likely to get paid for it, what sort of home they have and whether they can afford it, what the area in which they live is like—whether it is clean and safe to go out at night—and what services they get, especially services for the elderly and children. Local authority expenditure in those respects is critical.

Private sector jobs will not be attracted to an area which is run down and choked with traffic and in which the infrastructure is poor. The local authority must increase spending to maintain existing services and bring new jobs into the area. Private risk capital will not convert derelict sites in blighted areas.

Mr. Gerald Bowden

rose——

Ms. Harman

Public investment can, and does, provide the lead to private investment. The council should be encouraged, not deterred from taking that lead. It also has an important role as an employer. Most of the people in Peckham who have jobs work directly or indirectly for the public services. They work in the Health Service and the education service. Many work in the House in canteens, lifts and restaurants.

Mr. Gerald Bowden

rose——

Ms. Harman

If the Government would only allow it to, the council should take on many more staff as caretakers in estates where people feel unsafe at night, doing building works and repairs to private homes. They could be employed as home helps to allow elderly people to remain independent in their own homes, in day nurseries so that working parents could go out to work secure in the knowledge that their children were being well looked after and in day centres for the elderly or the handicapped so that the community can be sure that its most vulnerable members are being looked after. There is plenty that needs to be done in Peckham and plenty of people need jobs. One has only to walk around to see that.

If we have a fair system of finance for local authorities and if the Government recognise the urgent need to use public money to narrow the gap between richer and poorer areas, Southwark will be able to employ more people to do those vital jobs. That will mean that a young person, instead of leaving school and going on the dole or into a no-hope training scheme, could train as a bricklayer to build homes or train as a nursery nurse to look after small children. When one meets a school leaver in Peckham one must be careful about asking the usual question, "What will you do when you leave school?" More often than not, they say, "I suppose I will go on the dole."

Mr. Gerald Bowden

rose——

Ms. Harman

That is not because they lack motivation or initiative; it is just a recognition of the harsh realities in my constituency where in four of the eight wards, Brunswick, Liddle, Friary and Consort, more than 30 per cent. of them are unable to find work.

Mr. Gerald Bowden

rose— —

Ms. Harman

In the Liddle ward unemployment has risen over 90 per cent. between 1981 and 1985. By reducing the amount that Southwark can spend, the Government are directly responsible for preventing the public and the private investment that could create jobs. I should like to see more Government funding in Southwark so that we can also increase the wages of those who have work.

Mr. Gerald Bowden

rose——

Ms. Harman

The men and women who are working hard to provide vital services such as caretaking and home helps are already so low paid that, as well as working five days a week or more, many of them still have to claim benefit. For that not only do they earn very little but they earn the derision of Conservative Members. I think that that is a disgrace.

Mr. Gerald Bowden

rose——

Ms. Harman

Housing is of critical importance. Southwark has the largest percentage of council housing stock in London and it is of critical importance in Peckham. The overwhelming majority of people are in council homes because they cannot possibly afford to buy their own. Peckham has one of the lowest average incomes in London and the council housing position is critical. There are 10,000 families on Southwark's waiting list, and there are 10,000 families wanting a transfer.

Mr. Gerald Bowden

rose— —

Mr. Deputy Speaker

Order. The hon. Lady is not giving way.

Ms. Harman

There is empty land upon which the council could build new homes. It is unable to carry out the massive task in which it should be engaging of redesigning and refurbishing the deck access estates, which are not only unpopular but unhealthy and unsafe. For example, Gloucester grove estate was recently described by the national press as a "no-go" area when the postal workers stopped deliveries in protest at attacks on them. It is not difficult to understand the problems of the estate or to see how they could be remedied. Gloucester grove could be transformed into a desirable place to live if it was broken down into smaller units. It is too massive with over 1,000 flats. It could be transformed if the access to the flats was altered—at the moment tenants have to go up blind towers to reach the flats— if the refuse system was changed so that it efficiently coped with rubbish instead of efficiently breeding flies and constituting a fire hazard, if it had better transport which means more frequent bus services, if more people on the estate had jobs and if there were better leisure facilities in the area. Most of those factors are vital just to make it a decent place to live either as a pensioner or to bring up a young family. None of that is possible if there is a vice-like grip on council spending.

When Conservative or Liberal Members mention examples of expenditure which they think are wasteful, none of those figures, by any stretch of the imagination, are anything like the sum that needs to be spent to rehabilitate badly designed estates and to build new ones. Decent people have to continue to live in depressing and degrading housing. I have already mentioned the Gloucester grove estate, but the same applies to countless other estates in Peckham such as the Willowbrook estate, Aylesbury estate, Camden estate, north Peckham estate, and the Brandon estate. I mention that so that hon. Members can understand the size of the problem that needs to be faced.

Services are also very important in Peckham. I would like to mention social services, where Southwark has a good record. For example, it provides 11 home helps per thousand of the elderly population. In Tory areas such as Kingston, Surrey and Barnet there are fewer than four home helps per thousand of the population, which is 70 per cent. below the Government's guidelines. The Liberal Isle of Wight provides fewer than three home helps per thousand of the population. The Government are calling those councils responsible and calling Southwark council an irresponsible overspender. I believe that Southwark is a responsible council for trying to meet the needs of the people in the area. The Tory areas and the Liberal Isle of Wight are simply turning their backs on the needs of people in their areas. I should be interested to know whether the hon. Member for Southwark and Bermondsey (Mr. Hughes) supports the Isle of Wight in its appalling record of home help provision.

Mr. Deputy Speaker

Order. The hon. Member for Southwark and Bermondsey (Mr. Hughes) will not respond to that. We shall confine ourselves to the areas mentioned in the order.

Ms. Harman

Another indicator of the responsibility of Southwark council is that it tries to provide a decent number of day nursery places. Out of 108 local authorities, Southwark is the eleventh highest in the provision of day nursery places. However, it still has only four day nursery places for every 100 children. Over and over again parents come into my surgery desperate for a day nursery place. Those are services that people want and that the council wants to provide but central Government dictatorship prevents the council from providing what people want.

The "irresponsibility" that the Government say they are trying to stamp out is what we call care. The Government are really stamping out jobs, services and the hopes of thousands of people in Peckham. The Department of the Environment is no longer worthy of that name. It has simply become a sub-division of the Treasury. It has abandoned its role in favour of simply being an arm of the Government's brutal economic policies.

8.36 pm

Mr. John Cartwright (Woolwich)

Like my hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes), I oppose the order on principle. I strongly agree with the comments of the hon. Member for Peckham (Ms. Harman) at the beginning of her speech when she said that it is not the job of the House to fix rates for individual local authorities. That is the job of elected local councillors. If I had wanted to continue fixing rates, I would have stayed in local government and not come to the House. Those of us who have experience of rate fixing know that it is not a particularly easy task. It requires a great deal of detailed background information. It involves taking difficult decisions on priorities and settling competing claims for resources. We have no information before us tonight to enable us to do any such thing.

The Government are displaying their usual take it or leave it attitude. All we have before us is one scrappy flimsy piece of paper with 11 figures of maximum rates set out on it. That is not the way in which the House of Commons can judge whether what the Government are proposing is reasonable or unreasonable. However it is dressed up, it is not parliamentary scrutiny; it is simply a rubber-stamping charade which I believe brings the House into dispute. If there were no other grounds for objecting to the order, that, in my view, would be a powerful one.

I object to the order because of the impact of many of the cuts that appear to flow from it. In my own authority in Greenwich, I noted that the hon. Member for Mitcham and Morden (Mrs. Rumbold), who will reply to the debate, said: Greenwich is being required to reduce its expenditure by 10 per cent. in real terms"—[Official Report, 31 January 1986; Vol. 90, c. 1255.] As a former leader of Greenwich council, I know what a problem that will be. That is the magnitude of the cut that is being forced on my local authority. The difficulty is that that cut is being taken at the last moment. No preparation has been made for any such reduction in spending. Throughout the current financial year we have seen, on the part of Greenwich and other rate-capped authorities, a continued and determined jacking-up of expenditure rather than any planned attempt to come to terms with reality. The difficulty of that is that when the crash comes and the axe falls it has to fall swiftly wherever the cuts can be made and that may not be where they ought to be made in any sensible decisions on priorities.

The spending limit for Greenwich is £95.3 million. The local authority has told me that a no-cuts budget including transferred GLC services would involve spending £116.2 million. Clearly, that leaves a shortfall of £20.9 million. I accept that there may be some hyping of the position by the London borough of Greenwich but, even allowing for that, it is still a massive cut to be made at short notice.

There is the strange situation of the transferred GLC services. There is a gap between what is allowed for the cost of these transferred services in the rate support grant settlement and what has been allowed in the rate limitation order. The shortfall for Greenwich is £780,000, for Islington it is £804,000 and for Lambeth is almost £1.4 million. I hope that the Under-Secretary of State will explain how the Government can provide one definition for what is needed to meet the cost of these transferred services in the RSG settlement and another definition for the calculation of new rate limitation. This demonstrates once again the dubious basis on which rate limitation has been calculated.

One problem for all of us who object to rate capping on the basis that it will mean cuts—the Minister for Environment, Countryside and Local Government referred to this—is the extraordinary virulence of the forecasts made this time last year. I have a document which was cirulated to every home in Greenwich by my local authority, predicting that rate capping would mean the sacking of up to 1,000 council workers. The leaflet gives a spine chilling list of the effects of rate capping: more delays and queueing for all council services; substantial rent increases for council tenants; council housing taking longer to repair; increased charges on services for the elderly and handicapped; less nursery places for under-fives; home helps cut back; less books available in libraries; swimming pools, sports centres closed; roads and pavements not being swept regularly; refuse not being collected as often; community groups and small businesses losing their grant; ending training and apprenticeship schemes for school leavers.". Not one of those things has happened. Not a single redundancy has occurred. In fact, the reverse has taken place, as the council has taken on many more employees and is launching new services, despite rate capping.

Greenwich is not the only place where we were told there would be the end of civilisation as we have come to know it. The leaflet points out that rate capping would affect not just Greenwich but the neighbouring boroughs of Lewisham, Southwark and Lambeth. It states: The effects on south London would be catastrophic for it could mean the loss of 6,000 jobs. The total could rise to 10,000 with the proposed cuts to ILEA and GLC services. That means thousands fewer people buying goods in local shops, and firms and factories threatened with closure. My council suggested that that extraordinary catalogue of doom and disaster would flow from rate capping.

I understand the point that we have come through the first year of rate capping and perhaps the position will not be as good in the second, but I believe that, if hon. Members and local authorities had not cried wolf so long and so loud last year, it would be easier to believe what is said this year. Conservative Members cannot be surprised, after what they prophecised last year has not come about, if Ministers, and, more importantly, our electors have some doubts about the prophesies they are now making in the second year of rate capping.

My next point arises from what my hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes) said and relates to the so-called rates rebellion last year. Happily, we are not offered an action replay this year and local authorities are not refusing to levy a rate. I want to hark back to last year. It is worth reminding ourselves that the annual report of the Audit Commission, which was published last July, referred to the failure to levy a rate. It stated: The ratepayers in each of those authorities have suffered severe losses, that would not have been incurred if rate demands had been issued in April. That the authorities concerned include some of the most deprived in England and Wales makes such waste even more deplorable. I strongly endorse that conclusion.

The Audit Commission went on to set out what it saw as its role. It said: if local electors are content to have their affairs administered in this manner in the last analysis that is their affair. The auditors' duty is to bring the extent of any loss that is being incurred, to the attention of the local electors— so that they are properly informed. I wholeheartedly endorse that approach. Sadly, it is not being carried out. I have had a lengthy and not very profitable correspondence with the Audit Commission asking it to quantify the severe losses that have been inflicted on my ratepayers and the ratepayers of other local authorities. If it is the auditors' job to inform local electors, for London that must be done before 8 May this year, because that is the only opportunity in a four-year period that Londoners get to vote for their local authority. If we are asking the electors of the boroughs to make up their minds whether they want their affairs conducted in such a way, the auditors have a duty to tell my electors and those of other boroughs just what those severe losses are. I very much hope that the Under-Secretary of State will provide us with helpful information.

Mr. Waldegrave

I am interested in the hon. Gentleman's speech which is, as usual, an important one. I should be delighted if the hon. Gentleman wants to talk to Ministers about this matter. Although the Audit Commission is totally independent of us, as it is of the hon. Gentleman, this is such an important matter that I should be happy to assist him in drawing it to the attention of the commission.

Mr. Cartwright

I am grateful for that offer, but I must in all honesty tell the Minister that I have written to the Secretary of State and sent him copies of all the correspondence. The Secretary of State very helpfully said that he would refer the matter back to the Audit Commission, with which I had been corresponding for some months. That did not seem to be a terribly helpful response. If the Minister is offering a more positive response, I shall be happy to take up the offer.

We have had limited experience of the rate-capping arrangement. Our experience in the past year confirms the judgment that my colleagues and I made of the principle of rate capping last year. It is politically inept; it is a constitutional absurdity, and it represents a triumph for centralised bureaucracy. For those reasons, we shall vote against the order.

8.47 pm

Mr. Peter Bruinvels (Leicester, East)

I supported rate capping last year, and I support it this year. During the 1984–85 winter, when we considered part I of the Rates Bill, my local authority of Leicester was rate-capped at a rate of 25.22p in the pound. By rate capping, I am convinced that the Government and my right hon. Friend the Secretary of State saved ratepayers in Leicester and in the other 17 local authorities more than £300 million. The CBI has always welcomed rate capping as a successful measure.

Is the order tough enough? I believe that my feeling is similar to that of my hon. Friend the Member for Basildon (Mr. Artless). We were threatened last year. We are threatened now that there will be massive job losses at the city council's headquarters. However, more employees have been taken on since Leicester was rate-capped. There are now 4,126 employees. The jobs which we were told would be lost have continued. Sometimes, rate capping seems to be an advantage to some Labour authorities—a point that concerns me a little.

I would question the basis on which the list was drawn up. I do not criticise my right hon. Friend the Secretary of State or the Minister for Environment, Countryside and Local Government, but it seems strange that Basildon and Thamesdown, which behaved in similar ways to Leicester, have been rate-capped this year but Leicester has not. I understand that last year £150,000 was spent by my authority on fighting rate-capping even before the council was rate-capped. My concern would be——

Mr. Deputy Speaker

Order. The hon. Member was present when I issued reproaches earlier for straying outside the order. I hope that he will speak to the authorities mentioned in the order.

Mr. Bruinvels

The point I was trying to make is that once an authority is nominated, it is not totally bound to the requirement of keeping to the order, in the sense that although it says that it is, it threatens massive job reductions, which do not materialise. I have tried to assist the House by giving the example of my local authority following the order that we passed a year ago. Once the rate was levied it went ahead——

Mr. Deputy Speaker

Order. This is not a re-run of 1985. Would the hon. Member please speak to the order before the House?

Mr. Bruinvels

I would like the order to be withdrawn and to be re-submitted with my local authority included in it. I believe that if Leicester had been put on the local authority list it might have learnt a lesson, as would other local authorities which have not learnt a lesson and which continue to be a burden on the taxpayer and continue to damage the prospects of businesses, which we wish to encourage in our local areas. Those businesses have been penalised by new rates being levied and by local authorities, such as Leicester, being left off the list, and introducing a mammoth rate rise.

Far from cutting out waste by rate capping, it is made up in the following year. I should like to describe a typical example of what that might mean to local authorities. One defect in the order is that a local authority such as Leicester can levy 25.22p in the pound in the rate-capped year, and the next year, when it is let off the hook, it can set 45.5p in the pound, which is a city rate rise of 80 per cent. Those authorities give a notional figure for the year when they were rate-capped. The notional figure would have been 39.9p in Leicester's case if they had not been rate-capped. In Camden, for example, where I fought an honourable fight with the hon. Member for Holborn and St. Pancras (Mr. Dobson) for the local council a few years ago—he won on that occasion, but he will not win next time—we saw a large amount of public expenditure by the council and I wish to see an end to that. I want an end to the jobs for the boys that some local authorities give. I know of a case in the local authority that I represent where my Labour opponent was found a job within three months of being elected as a Labour candidate. It worries me that all those local authorities are taking advantage of their position.

I urge the Minister to justify why some authorities have been identified in the order and others have not.

Mr. Deputy Speaker

Order. If the Minister attempts to do so, I shall have to rule him out of order also. The hon. Member must recognise that he is being unfair to his colleagues from Leicester who might reasonably have assumed that Leicester would not be debated tonight. I hope that he will confine himself, as I have instructed him, to the order before the House.

Mr. Bruinvels

I am grateful for your advice, Mr. Deputy Speaker——

Mr. Deputy Speaker

It is no longer advice; it is an instruction to the hon. Member.

Mr. Bruinvels

The order concerns all rate bills of the authorities that have been nominated. My concern is that those authorities are allowed to levy rates that will be protected. I urge the Minister to give the undertaking that other authorities will continue to be considered, because it is a rates blow in local authorities out of the rate-capped area for the residents to be suddenly presented with massive rate rises. Basildon has probably been warning everyone in the area that it is still fighting for its services and protecting jobs. No doubt other authorities that are not rate-capped are also doing so.

The principle of rate capping and the order must be welcomed by all those who believe that not enough consideration is being given to businesses that pay the largest rates and receive no opportunity to be properly represented. A local authority says that it has a mandate, but it has a limited mandate to increase services, because the mandate is probably no more than 30 to 40 per cent. of the electorate.

We must consider the real rate for the future. We do not want artificially depressed rates whacked up the following year, because the authority is not rate-capped. Ratepayers are entitled to a better opportunity and full representation. Chambers of commerce and industry, including Leicester, are worried about the rates burden and the fact that jobs could be lost. Many businesses have become political shuttlecocks in hung councils. We must oppose any failure of the local authority to consult with businesses about the rates that they would like, so that a fair accord can be established between businesses and the local authorities. Both sides must be properly considered. Huge rate rises and any political activities, whether in Basildon, Thamesdown or Leicester, which abuse ratepayers' money are anathema to society.

The order will encourage other local authorities to take care or they will be rate-capped. I am envious of those authorities which have been rate-capped today. I look forward to Leicester being included in the next round.

8.55 pm

Mr. Frank Dobson (Holborn and St. Pancras)

Camden council and consequently the Camden people have received no central Government grant since 1980–81. The last time that they received any grant from central Government was 1979–80 when central Government's contribution was equal to 23 per cent. of Camden's local expenditure. If the Government were to finance 23 per cent. of Camden's expenditure now, it would amount to a grant of £30 million. Despite the absence of any grant and Government cries of profligacy, the level of local rates in Camden has scarcely changed since 1981–82, when it was 89.4p in the pound. It is now 90.2p, which is an increase of 2.9 per cent. During that time the retail price index has increased by 25 per cent. If Government spending was only 2.9 per cent. in relation to that increase, we would be considerably better off, especially in view of what they spend their money on.

The Government have decided to set a limit on Camden's spending, which amounts to a cut in real terms of 14 per cent. I do not believe that the Minister will be able to argue with those facts. However, the Government-imposed limit is not all, even if those who write Ministers' speeches seem to believe that it is funny. The abolition of the GLC is likely to lead to additional calls on Camden's expenditure. The Government are allowing Camden £16.3 million. Camden estimates that the cost of the GLC services that will take over will be about £25 million. It may be that the figure is somewhere in between—I am prepared to accept that—but if it is, any additional sum above £16.3 million will have to be met from Camden's other spending.

On top of that, the Government have made no allowance for the increase in Camden council spending on homelessness. Net expenditure on homelessness as recently as 1983–84 was £782,000. This year, it will be £7.6 million—an increase of nearly 10 times, which results from several causes. There has been an increase in homelessness, with a massive number of people in temporary accommodation, and there has been a massive increase in the number of people applying on the grounds that they are homeless. Many of these are large families that need substantial places in which to live. The result has been an increase in the costs that Camden incurs in trying to deal with the problem.

In 1983–84, the average cost to the council of placing people in bed and breakfast was £90 per week, but the current cost is £174 a week. That is partly because there has been an increase in charges, and partly because the council properly decided that it had been leaving homeless families in accommodation that was dangerous and unsafe. Indeed, some people placed in bed and breakfast accommodation by the council were burnt to death. It is right and proper that the council has knocked 22 of the cheapest hotels off its list. That is a step forward, but the Government are making no allowance.

Another massive reduction in income has resulted from the DHSS decision to reduce board and lodging limits, which has reduced its contribution by between £26 and £43.50 per member of a family. No hotel in the borough of Camden meets the council's environmental and health requirements and charges less than the new Government limits. Consequently, the council is making up the difference. The Government, after deciding to punish the homeless instead of getting at the landlords who rip off their tenants, are punishing the ratepayers who, through the council, are trying to do something about the problem.

The estimated cost to Camden next year of the Government's measure is an increase of £3 million in its spending on the homeless, and no compensatory payment is being made. The council will also lose GLC stress money, which would have made a considerable contribution to preventing rates increasing next year. Camden has always had certain special features. Three main line stations disgorge from time to time people who need much attention and help from the council. There is a big concentration of hospitals and the council has to provide services such as social workers. Land costs are high, and continue to rise. That has other knock-on costs on council spending. As my hon. Friend the Member for Copeland (Dr. Cunningham) pointed out, we feature, lamentably, in all the stress index factor lists.

It is worth pointing out that one of our main problems is that hon. Members representing inner city seats have to put up with decisions being imposed on our electorate by those who appear to have no conception of what is going on. It is worth comparing the circumstances in my constituency with those in the constituency of the Secretary of State for the Environment. The density of population in my constituency is 34 times that of Mole Valley. The number of under-16s living with one parent in my constituency is five times the level in Mole Valley. The number of households that do not live in self-contained homes is eight times the level in Mole Valley. The number of unemployed in my constituency is six times the level in Mole Valley, and that ignorance from the Secretary of State is a sign of what he is up to.

This debate should be unnecessary. Labour Members should not have to argue the merits of spending on the authorities concerned. It is startling that the Government are forcing the House to discuss the minutiae of local government spending.

Mr. John Powley (Norwich, South)

rose——

Mr. Dobson

I shall not give way.

The Government are rejecting the basis of our democracy. Pluralism has always been at its heart and the Labour party still stands for it. We believe in separate and distinct sections of power and influence, and in the right to dissent. The Government believe in curtailing, crippling, stifling and subduing the right to dissent. They are opposed to people having the right to decide what they want in their locality.

Camden council is imperfect— it was when I was leader of the council and even more so when the hon. Member for Hampstead and Highgate (Sir G. Finsberg) was leader. The people of Camden should be able to decide what the council spends and what services it provides. That is what we have always had in the past and it is deplorable and despicable that we have a Government that say that the Tory party in these localities has sunk so low that it stands no chance of being elected to bring in the Government's policies.

If the Government had any confidence in Tory policies and in local Tory parties, they would be prepared to let the local electorate decide what it spent and what services are provided. This is a gutless and undemocratic Government. The sooner we get rid of them, the better.

9.4 pm

Mr. Stuart Holland (Vauxhall)

Various criticisms have been made of the borough of Lambeth, and I should like to reply to some of them. It will be evident to anybody in the Chamber that Lambeth ranks high on any single index of deprivation or, indeed, on indices of multiple deprivation, whether on the Department of the Environment's figures on this matter or on other studies.

There has been an implied criticism that boroughs such as Lambeth simply wish to raise rates ad infinitum. I stress that that is not the case. As the deputy leader of the council today stressed to me, Lambeth is not requesting the right to raise rates still further. The council recognises the detrimental effects on living standards caused by high rates which effectively pass on to local people the costs of providing essential services inadequately provided by the Government.

The problems which Lambeth faces are these. Since the Government came to power in 1979, there has been a year-by-year reduction in central Government grants to the borough, a total of £113 million between 1979 and 1985 if the 1978–79 RSG is taken as the base year. That is the equivalent of Lambeth's annual spending in one year which has been taken away from it by the cuts in the rate support grant and by other Government cuts.

The Government also fail to recognise the problems which will be caused for Lambeth following abolition of the GLC, exacerbating the concern of organisations now funded by the GLC which have an uncertain future, granted the lack of guarantee of alternative provision of finance.

The so-called Richmond and transitional schemes mean that many groups are now turning to Lambeth council or making representations to me as a Member of Parliament or to my hon. Friend the Member for Norwood (Mr. Fraser), requesting additional cash aid to stave off the issuing of redundancy notices.

There are in essence two objectionable issues behind the order. One is the starting point on the grant-related expenditure assessment, GREA, and the second is the penalties involved. According to the Department of the Environment, GREA is meant to represent for each authority the cost of a similar standard of service which takes account of variation in need".

The present formula fails to reflect Lambeth's needs in several respects — for example, the cost of hospital social workers for authorities with large hospitals in their areas such as my constituency, which includes St. Thomas's hospital and is bordered by King's college hospital; and the cost of fulfilling the council's obligations under section 1 of the Race Relations Act 1976.

The largest single example of inequity, however, is the so-called 30p issue. The Government in 1981–82 urged authorities to increase rents by £3.25, and £2.95 of this tallied with a deduction made on housing subsidy, but an extra 30p increase was encouraged.

The Government calculated the total income throughout the country that 30p would produce, then deducted it pro rata against revenue account deficits. The result is that Lambeth's deduction is not 30p but £1.70, an over-charge on GREA of £3.6 million which, with penalty, means a cost in cash terms of £7.2 million to Lambeth in 1986–87.

A range of products is at risk, as illustrated in an answer given to my hon. Friend the Member for Norwood by the Under-Secretary of State, the hon. Member for Ealing, Acton (Sir G. Young), only a few days ago—a range of some 50 projects whose bids and submissions total some £2,065,000. However, only £1,300,000 will be made available to meet this. What is the economic basis for this policy? The Minister cannot justify it upon the monetarist ground of crowding out private expenditure by public expenditure. He ought to know that over 95 per cent. of the council houses in England and Wales are constructed by private contractors. Every £100 of cuts imposed on local authorities mean that £95 is taken away from the rotarians and the other small builders who voted with enthusiasm for this Government but who now find that they are unemployed.

The result of a two-thirds cut in the council house budget means that company liquidations in the construction sector have risen from 1,000 a year in 1980 to nearly 2,000 in 1984. Hundreds of thousands of workers are now unemployed. Furthermore, hundreds of thousands — indeed, millions — of houses are unfit for human habitation because they lack basic amenities. That is the irony of the Government's policy. Only last October a leader in the Financial Times said: Monetarism is dead—official. The Government have abandoned monetary targets. Why do they not abandon these targets for local authorities and respect their right to reflect the wishes of their electors in the ballot box rather than in the black boxes of the Department of the Environment?

9.11 pm

Mr. Jack Straw (Blackburn)

I commend many of the Opposition speeches, in particular the speech of my hon. Friend the Member for Vauxhall (Mr. Holland). He went straight to the heart of our objection to the order.

At the heart of traditional Conservative principles lies the idea of freedom. This was referred to by my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson). Freedom of the individual has been the Conservative battle cry down the ages. Their claim is that freedom of the individual is not possible unless people can form themselves into associations or institutions, free from interference from or control by the state.

Mr. Waldegrave

Hear, hear.

Mr. Straw

I am glad to hear that the Minister, the hon. Member for Bristol, West (Mr. Waldegrave), supports that proposition. The notion of freedom lies behind the Conservative party's subscription to private enterprise. It lay behind the Prime Minister's 1979 rhetoric about rolling back the frontiers of the state. It also lay behind the claim that town hall should come before Whitehall. So strong was this idea that the Minister for Environment, Countryside and Local Government devoted a whole book to the subject, entitled "The Binding of Leviathan." Generous to a fault, he even gave me a copy of this book——

Mr. Powley

Was it a signed copy?

Mr. Straw

No, it is not yet signed. He gave me a copy of his book at the end of the proceedings on the Rates Bill. I shall not embarrass him by quoting from his book, despite the undoubted boost that this would give to what I imagine are now its flagging sales.

Mr. Waldegrave

They are entirely flat.

Mr. Straw

The Minister says that they are entirely flat. However, in one area of our national life after another this Government have turned the traditional Conservative value of freedom of choice upon its head. Indeed, they have torn up page after page of what the Minister said was central to the heart of the old Conservatism. The frontiers of the state have most obviously been rolled forward in the areas of law and order and unemployment. The 4 million unemployed know of no land beyond the frontiers of the authoritarian state. Their abject dependence upon the power of the state is total.

As for local government, the new Conservative party has abolished those councils to whose policies it took objection, to which the ever dirty and cheap chairman of the Conservative party was candid enough to testify. The present Government are seeking to deny to councillors freedom to speak as they choose. So extreme is this proposal that the Government have been unable to convince their loyal supporters in local government and in the other place of the rightness of their action.

Alongside all this, two years ago the Government took the power directly to control the budgets and the rates of every single local authority in the land. This order affects only 11 authorities, but we shall do well to remember that the Rates Act 1984 under which this order is made contains the power to control the budgets of every local authority. This order is but the apex of a vast framework of controls and threat of controls that lie as a pall over the work of every one of the 24,000 councillors in this land.

Many of my hon. Friends have spoken with great eloquence and knowledge about the effect that these orders will have upon their communities, and there is no need for me to repeat what they have said. Hon. Members who represent Hackney, as does my hon. Friend the Member for Hackney, North and Stoke Newington (Mr. Roberts), and hon. Members who represent Liverpool, Southwark, Camden and Lambeth all have great knowledge of information about, and experience of, their areas, and know what is likely to benefit their constituents. Such knowledge, information and experience is far greater than ever this Government or any other central Government could have.

We have heard a great deal about Lambeth. I declare an interest because I am a ratepayer in Blackburn, which was almost rate-capped last year and of Lambeth which was rate-capped last year and this year and, no doubt will be next year. The Minister gave himself away because he seemed to think that I would be pleased that my rates have gone down by £20 and that they might have gone down by a further £120. One of the many things that separate his side from ours is that we are willing to pay for public services. Those of us who have broad backs and relatively high incomes—I count myself and my hon. Friends in that—think it is right that we should pay for decent services for the rest of the population. I do not begrudge the money that I pay to Lambeth. I begrudge some of the taxes taken from me to pay for wasteful expenditure on Trident far more than I begrudge the money I pay towards the services provided in Lambeth. As I have said time and again, I look upon the £550 in rates that I was paying before rate capping on what is not altogether a modest-sized house as a good bargain for the services that I and my children receive. Moreover, I look upon it as a reasonable contribution towards those people who are less well off in that borough than we are.

Sadly, and just for the moment, Basildon has only Conservative representatives. It will only be temporary, as last year's county election results show and as this year's district council election results will show. The hon. Member for Swindon (Mr. Coombs) criticised his council, but, although it has a different political complexion from his, he was willing to say that his council had done good things. Repeatedly, hon. Members who represent Basildon district have denigrated the achievement of the people in Basildon council. Never once have we heard them applauding the work of that council or the fact that its work was applauded for efficiency by the Audit Commission. What is more, we never once heard that Basildon is being rate-capped, that this Government have taken control of Basildon, despite the fact that Basildon is not receiving a single penny piece by way of central Government support. All the services in Basildon are being paid for directly by its ratepayers. What effrontery the Government have to tell the people of Basildon how to spend their own money.

Mr. Amess

I am rather surprised at what the hon. Member for Blackburn (Mr. Straw) says, because he clearly did not listen to my opening remarks. I spent a quarter of my speech saying what a fine town Basildon was. What annoys me and my hon. Friend the Member for Billericay (Mr. Proctor) is that many of the achievements of which I am rightly proud and about which we read in propaganda sheets such as Link, are claimed by the council when in fact many of them are due to the good work of the Government and the development corporation.

Mr. Straw

The hon. Gentleman makes my point entirely. He did praise the development corporation and even had the cheek to praise the Government for their contribution in winding up the development corporation and stopping Basildon from being a new town. I am glad he praised the new town, because Basildon is a Labour achievement. It was the Labour party that got the new towns going, and Basildon would never have achieved what it has achieved if there had not been a partnership between the new town development corporation on the one hand and its excellent district council on the other.

Swindon has been discussed, which is a Labour-controlled council. I am sorry that the hon. Member for Swindon is not in his place. Swindon has an excellent authority and it has expanded as a new town without any help from central Government. It has been successful but the Secretary of State is penalising it for its success. He is doing so despite the fact that its growth in expenditure since 1979, at about 103 per cent., is far less than that of central Government over the same period.

The hon. Member for Leicester, East (Mr. Bruinvels) asserted that Leicester should have been included in the order. I have no doubt that that is one reason why he will vote against it. Leicester was not rate-capped this year but it is suffering from the consequences of being rate-capped last year. The House will recall that last year the Government proposed that Leicester's rate should be cut nearly in half. They claimed — no doubt they were whipped on by the two temporary Conservative Members for the city, the hon. Member for Leicester, East and the hon. and learned Member for Leicester, South (Mr. Spencer)—that Leicester could live off its savings and balances. Having said—[Interruption.] I think that the Secretary of State said "cock-up".

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

I said that the hon. Gentleman should not be cocky.

Mr. Straw

I shall move on to the cock-up. The right hon. Gentleman's predecessor, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), was the Secretary of State for cock-ups. Having said that Leicester's rate should be halved, he changed his mind and said that there should be a cut of only a quarter. That was an error rate, as I think the Department of Health and Social Security describes these things, of only 100 per cent. The Opposition warned at the time, especially my hon. and Learned Friend the Member for Leicester, West (Mr. Janner), that the people of Leicester would be forced to pay dearly for the vindictiveness of their Conservative Members. To restore a 25 per cent. cut involves a 33 per cent. increase, and as Leicester was left last year without resources to meet immediate commitments the increase is likely to be a great deal more. The rate increases which the people of Leicester are to face are the direct responsibility of the Government and of Leicester Conservative Members, who urged a course of madness upon the Government for which their constituents are now having to pay.

Mr. Peter Bruinvels

What message will the hon. Gentleman give the ratepayers of Leicester who saw the city rate-capped and a low rate? They were grateful to the two Conservative Members who campaigned for that and lobbied the then Secretary of State. They now find that the rates have shot up by 80 per cent. At the same time the local council is spending money on a Nelson Mandela park. It is trying to twin with Nicaragua and is imposing irrelevant and cheap Labour party propaganda upon Leicester which the ratepayers and those running businesses in the city are opposed to desperately. Both ratepayers and business people want to get on with bringing more people to work in the city and not fewer.

Mr. Straw

The message that I give to the hon. Gentleman is that what is good for Leicester is a matter for the people of Leicester, and that that is a matter for them to decide. They showed clearly in the shire county elections of 1985 that they supported the Labour party. The hon. Gentleman would have lost his seat, as would his hon. and learned Friend the Member for Leicester, South, if they had been up for election as well. I am sure that that will be made equally clear in the May elections.

Much has been made of the fact that some of the dire warnings of the rate-capped authorities last year of the effect of rate capping upon jobs and services have not come to pass. My answer to that is "Not yet". In any event the fact that they have not is no thanks to the Secretary of State or his predecessor. To the extent that the consequences have not yet occured, that is due partly to the factors to which my hon. Friend the Member for Norwood (Mr. Fraser) referred in an intervention, and partly due to authorities resorting to a number of accountancy arrangements, which, whatever their technical differences, have the common characteristic of enabling authorities to pay later for expenditure which they incur now.

Apparently the Secretary of State is opposed to these arrangements. He had better say now whether he deplores or applauds these authorities in so far avoiding cuts. It is a matter of record that his rates and expenditure limits would require a reduction in expenditure by Greenwich of 10 per cent. in real terms, by Hackney of over 12 per cent. and Lewisham by 14 per cent. That is the direct result of rate capping. That is what the Under-Secretary of State said in an Adjournment debate on 31 January. These cuts have not been achieved yet, but the point for the Secretary of State and his Ministers to acknowledge is that, if the cuts are achieved, they can only mean equivalent cuts in staff and services and in the jobs in private firms, so many of which directly depend on the public service. Is that what the Government want? Do they want cuts of the magnitude which the Under-Secretary of State for the Environment spoke about? If not, it is time that the Government took account of the damage that they are doing in these areas and of the crisis that they are creating.

Local government needs no lectures from central Government about the accounting devices. Central Government have corrupted and abused established accounting conventions to cover up the failure of their own policies no more so than in their use of the proceeds of the sale of the public's capital in nationalised industries, to offset current expenditure and current tax cuts. The right hon. Member for Worthing (Mr. Higgins), a former Treasury Minister, described that in his own way as dubious.

As traditional Conservatives know only too well, one objection to using the central apparatus of the state to make decisions which should rightfully be made at local level, is that, while it is easy to centralise power, it is far more difficult to collect centrally and then to use all the necessary information to exercise that power wisely. Nowhere do we see that process operating better—or worse — than in rate capping. The effects there are arbitrary, unfair and sometimes wholly unanticipated.

The system is unfair because of the measures used to determine rate capping. Target is one measure, but that is so unfair that the Secretary of State has made much of the fact that he has now abolished it. Grant-related expenditure assessment is a second measure. That system, as the Secretary of State knows only too well, was never designed to be used for control purposes. While the Secretary of State's predecessor described the GREAs as robust and objective, the present Secretary of State has described them as byzantine in their complexity and impossible to understand. It is obvious that the GREAs cannot be both byzantine and impossible to understand and also robust and objective.

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

That is right.

Mr. Straw

The Secretary of State says that he is right and that his right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) is wrong.

Of course the Secretary of State is right, but why then, is he using a system that is byzantine in its complexity and impossible to understand? Why does the Secretary of State pretend that the system is a fair one with which to judge individual authorities?

A comparison of the increase in authorities' spending is no base to determine rate capping. We have heard much from the Secretary of State about the amounts by which rate-capped local authorities have increased their expenditure since the Government came to power. I must tell the Secretary of State that of the 11 authorities that have been rate-capped, six have increased their expenditure by less than central Government have increased their spending. We do not hear much about the fact that they have only increased their spending at or below the level of central Government. Lambeth, Haringey, Islington, Thamesdown and Liverpool have all matched or been below central Government spending.

I had the Library working on these figures all day. The figures for local government are freely available but the Library was working on central Government figures as the Government have stopped providing any information about the expansion of central Government's current spending. The figures cannot be found in the public expenditure White Paper and telephone calls to the Treasury could not elucidate that information. The Government have stopped counting their own current expenditure.

Dr. Cunningham

I wonder why.

Mr. Straw

My hon. Friend says he wonders why, I admit that I wonder why as well. I fancy it is because the Government are embarrassed that they came to power pledging to cut public spending and that they have hoisted public spending by keeping 4 million people unemployed and building ludicrous nuclear submarines.

Mr. Peter Bruinvels

Oh, really.

Mr. Straw

The hon. Member for Leicester, East says, "Oh, really," but we shall see when the orders for the nuclear submarines are cancelled.

We hear that Camden's expenditure has increased by 147 per cent. Why do we not hear about Brentwood, an urban Conservative authority, which has had an expenditure increase of 145 per cent.? West Wiltshire's expenditure has risen by 145 per cent. We hear of Hackney's expenditure rising and that has risen from a very low base, but what about the City of London? Hackney looks like an authority run by church mice when compared with the City of London. Hackney's expenditure has risen by 172 per cent. while the City of London has increased its expenditure by 300 per cent. over the past seven years. Will the Under-Secretary of State say anything about that when she replies to the debate? Will the City of London be rate-capped? Of course it will not be.

There is then the effect of rate capping upon Conservative-controlled shire councils. Rate capping was sold to a sceptical Conservative audience on the basis that it would help them. Last year, the former Secretary of State claimed: the more favourable targets which we have been able to give low-spending authorities for 1985–86 have been possible only through the savings which have been achieved in public expenditure terms by rate-capping the highest spenders. He went on to say, and I hope the Secretary of State agrees with this: Thus, low-spending authorities will benefit from rate capping."— [Official Report, 16 January 1985; Vol. 71, c. 416–17.]

The truth is the reverse. Low-spending authorities have been hit by rate-capping. Rate capping was explicitly designed to bring down the expenditure of rate-capped authorities. Those authorities were bound to earn more grant and, as that grant comes from a fixed pool, it would be taken away from the lower spending Conservative-controlled authorities.

That is so mad as to be almost unbelievable but, in support of my contention that is happening, I must quote Mr. John Banham, the controller of the Audit Commisssion. He said of the system of which the Secretary of State is the proud architect: If I were asked to design a system that would produce more waste and inefficiency … it is not immediately certain to me what additional complications I would build in. I do not claim to be clairvoyant but last year I predicted what would happen. When we concluded the debate last year I asked how many more times we would have to ask the Secretary of State about the effect on Conservative-controlled councils. I said: Does he not understand that if all the authorities did what he told them and all spent at GREA, rates in Berkshire would have to go up by 20 per cent. and rates in Essex would have to go up by 25 per cent?"—[Official Report, 6 February 1985; Vol. 72, c. 1018.]

I had a wonderfully considered reply from the former Secretary of State. It is no wonder that he was fired. He said, "That is silly." When I continued he said, "That is stupid." What has happened? Have the rates of Essex and Berkshire remained stable as a result of rate capping? I see the Secretary of State is smiling. It is true that I got the rates in Berkshire wrong because they have only increased by 13 per cent. but rates in Essex have increased by 19 per cent. It is a Conservative-dominated council. It is supported by the Liberals and the SDP. Across the country what was predicted has come true more quickly than I could have expected. Buckinghamshire is raising its rates by 30 per cent. Dorset by 20 per cent, Lincolnshire by 22 per cent, Norfolk by 19 per cent. and West Sussex by 19 per cent. Will the Under-Secretary tell us who is now being silly and stupid?

Conservative Members should not believe that once the brave new world has dawned and the Green Paper "Paying for local government" has been implemented in full their troubles will be over. Business rates in Conservative-controlled areas will rocket as a result of the changes. Collecting the poll tax will be a nightmare. For all the synthetic nonsense about the way in which the changes will improve local accountability, the full apparatus of centralised control will remain. More power will be given to central Government through their direct control of the income of the business rate and its level, and rate capping and poll tax capping will continue.

All that will occur because of the triumph of Treasury Ministers over the Secretary of State, because of their failure to represent the interests of local Government, and because of their refusal to get their brain around the fact that even with their economic policy there is no economic case for controlling what local authorities spend from their own resources. If the Government deny that, let them spell out why the United States and West Germany have never found such controls necessary, despite espousing similar economic principles but with markedly more successful results.

On Saturday, the Secretary of State, no doubt with his acolytes, will attend the Conservative local Government conference in a vain attempt to prepare the faithful for their coming annihilation at the district council elections in May. The Secretary of State was so worried about the attendance at this conference that he wrote to all Conservative councillors in January to encourage them to turn up. His letter is illuminating. First, he thanked all the councillors for their hard work in maintaining the thin blue line in town and county halls up and down the country"— a line so thin that it will be broken with ease in May. He continued: yours is often a thankless task, with poor rewards and long hours away from your families, For once the Secretary of State is right. It was once a pleasure to serve on a local authority, a thankful task with great satisfactions. It has become a thankless task with poor rewards because of the actions of the Government in wrecking the relationship between the town hall and Whitehall and by denying basic freedoms to authorities.

The Secretary of State continued: we are all agreed that the present Local Government finance system is unfair, and stifles accountability, and is at the heart of the many conflicts between Local and Central Government over the years. The Secretary of State was also right when he said that. Rate capping lies at the core of this crazy, byzantine, impossible and unfair system. If the Secretary of State had the courage of his convictions he would be voting with us tonight against this order.

9.36 pm

The Parliamentary Under-Secretary of State for the Environment (Mrs. Angela Rumbold)

I have been extremely interested in listening to this debate. In spite of all the anxieties, worries, complaints and hysteria about this measure, only six out of 11 Labour authorities have been defended this evening by hon. Members. I expected a great deal more from those hon. Members who are concerned about the expenditure of local authorities.

We have had representations from Hackney, Liverpool, Greenwich, Camden and Lambeth. We had a representation from the hon. Member for Southwark and Bermondsey (Mr. Hughes) on behalf of Southwark and also representations from Sefton. I will now make a representation from Kingston. The hon. Member for Southwark and Bermondsey not only managed to talk about Southwark but also, incidentally, about Lambeth and Liverpool—that is par for the course.

When my hon. Friend the Minister for Environment, Countryside and Local Government opened this debate he predicted that we would have a fair old litany of complaints about the problems that ratecapping will produce for authorities. There has not been a word of honest regret that the actions of authorities such as Camden and Lambeth are so irresponsible that they are the ones which are bringing local government into disrepute.

The hon. Member for Blackburn (Mr. Straw) complained that local government was being over-centralised by wicked central Government. The present state of local government has nothing to do with central Government. It is due to the irresponsible attitude of the Labour-held local authorities. They have set themselves up to try to distort and operate against central Government in a wilful way which has misdirected their efforts. A great deal has been made by Opposition Members about local authority spending. They have suggested that the rate limitation order introduced by my right hon. Friend the Secretary of State has had as dire an effect on Conservative authorities as it has had on Labour authorities. It is true that most local authorities spend a great deal of money.

My hon. Friend the Member for Billericay (Mr. Proctor) quite rightly drew attention to the amount of money that is spent by local authorities. Local authority revenue spending is £25 billion per annum. All hon. Members are aware that local government spends 11 per cent. of the gross domestic product of this country. That is one quarter of all public expenditure. It is a great deal of money and it is not merely Labour authorities but also Conservative authorities which are spending and growing in real terms, day by day and year by year. We must take that into account. It is well and good that many Conservative-controlled authorities have organised and run expenditure effectively and efficiently. They serve the local people without trying to increase rates by huge sums year on year.

My hon. Friend the Member for Basildon (Mr. Amess) made an excellent speech, setting out clearly some of the iniquities of the council by which his constituency has the misfortune to be run. [Interruption.] His authority is extraordinary. It spends money as though it has gone out of fashion. My hon. Friend explained how the public relations unit seeks to discover the public's views on education.

Mr. Straw

The Minister said that Basildon council spends money as though it has gone out of fashion. Since Basildon's increase in spending of 121 per cent. is four percentage points below central Government's increase in spending, would she say that the Prime Minister is spending money as though it has gone out of fashion?

Mrs. Rumbold

It depends entirely from where one starts. The public relations unit is taking soundings about the provision of education services, which is not the responsibility of a district authority. That was my hon. Friend's point. Moreover, the council has founded an interesting unit called BEDCO which plans to borrow £15 million for worthy and, no doubt, useful projects. The future ratepayers of Basildon will have to pay for that, and we should not forget that for one moment. It sounded to me as though the public relations unit intended to take over the duties of the Boundary Commission by tinkering with its recommendations. All in all, my hon. Friend has every cause to support the actions taken by my right hon. Friend the Secretary of State.

I was a councillor and regarded it as a great privilege to serve as a member of the royal borough of Kingston upon Thames council. I also regarded it as a great duty to take care how I spent other people's money. I am aware of the need to maintain services and to ensure that they are efficient and well balanced, but that should not be at the expense either of businesses and commerce, which provide 60 per cent. of the revenue raised at local level, or of domestic ratepayers.

The hon. Member for Peckham (Ms. Harman) spoke about jobs in local government. It is important to consider the provision of jobs through local government expenditure and how it raises rates. By raising rates, jobs in the private sector are diminished, and by increasing public sector employment, one does not necessarily improve the quality of life within a local authority.

Mr. John Fraser

rose— —

Mrs. Rumbold

I wish to develop my argument, and the hon. Gentleman may be interested in my comments.

One does not do the best for one's constituents by creating jobs in the public sector. Lambeth, for example, was curious in the way in which it created some jobs. Not so long ago, Lambeth had a poet.

Mr. Fraser

A poet?

Mrs. Rumbold

Indeed, Lambeth had a poet.

Mr. Fraser

The Queen has a poet.

Mrs. Rumbold

With great respect, the Queen's poet is free. I am in favour of poetry. Indeed, the longer I stay in the House, the more I realise that one must read well-written poems from time to time as light relief. I would prefer people to write spontaneous poetry rather than be employed by the likes of Messrs. Knight and company on Lambeth council, eulogising their activities.

Mr. Fraser

Will the hon. Lady give the House one example of how rate capping makes a council more efficient?

Mrs. Rumbold

Rate-capped local authorities have much better balances. Because the rates are limited, such councils will attract more grant, which enables most of them to spend efficiently and give their people the benefit of good services. It is a great pity that Opposition members ask questions and then flatly refuse to listen to the answers.

We have heard about the iniquities of rate capping. We have heard how it is unnecessary and unfair and prevents local authorities from serving people. We have heard how it prevents them from carrying out their mandates. The hon. Member for Copeland (Dr. Cunningham) talked a great deal, and with some affection, about local government. I am glad to hear that he has affection for local government. He said that the rate-capped authorities are together responsible for the expenditure of £1,103.5 million. That almost makes the point that they are very high-spending authorities.

If there is ever a Labour Government, I hope that the hon. Gentleman will be as sanguine about the relationship between that Government and local government. I am sure that he is ready to confess that the Government have a responsibility for the overall economy.

Dr. Cunningham

Perhaps the Under-Secretary of State will now explain how the total budgets of rate-capped authorities can show whether they are high or low spenders. The figure that I gave was the total of their budgets. Any conclusion that she can draw from that figure about whether they are high or low spenders would be interesting for the House. [Interruption.] Perhaps she will listen to me rather than to the Secretary of State, who is shouting in her ear. My point, which she is singularly refusing to answer, is that the House has no knowledge of the nature, detail, composition or necessity of those expenditures in those budgets.

Mrs. Rumbold

The criteria for rate-capping authorities is that they should be expending 20 per cent over their grant-related expenditure. My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) laid that down last year. My right hon. Friend the Secretary of State has also laid down the criteria for ratecapping. It is most interesting that the hon. Member for Copeland said that, if ever there were a Labour Government, God forbid, he would abolish the Rates Act 1984. If he is prepared to abolish that Act, I wonder how long a Labour Government would allow local authority expenditure to increase.

In 1975, when I was a councillor, Tony Crosland announced to the world of local government that the party was over and that spending had to come to an end. I remember because I took note of what he said, as did many Conservative-controlled authorities. We started to curb our expenditure. It is a great pity that that did not happen later. I should be interested to know whether the Labour party would be inclined to take serious measures against Labour-controlled authorities were they disposed—I am sure that they would not be — to disobey a Labour Government.

Mr. Powley

Does my hon. Friend accept that when we had the restrictions on local government expenditure in the years she refers to, when she was a local authority councillor and I shared a similar position with my local authority, Conservative-controlled councils—we had a Labour Government—willingly accepted the economic restraints that we had to accept because that is what Conservatives do? We co-operated with the economic expenditure restriction that had to be imposed by a Labour Government, whereas now that we as a Government accept economic restrictions because of the circumstances, Labour-controlled authorities actively seek to thwart the intentions of the Government.

Mrs. Rumbold

That is exactly what happened. In fact, there were considerable rate penalties on Conservative authorities which tried to behave properly.

The matter of how interim rates have been set has been raised. Islington has told us that the way we are doing it is illegal and that my right hon. Friend the Secretary of State should at least set an interim rate. He has always had that in mind and he has had meetings with eight of the authorities which sought such meetings in order that that could take place. I say to my hon. Friend the Member for Swindon (Mr. Coombs) that we would certainly have been interested to meet Thamesdown had it made such an application, but, alas, it did not. It is known to the House that Newcastle has also agreed its limits following representations.

Mr. Wareing

rose— —

Mrs. Rumbold

The two remaining authorities made no such constructive representation. I shall come to Liverpool in a moment and I hope that I shall be able to deal with some of the points that the hon. Member for Liverpool, West Derby (Mr. Wareing) wishes to raise.

The matter of voluntary organisations and the voluntary sector has also been raised. I think that it is important to say a few words about that. One does not want voluntary organisations to be considered in any sense outsdie the consideration by local authorities for careful spending. Certainly the Government do not want to interfere in the local decision-making, in spite of what some Labour Members have said about the Government trying to set rates for local government. That is nonsense, and has nothing to do with rate limitation.

Every authority has the right to determine how and what its priorities are, and that also applies to voluntary organisations. The Government are most anxious that the extremely valuable contributions made by voluntary organisations should continue and I hope that local government will, when it is considering its budget across the board, look at the voluntary organisations and the grants that they are given with the intention of trying to help to maintain their services. It is well known throughout the country that voluntary organisations provide an extremely efficient and effective service.

Mr. Simon Hughes

rose——

Mrs. Rumbold

I shall give way when I have finished this section.

At present we are providing 75 per cent. of the transitional funding which is up to £12 million in addition to what the boroughs are spending within London. That amount, together with what is already being provided by London, makes £27 million under the Richmond scheme. I trust that that money will be sufficient to cover the voluntary organisations for which I hold as much regard as the Opposition Members who have spoken about that. I believe that that can be sustained.

It is noticeable that the amount of money which had ben spent by the Greater London council and the previous metropolitan county councils has been considerably increased during the past years. That means that there has been a great advance in the number of organisations.

Mr. Wareing

The hon. Lady has been talking about the need for local authorities to assist voluntary organisations. From where will Liverpool get the money to fund voluntary organisations? It is being rate-capped and its expenditure level is only 5.1 per cent. above GRE, yet the norm is 20 per cent.

Mrs. Rumbold

Liverpool's expenditure level has been increased by almost £10 million. Liverpool city council was selected for rate limitation on the basis of the best information available to my right hon. Friend the Secretary of State when he took his decision. That information was the budget which the council agreed on 14 June. We all know what nonsense that budget was. Had the council agreed on a different budget before my right hon. Friend took his decision on selection he would have had to take that into account. We cannot rewrite history.

Mr. Wareing

Liverpool did.

Mrs. Rumbold

It is impossible to take the step of totally rewriting history, even in the light of the hon. Gentleman's claims. I regret it, but that is the position.

My right hon. Friend the Secretary of State decided, after studying representations from all the authorities and looking at all the factors, that there was no outstanding issue that warranted delay. It seems to us that a rate should be set for all authorities and that interim limits would do no more than provide unsatisfactory bases for the budget decisions by these councils.

It has been suggested that my right hon. Friend should have looked favourably on interim limits simply because of the uncertainty that abolition would bring to many London boroughs. It is equally true to say that interim limits would cause uncertainty and confusion. I think that one should leave the matter at that point.

Much play has been made of the issue of abolition for the GLC and for London boroughs, such as the eight which have been affected by the order. The matters which the hon. Member for Southwark and Bermondsey raised about the councillors who are facing court cases brought by the auditor are not for the House because the auditor is an independent authority and further action will depend on the outcome of the cases.

Mr. Simon Hughes

The Minister for Environment, Countryside and Local Government told my hon. Friend the Member for Woolwich (Mr. Cartwright) that the issue arising in councils other than those affected by the court cases mean that figures on the losses incurred must be required for the electorate and the public at large before May. I hope that the hon. Lady will bring her good offices to bear in obtaining that information as soon as possible. We should be happy to co-operate in any way.

Mrs. Rumbold

I thank the hon. Gentleman. That is very helpful.

With all authorities, it is now possible to make accurate estimates of any additional costs, especially in London where the residuary body announced earlier today its levy and charges for the coming year. I believe that this will considerably reduce the burden on many of the councils which, when I saw them recently, were expecting and counting on higher charges.

In addition, there will be an extra advantage to London boroughs from the GLC's balances which will be distributed to rate-capped authorities just as much as to others. That particular bogy needs to be laid to rest immediately. My right hon. Friend the Secretary of State has always said that abolition will have a neutral effect. It is clear from the figures that that is more than borne out by the facts. The Opposition fail to acknowledge that, within the grants system, these problems have been readily understood and incorporated. Islington and Hackney have grant-related expenditure per head of population of £571 and £556 respectively compared with GRE in Kingston and Bexley of £211 and £178 respectively. There is considerable evidence that the councils chosen for rate capping have been more than adequately selected.

Most hon. Members have understood perfectly that the local government elections, about which the Opposition talk so much as providing a mandate, are a little bit of a sham because the percentage of the voters taking up the opportunity to vote is low. They know that many people have no idea of what the council is doing. They have no reason to question, because they do not pay. They vote for the tissue of lies that the councils put around. How many people live in squalor because the councils do not carry out their obligations to tenants to repair and maintain and to sell houses when the tenants ask for that right? Howmany of those councils get votes by refusing to collect rents? How many councils fail to collect rent arrears, which are an absolute disgrace? There are £57 million-worth of rent arrears. The only exception among rate-capped authorities is Greenwich.

No one should try to tell me that those authorities have no money and cannot fulfil their obligations to the people in their areas. They choose to manage badly. The people in their authorities suffer as a result. For the sake of the ratepayers and innocent voters in those rate-capped authorities, I commend the order to the House.

Question put:—

The House divided: Ayes 278, Noes 208.

Division No. 85]	[10 pm
AYES
Alexander, Richard	Fairbairn, Nicholas
Amess, David	Fallon, Michael
Ancram, Michael	Farr, Sir John
Arnold, Tom	Favell, Anthony
Ashby, David	Fenner, Mrs Peggy
Aspinwall, Jack	Fletcher, Alexander
Atkins, Rt Hon Sir H.	Fookes, Miss Janet
Atkins, Robert (South Ribble)	Forman, Nigel
Atkinson, David (B'm'th E)	Forsyth, Michael (Stirling)
Baker, Rt Hon K. (Mole Vall'y)	Forth, Eric
Baker, Nicholas (Dorset N)	Fowler, Rt Hon Norman
Baldry, Tony	Fox, Marcus
Banks, Robert (Harrogate)	Franks, Cecil
Batiste, Spencer	Fraser, Peter (Angus East)
Beaumont-Dark, Anthony	Freeman, Roger
Bellingham, Henry	Fry, Peter
Bendall, Vivian	Gale, Roger
Bennett, Rt Hon Sir Frederic	Galley, Roy
Best, Keith	Gardiner, George (Reigate)
Bevan, David Gilroy	Gardner, Sir Edward (Fylde)
Biffen, Rt Hon John	Garel-Jones, Tristan
Blackburn, John	Glyn, Dr Alan
Body, Sir Richard	Goodlad, Alastair
Bonsor, Sir Nicholas	Gow, Ian
Boscawen, Hon Robert	Gower, Sir Raymond
Bottomley, Peter	Grant, Sir Anthony
Bottomley, Mrs Virginia	Greenway, Harry
Bowden, A. (Brighton K'to'n)	Gregory, Conal
Bowden, Gerald (Dulwich)	Griffiths, Sir Eldon
Boyson, Dr Rhodes	Griffiths, Peter (Portsm'th N)
Braine, Rt Hon Sir Bernard	Grist, Ian
Brandon-Bravo, Martin	Ground, Patrick
Bright, Graham	Hamilton, Hon A. (Epsom)
Brinton, Tim	Hamilton, Neil (Tatton)
Brittan, Rt Hon Leon	Hampson, Dr Keith
Brooke, Hon Peter	Hanley, Jeremy
Brown, M. (Brigg & Cl'thpes)	Hannam, John
Browne, John	Hargreaves, Kenneth
Bruinvels, Peter	Harris, David
Buchanan-Smith, Rt Hon A.	Haselhurst, Alan
Buck, Sir Antony	Hawkins, C. (High Peak)
Budgen, Nick	Hawkins, Sir Paul (N'folk SW)
Bulmer, Esmond	Hawksley, Warren
Burt, Alistair	Hayes, J.
Butcher, John	Hayhoe, Rt Hon Barney
Butler, Rt Hon Sir Adam	Hayward, Robert
Butterfill, John	Heddle, John
Carlisle, John (Luton N)	Henderson, Barry
Carlisle, Kenneth (Lincoln)	Heseltine, Rt Hon Michael
Carlisle, Rt Hon M. (W'ton S)	Hickmet, Richard
Carttiss, Michael	Hicks, Robert
Cash, William	Hill, James
Chalker, Mrs Lynda	Hind, Kenneth
Channon, Rt Hon Paul	Hirst, Michael
Chapman, Sydney	Hogg, Hon Douglas (Gr'th'm)
Chope, Christopher	Hordern, Sir Peter
Churchill, W. S.	Howard, Michael
Clark, Dr Michael (Rochford)	Howarth, Gerald (Cannock)
Clark, Sir W. (Croydon S)	Howell, Ralph (Norfolk, N)
Clarke, Rt Hon K. (Rushcliffe)	Hunt, David (Wirral W)
Colvin, Michael	Hunt, John (Ravensbourne)
Coombs, Simon	Hunter, Andrew
Cope, John	Irving, Charles
Couchman, James	Jenkin, Rt Hon Patrick
Cranborne, Viscount	Johnson Smith, Sir Geoffrey
Crouch, David	Jones, Robert (Herts W)
Currie, Mrs Edwina	Joseph, Rt Hon Sir Keith
Dickens, Geoffrey	Kellett-Bowman, Mrs Elaine
Dorrell, Stephen	Kershaw, Sir Anthony
Douglas-Hamilton, Lord J.	Key, Robert
Dover, Den	King, Roger (B'ham N'field)
Dunn, Robert	King, Rt Hon Tom
Dykes, Hugh	Knight, Greg (Derby N)
Edwards, Rt Hon N. (P'broke)	Knowles, Michael
Eggar, Tim	Knox, David
Emery, Sir Peter	Lamont, Norman
Evennett, David	Lang, Ian
Eyre, Sir Reginald	Lawler, Geoffrey

Lawrence, Ivan	Pollock, Alexander
Lawson, Rt Hon Nigel	Porter, Barry
Lee, John (Pendle)	Portillo, Michael
Leigh, Edward (Gainsbor'gh)	Powley, John
Lennox-Boyd, Hon Mark	Price, Sir David
Lester, Jim	Proctor, K. Harvey
Lewis, Sir Kenneth (Stamf'd)	Raison, Rt Hon Timothy
Lightbown, David	Rathbone, Tim
Lilley, Peter	Rees, Rt Hon Peter (Dover)
Lloyd, Ian (Havant)	Renton, Tim
Lloyd, Peter (Fareham)	Rhys Williams, Sir Brandon
Lord, Michael	Ridley, Rt Hon Nicholas
Luce, Rt Hon Richard	Ridsdale, Sir Julian
McCrindle, Robert	Rifkind, Rt Hon Malcolm
McCurley, Mrs Anna	Rippon, Rt Hon Geoffrey
Macfarlane, Neil	Roe, Mrs Marion
MacGregor, Rt Hon John	Rumbold, Mrs Angela
MacKay, Andrew (Berkshire)	Sackville, Hon Thomas
MacKay, John (Argyll & Bute)	Sainsbury, Hon Timothy
Maclean, David John	St. John-Stevas, Rt Hon N.
McNair-Wilson, M. (N'bury)	Scott, Nicholas
McNair-Wilson, P. (New F'st)	Shaw, Giles (Pudsey)
Major, John	Shaw, Sir Michael (Scarb')
Malins, Humfrey	Sims, Roger
Malone, Gerald	Skeet, Sir Trevor
Maples, John	Soames, Hon Nicholas
Marland, Paul	Spicer, Michael (S Worcs)
Marlow, Antony	Squire, Robin
Mates, Michael	Stern, Michael
Mawhinney, Dr Brian	Stevens, Lewis (Nuneaton)
Mayhew, Sir Patrick	Stewart, Allan (Eastwood)
Mellor, David	Stokes, John
Miller, Hal (B'grove)	Tapsell, Sir Peter
Mills, Iain (Meriden)	Taylor, John (Solihull)
Miscampbell, Norman	Tebbit, Rt Hon Norman
Mitchell, David (Hants NW)	Thompson, J. (Wansbeck)
Moate, Roger	Thorne, Neil (Ilford S)
Monro, Sir Hector	Thorne, Stan (Preston)
Moore, Rt Hon John	Thurnham, Peter
Morris, M. (N'hampton S)	Townsend, Cyril D. (B'heath)
Morrison, Hon P. (Chester)	Trippier, David
Moynihan, Hon C.	Trotter, Neville
Mudd, David	Vaughan, Sir Gerard
Murphy, Christopher	Viggers, Peter
Neale, Gerrard	Wakeham, Rt Hon John
Neubert, Michael	Waldegrave, Hon William
Newton, Tony	Walker, Bill (T'side N)
Nicholls, Patrick	Walker, Rt Hon P. (W'cester)
Normanton, Tom	Wall, Sir Patrick
Norris, Steven	Waller, Gary
Onslow, Cranley	Wardle, C. (Bexhill)
Oppenheim, Phillip	Watson, John
Oppenheim, Rt Hon Mrs S.	Watts, John
Osborn, Sir John	Wells, Bowen (Hertford)
Ottaway, Richard	Wells, Sir John (Maidstone)
Page, Richard (Herts SW)	Wheeler, John
Parris, Matthew	Wiggin, Jerry
Patten, Christopher (Bath)	Winterton, Nicholas
Patten, J. (Oxf W & Abgdn)	Young, Sir George (Acton)
Pattie, Geoffrey
Pawsey, James	Tellers for the Ayes:
Peacock, Mrs Elizabeth	Mr. Tony Durant and
Percival, Rt Hon Sir Ian	Mr. Francis Maude.

NOES
Alton, David	Bermingham, Gerald
Anderson, Donald	Bidwell, Sydney
Archer, Rt Hon Peter	Blair, Anthony
Ashdown, Paddy	Boothroyd, Miss Betty
Ashton, Joe	Boyes, Roland
Atkinson, N. (Tottenham)	Bray, Dr Jeremy
Bagier, Gordon A. T.	Brown, Hugh D. (Provan)
Banks, Tony (Newham NW)	Brown, R. (N'c'tle-u-Tyne N)
Barron, Kevin	Brown, Ron (E'burgh, Leith)
Beckett, Mrs Margaret	Bruce, Malcolm
Beith, A. J.	Buchan, Norman
Bell, Stuart	Caborn, Richard
Benn, Rt Hon Tony	Callaghan, Jim (Heyw'd & M)
Bennett, A. (Dent'n & Red'sh)	Campbell, Ian

Campbell-Savours, Dale	John, Brynmor
Carlile, Alexander (Montg'y)	Jones, Barry (Alyn & Deeside)
Carter-Jones, Lewis	Kaufman, Rt Hon Gerald
Cartwright, John	Kennedy, Charles
Clark, Dr David (S Shields)	Kilroy-Silk, Robert
Clarke, Thomas	Kinnock, Rt Hon Neil
Clay, Robert	Kirkwood, Archy
Clelland, David Gordon	Lambie, David
Clwyd, Mrs Ann	Lamond, James
Cocks, Rt Hon M. (Bristol S)	Leadbitter, Ted
Cohen, Harry	Leighton, Ronald
Coleman, Donald	Lewis, Ron (Carlisle)
Conlan, Bernard	Lewis, Terence (Worsley)
Cook, Frank (Stockton North)	Litherland, Robert
Cook, Robin F. (Livingston)	Livsey, Richard
Corbett, Robin	Lloyd, Tony (Stretford)
Corbyn, Jeremy	Lofthouse, Geoffrey
Cox, Thomas (Tooting)	Loyden, Edward
Craigen, J. M.	McCartney, Hugh
Crowther, Stan	McDonald, Dr Oonagh
Cunliffe, Lawrence	McGuire, Michael
Cunningham, Dr John	McKay, Allen (Penistone)
Dalyell, Tam	McKelvey, William
Davies, Rt Hon Denzil (L'lli)	MacKenzie, Rt Hon Gregor
Davis, Terry (B'ham, H'ge H'l)	Maclennan, Robert
Deakins, Eric	McNamara, Kevin
Dewar, Donald	McTaggart, Robert
Dixon, Donald	Madden, Max
Dobson, Frank	Marek, Dr John
Dormand, Jack	Marshall, David (Shettleston)
Douglas, Dick	Martin, Michael
Dubs, Alfred	Mason, Rt Hon Roy
Duffy, A. E. P.	Maxton, John
Dunwoody, Hon Mrs G.	Maynard, Miss Joan
Eadie, Alex	Meacher, Michael
Eastham, Ken	Meadowcroft, Michael
Edwards, Bob (W'h'mpt'n SE)	Michie, William
Evans, John (St. Helens N)	Mikardo, Ian
Ewing, Harry	Millan, Rt Hon Bruce
Fatchett, Derek	Miller, Dr M. S. (E Kilbride)
Field, Frank (Birkenhead)	Morris, Rt Hon J. (Aberavon)
Fields, T. (L'pool Broad Gn)	Nellist, David
Flannery, Martin	Oakes, Rt Hon Gordon
Foot, Rt Hon Michael	O'Brien, William
Forrester, John	O'Neill, Martin
Foster, Derek	Orme, Rt Hon Stanley
Foulkes, George	Park, George
Fraser, J. (Norwood)	Parry, Robert
Freeson, Rt Hon Reginald	Patchett, Terry
Freud, Clement	Pavitt, Laurie
Garrett, W. E.	Pendry, Tom
George, Bruce	Penhaligon, David
Gilbert, Rt Hon Dr John	Pike, Peter
Godman, Dr Norman	Powell, Raymond (Ogmore)
Golding, John	Prescott, John
Gould, Bryan	Radice, Giles
Gourlay, Harry	Randall, Stuart
Hamilton, James (M'well N)	Redmond, Martin
Hamilton, W. W. (Fife Central)	Rees, Rt Hon M. (Leeds S)
Hancock, Michael	Richardson, Ms Jo
Hardy, Peter	Roberts, Allan (Bootle)
Harman, Ms Harriet	Roberts, Ernest (Hackney N)
Harrison, Rt Hon Walter	Robinson, G. (Coventry NW)
Hart, Rt Hon Dame Judith	Rogers, Allan
Hattersley, Rt Hon Roy	Rooker, J. W.
Haynes, Frank	Ross, Ernest (Dundee W)
Healey, Rt Hon Denis	Rowlands, Ted
Heffer, Eric S.	Sedgemore, Brian
Hogg, N. (C'nauld & Kilsyth)	Sheerman, Barry
Holland, Stuart (Vauxhall)	Sheldon, Rt Hon R.
Home Robertson, John	Shore, Rt Hon Peter
Howell, Rt Hon D. (S'heath)	Short, Ms Clare (Ladywood)
Howells, Geraint	Short, Mrs R. (W'hampt'n NE)
Hoyle, Douglas	Silkin, Rt Hon J.
Hughes, Robert (Aberdeen N)	Skinner, Dennis
Hughes, Roy (Newport East)	Smith, C.(Isl'ton S & F'bury)
Hughes, Simon (Southwark)	Snape, Peter
Hume, John	Soley, Clive
Janner, Hon Greville	Spearing, Nigel
Jenkins, Rt Hon Roy (Hillh'd)	Steel, Rt Hon David

Stott, Roger	Wallace, James
Strang, Gavin	Wareing, Robert
Straw, Jack	Weetch, Ken
Thomas, Dafydd (Merioneth)	Welsh, Michael
Thompson, J. (Wansbeck)	White, James
Thorne, Stan (Preston)	Wigley, Dafydd
Tinn, James	Williams, Rt Hon A.
Torney, Tom	Winnick, David
Wainwright, R.	Woodall, Alec

Wrigglesworth, Ian	Tellers for the Noes:
Young, David (Bolton SE)	Mr. John McWilliam and
	Mr. Allen Adams.

Question accordingly agreed to.

Resolved, That the draft Rate Limitation (Prescribed Maximum) (Rates) Order 1986, which was laid before this House on 13th February, be approved.