HC Deb 23 July 1986 vol 102 cc328-30
5. Mr. Hayes

asked the Secretary of State for the Environment what plans he has to seek further powers to prevent local authorities taking action aimed at circumventing rate-capping legislation; and if he will make a statement.

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

My right hon. Friend announced yesterday that he would be seeking to block one major loophole which has up to now been used by some authorities to avoid the effect of rate capping. We keep the position under review.

Mr. Hayes

I hope that my hon. Friend will take careful note that the Left-wing loonies who run Harlow council recently banned the playing of the national anthem. The council has arranged a loan facility with a merchant bank for £50 million, which will cost the ratepayers over £20 million in bank charges. I hope that my hon. Friend will be able to do something about it.

Mr. Waldegrave

Harlow is one of the authorities which, by manoeuvreing their balances, have just kept out of rate capping by keeping below the threshold of £11 million. The only thing that one can say to such authorities is that the penalties for all this will be visited on the people in the end. They will be paying not only the cost of the Left-wing high expenditure, but the profit margins of the people who are enabling them to undertake these manoeuvres.

Mr. Cartwright

Rate capping has not prevented the London borough of Greenwich from budgeting to spend 25 per cent. more this year than it spent last year, so is the Minister not shutting the stable door long after the horse has well and truly bolted? Will he confirm that whatever fancy borrowing the council is undertaking, there will be a day of reckoning when the bill has to be paid, not by the councillors, but by the ratepayers? What help can the ratepayers get from the measures to which the Minister has just referred?

Mr. Waldegrave

We have blocked off one of the major measures. A leader of one of the Labour-controlled London boroughs, Mrs. Hodge, has explicitly said that she believes that this is a very high risk strategy, because it rests upon being bailed out by a future Labour Government. That is indeed a very high risk strategy, particularly as the Labour Front Bench has taken great care not to say that Labour will bail them out. The costs will fall on the ratepayers in the end. It is very irresponsible of those authorities to act like that.

Mr. Squire

I welcomed yesterday's announcement by my right hon. Friend the Secretary of State for the Environment. Does my hon. Friend not think it strange that some of the most Left-wing councils have been prepared to embrace capitalism in some of its more extreme forms, including overseas banks and offshore funds?

Mr. Waldegrave

They will also learn, as some countries in South America and elsewhere have learnt, that, although one can borrow, in the end it catches up with one.

Mr. Pavitt

In the first part of his answer to me yesterday the Secretary of State referred to rate capping in Brent. In my innocence, I thought that he understood the intense social problems in that inner city area. If he was sincere, will he now make sure that no attempt is made to prevent creative accounting or steps being taken to ease rather than circumvent rate capping, and provide some services for the very hard-pressed people in my area? Yesterday the Secretary of State referred to rent arrears, but they occurred under a Tory administration. I assure him that now that Labour has gained control again, they will be rapidly dealt with.

Mr. Waldegrave

I do not believe that the last part of the hon. Gentleman's question can be quite right, because there was only one year of Tory administration in Brent. What stands between the hon. Gentleman and my right hon. Friend and me is a completely different analysis of what will help the people of Brent. We do not believe that high spending, high taxing inner city authorities are the best way out for problem areas like Brent. Brent needs enterprise, low taxes and new jobs.

Mr. Stern

Has my hon. Friend noted the recent decision of Bristol city council, which is under Labour control, to seek funds from an overseas bank for wasteful expenditure, which funds will no doubt arise from that bank's investments in South Africa? Does he agree that this is just a sign of the new-found desire of Bristol city council, at the prodding of the Transport and General Workers Union, to increase trade links with South Africa?

Mr. Waldegrave

My hon. Friend is very ingenious in going a little bit wider than my Department's responsibilities. I am aware that Bristol city council has been seeking the re-financing of some of its dock debt, but I am not certain that I am aware of what my hon. Friend is referring to today.

Mr. Straw

Will the Minister confirm that the admission that we dragged out of the Secretary of State a few moments ago means that authorities' GREAs will be £1,260 million less than the £25.2 billion that he said he was accepting as their current spending? That is bound to mean that not just rate-capped authorities will suffer penalties, but that virtually every authority will suffer major penalties and that the total of those penalties could well, arithmetically, exceed the £628 million of grant money that was recycled this year.

Mr. Waldegrave

When the hon. Gentleman has done the sums more carefully, I think he will find that it is exceedingly unlikely that the grant penalty money will be comparable to that for this year. Neither he nor I can say yet what the likelihood will be, because it will depend upon the spending levels and upon the GREs that are ultimately set.