Rate Support Grant

HC Deb 05 March 1986 vol 93 cc319-26

4.5 pm

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

With permission, Mr. Speaker, I should like to make a statement.

The House will be pleased to know that my right hon. Friend the Secretary of State for the Environment was yesterday able to tell the local authority associations that he could guarantee that £500 million of grant would be available to be recycled in 1986–87 and that authorities would be able to take this into account in fixing lower precepts and rates.

As the House will recall, in the rate support grant debate on 20 January my right hon. Friend explained that if local authorities budgeted to spend more next year than we allowed for in the RSG settlement the grant forfeited by overspenders would go into a pool which would then be recycled to all authorities. He illustrated the grant gains to authorities if the pool were £400 million. Those figures could only be illustrative at that stage, because they depended on authorities' budget decisions.

This week, in the light of the latest figures available, we are in a position to go much firmer than that. It is clear that the pool of grant to be recycled will be some £500 million. This means that the grant gains will be bigger than those illustrated in January and that authorities will get more grant than they have assumed. Moreover, to avoid all doubts the Government are prepared formally to guarantee that £500 million of grant will be recycled. My Department has written to all authorities telling them the amount of extra grant that they will receive from that amount of recycling in addition to their grant entitlement under the RSG settlement announced in December. I am placing a copy of the table in the Library.

Councils will now know the size of their grant entitlement more clearly and this will allow them to make a lower call on their ratepayers. Where the rate making has not been completed, I hope that hon. Members will urge their local authorities to revise their rating plans in the light of these figures.

My right hon. Friend wrote to the local authority associations as soon as he was in a position to confirm the level of recycled grant that would be available. Local authorities are now making their rating and precepting decisions, and it was essential to provide them with this information immediately. I am sure that all hon. Members will agree that rate increases should be no higher than absolutely necessary.

Mr. Jack Straw (Blackburn)

Will the Minister confirm that no new extra money is involved in the statement, and that since the abolition of targets last July every local authority treasurer has been aware that a sum of this size would be available for recycling? If there is any substance in the statement, why have the Government waited until most shire counties have set rates for 1986–87?

Is the Minister aware that, so far, Conservative shire counties have increased their rates by far more than Labour shires have done? Is she aware that Kent is raising its rates by 13 per cent., East Sussex by 19.9 per cent., Dorset by 20 per cent., and Buckinghamshire by 30 per cent.? Does she expect any shire authority which has set its rate to change its decision now, and, if so, by how much? As this is supposed to help lower spending authorities, will the Minister explain why, of the 21 authorities shown in the tables to receive absolutely nothing, nine are Conservative-controlled, including authorities such as Hillingdon, Westminster, South Bucks, Chiltern, Elmbridge, and Epsom and Ewell? Why are those authorities to receive nothing?

Will the Minister confirm that the sums specified in the tables are gross figures and take no account of what has already been lost? As the sums are supposed to be guaranteed, what happens if the authorities spend over the budget assumptions on which they are made? Will they get the money anyway?

Lastly, is the Minister aware that yesterday's announcement and today's statement are no more than a cheap and highly misleading public relations stunt by Ministers who have been panicked by high rate rises in Tory shires and by the financial uncertainty and chaos that they have created in Labour and Conservative authorities alike?

Mrs. Rumbold

I am surprised to hear the hon. Member speaking in such terms. I should have thought that he would have the grace to welcome the new announcement simply because it gives local authorities a greater certainty. That is a rather poor way to respond to news which is important to local councils, especially when they are about to go before their ratepayers to make this announcement.

The answer to the hon. Gentleman's question about the shire counties is that there is still time for them to reconsider their rate levels. In the light of this new information, one hopes that those shire counties which have taken a pessimistic view on what their grant entitlement, through recycling, might have been will reconsider the submissions that they have made. There is still time for the shire counties to do that.

I believe that many local authorities will welcome today's statement, and I trust that most will not share the pessimistic and uncharitable view of the hon. Member for Blackburn (Mr. Straw).

Several hon. Members

rose—

Mr. Speaker

Order. I propose to give preference to those Members who were not called on 28 January. I said that I would do this.

Mr. Allan Roberts (Bootle)

Is the Minister aware that not only have some of the Tory shire counties set their rates without taking account of this flowback money, but that some local authorities decided to organise their budgets to take account of moneys which they thought they might get?

The Government have just come to the rescue of local authorities such as Sefton, which, until today's statement, have made a deficit budget. Sefton was set to "do a Liverpool" and break the law. Is the Minister aware that this miserly amount of money will not make a significant difference, because Sefton will still have a 26 to 30 per cent. rate increase? All the rates will go up by massive amounts on Merseyside, and that is a direct consequence of the cost of abolishing Merseyside county council.

Mrs. Rumbold

I am aware, and I think my right hon. Friend is aware, that some local authorities' treasurers were advising considerable caution about the money which my right hon. Friend said was recycled money. That is one reason why some local authorities were taking a slightly pessimistic view. For those local authorities which were proposing to make a higher rate than they had hoped to make this announcement will make all the difference to what they do, and indeed it has been greatly welcomed by them.

Mr. Ian Gow (Eastbourne)

Is my hon. Friend aware that her statement will be widely welcomed on these Benches? The warm welcome that I give to her statement is coupled with a question: what will happen next year? The way in which the announcement has been made and the timing of it—the fact that we are told on 5 March that there is to be a change in the settlement for the coming year—is the reverse of perfect.

Mrs. Rumbold

I understand the difficulties with which some councils have been presented. My right hon. Friend had a greater awareness of the amount of money that he hoped to find in the recycling pool because of information sent in daily of budgets set and estimates announced. That is why we have been a little late. However, I understand the point that my hon. Friend has made. I shall relay that message and take note of it in the future.

Mr. Simon Hughes (Southwark and Bermondsey)

First, will the Minister explain why the announcement was made outside the House before being made in the Chamber? Secondly, will the Minister explain how it is possible for those counties which have already set their rates to do anything to take into account the figures announced today? Thirdly, will the Minister explain how it is possible to justify the decision by her right hon. Friend only two months ago that the average rate increase would be 7 to 9 per cent. when we now know that many Conservative-controlled counties have set rate increases of 30 per cent.?

Lastly, will the Minister explain why the Government believe that they can change the rules of the game at this late stage? In January the Government did not suggest with any certainty that they would so so. Are the Government fully aware that it takes more than a matter of minutes for local authorities to recast their budgets, even if they have not set their rates by today?

Mrs. Rumbold

It was regarded as important that local authorities, many of which were last night in the process of starting to make their rate settlements, should have the information as quickly as possible. That was my right hon. Friend's decision. The information was given to the local authorities because of that decision, and was brought to the House as quickly as possible.

A number of shire counties are setting their rates to spend 10 per cent. more. That is not welcomed by my right hon. Friend or, indeed, by his colleagues. It is sad, and it is to be deprecated that these local authorities are setting their rates quite so high. As the deadline for authorities to set their precept is Monday, we hope that those authorities which have already set their rates will take the opportunity to reopen negotiations when they learn of the substantial sums of money that will come to them in grant. It is possible for them to do that.

I must reiterate to the hon. Member for Southwark and Bermondsey (Mr. Hughes) that this is information that local authorities will welcome. If the information is a little late the Government regret that, but it is better for the local authorities to have this information at this stage than not at all.

Sir Ian Gilmour (Chesham and Amersham)

Any increase in money is welcome, but will my hon. Friend clarify her statement? Will she confirm that the difference between what she has said today and what my right hon. Friend the Secretary of State said in January is £100 million? That will make a difference in Buckinghamshire of about £1 million, but, compared with the £26 million which the Government have already robbed from Buckinghamshire, that is not a large sum. As the shire counties must increase their rates because of Government policies, does not my hon. Friend think it wrong for her not to regret that?

Mrs. Rumbold

Buckinghamshire is now certain to receive £7,403,000, which will make a difference to the county's rate making. My right hon. Friend the Secretary of State has always taken the view that local authorities should take care to study the hopes and expectations of central Government expenditure plans when setting their rates. We had hoped that local authorities would be careful to ensure that they did not exceed the Government's expenditure plans.

Mr. Peter Bruinvels (Leicester, East)

I welcome the news that £8.5 million extra recycled grant will be given to the county of Leicestershire and hope that Leicestershire county council will reduce the 27 per cent. increase in its rate, but will my hon. Friend explain why Leicester city, which has increased its rates by 80 per cent., will be given an additional £431,000? It is the greatest candidate for being rate-capped.

Mrs. Rumbold

I understand my hon. Friend's position on his local authority of Leicester city. However, recycled grant has to be given even-handedly across the country, otherwise the system will collapse. I sympathise with my hon. Friend, but I hope that he will go back to his constituency and beseech the council to be far more responsible in its attitude towards its ratepayers. It is the business ratepayer who will suffer most because of the exorbitant 80 per cent. rate increase.

Sir Geoffrey Johnson Smith (Wealden)

I join my hon. Friend the Member for Eastbourne (Mr. Gow) in welcoming the Minister's statement. Will she tell us how much East Sussex will gain? What advice will she offer to the leader of the East Sussex county council, which has already made its budget?

Mrs. Rumbold

East Sussex will get £7.432 million. My advice to the leader of the East Sussex council, who is a friend and a well respected council leader, is that if he is so minded, he may like to call a council meeting before Monday and adjust the precept. That is perfectly possible.

Sir Peter Hordern (Horsham)

Does my hon. Friend agree that, although what she has announced is an improvement, there must be a better way in which to handle our rate support grant system? Would it not be a much better system if it allowed local authorities which spend less than their grant-related expenditure assessments to get more, and those who spend more than the Goverment think they should to get less grant?

Mrs. Rumbold

I understand the logic of what my hon. Friend says, but the system by which we allocate grant is national. GREAs are made on national expenditure notions, so it is rather difficult to adjust the figures as I suspect my hon. Friend would like, which is in essence to play balances against and for in such a way as would be inequitable across the country. We have to allocate grant as fairly as possible. We all agree that that is right.

Mr. Clement Freud (Cambridgeshire, North-East)

Does the Minister agree that, although she regrets the rate increases in the shire counties, it was the rate support grant legislation which caused an increase of more than 15 per cent. in Cambridgeshire? Is she aware that if one quantifies her statement, one finds that the Cambridgeshire rate, which is £1.94, can now go down to £1 .92½—or could do had it not set a precept last week? Does she agree that good management in local government depends on planning, and that that is impossible if the goal posts are moved while the game is in action? Will she at least give the House a promise that West Derbyshire and Ryedale will not have an extra rate support change before the by-elections?

Mrs. Rumbold

I prefer to ignore the hon. Gentleman's latter remark, as I do not think that it is worth answering. Cambridgeshire is a Liberal-Social Democratic alliance-controlled council, and it has chosen to raise its rate by a disgraceful 33 per cent. this year. That is unnecessary. If the council had examined its expenditure carefully rather than played with figures and toyed with ratepayers, it could have kept its rates far lower. It has set a very high rate. I hope that it will take this opportunity to rethink the position, for the sake of all of its ratepayers.

Several Hon. Members

rose—

Mr. Speaker

Order. I said earlier that I would try to call those hon. Members who had been rising regularly. I shall do my best to get everybody in.

Mr. Colin Shepherd (Hereford)

Does my hon. Friend agree that there will be a temptation for authorities which have set their precepts without taking account of the possibility of a recycling grant? For example, LiberalSDP-led shire counties such as Cambridgeshire, might be tempted to put that grant in the bank in balances and not reflect it in a reduction in the rate precept this year. Will my hon. Friend publish a list for each local authority which has set a precept showing what would be possible if it recycled the grant all the way into a reduced rate precept?

Mrs. Rumbold

My hon. Friend is absolutely right. There is likely to be a temptation for authorities which have already set the precept to bank the money. The information in the Library will enable my hon. Friend to see what the reduction could have been if authorities had taken a responsible attitude to their ratepayers and reduced their rates according to the amounts of money that are now guaranteed.

Mr. Richard Holt (Langbaurgh)

My hon. Friend knows that Cleveland is the second smallest county, but that it is the second highest rated county, at 235p in the pound. Does she agree that it is highly unlikely that there will be any reduction for ratepayers, but that there will be a huge temptation for the Labour-controlled authority to spend the money without any regard for the national economy?

Mrs. Rumbold

I hope and trust that my hon. Friend will do his best to ensure that his constituents and others in Cleveland are well aware of the amount of money available to the local authority, so that they will be able to draw their own conclusions should the council's expenditure rise.

Sir Ian Percival (Southport)

Is my hon. Friend aware that, despite the sour grapes of the hon. Member for Bootle (Mr. Roberts), what she said will be very welcome to the ratepayers of Sefton?

Mr. Allan Roberts

It will not make any difference.

Sir Ian Percival

The guarantee that she has given, together with other things in the pipeline, could enable Sefton council to fix a rate increase at a figure about 5 per cent. lower. That is to say that, instead of looking at an increase of 25 per cent.—or even 30 per cent. and upwards if the Labour and Liberal parties had had their way over increased spending by the passenger transport authority—we may now hope to be looking at 20 per cent. or less. Is my hon. Friend aware that, contrary to what the hon. Member for Bootle said, this is nothing to do with abolition, but that the main increase is due to the excessive spending of a body that is not abolished—the passenger transport authority? Is she aware that my constituents and I are conscious of the fact that only the efforts of the Government, in curbing the excesses of that authority and then guaranteeing this extra money, have saved us from a really high increase?

Mrs. Rumbold

I am delighted that my right hon. Friend the Secretary of State has been able to help my right hon. and learned Friend. I am also delighted to learn that Sefton council now feels much more able to set a reasonable rate.

Mr. Charles Morrison (Devizes)

Although I welcome the improvement in the grant, is my hon. Friend aware that the real solution lies in rather more generous treatment of shire counties right from the beginning? In that regard, is she aware that she would have full support for her arguments in trying to persuade a mean-minded, parsimonious and apolitical Treasury to be more generous with shire counties in future?

Mrs. Rumbold

I am certain that the Government's overall expenditure plans for the country are right. I am glad that Wiltshire will be a happy beneficiary of my right hon. Friend's guaranteeing the £500 million, but I believe that shire counties, like all other local authorities, should be exhorted to try to contain their expenditure in the interests of the national economy.

Mr. Michael Marshall (Arundel)

Will my hon. Friend give the figure for West Sussex? Will she confirm that, because of the scale that she has announced, the fact of West Sussex being the lowest-rating precept authority in the country cannot be taken into account? Will she reaffirm that she looks to fundamental changes in the system to begin to address the problem in the future?

Mrs. Rumbold

The figure for West Sussex is £7.656 million. I hope that that will be of some advantage to the council. The Green Paper "Paying for Local Government" is, we hope, the basis for a completely different way of paying for local government which I hope all hon. Members will consider.

Mr. Robin Squire (Hornchurch)

May I, on behalf of Havering, welcome my hon. Friend's announcement, believing that even the whisper of virtue being its own reward is welcome in the light of recent years' experience? Will she undertake to give the widest publicity to the comments of the hon. Member for Cambridgeshire, North-East (Mr. Freud) about the two areas that he mentioned, as the Liberals seem reluctant to see any support going to those areas?

Mrs. Rumbold

My hon. Friend knows that London as a whole has greatly welcomed my right hon. Friend's announcement, because most local authorities are about to make their rates. I note what my hon. Friend said, especially about Cambridgeshire and elsewhere.

Mr. David Sumberg (Bury, South)

The metropolitan authority of Bury, which is by no means a rolling and wealthy shire county, will be extremely grateful for the announcement, which means nearly £1.5 million of additional resources. Does my hon. Friend agree that that Conservative-controlled authority has loyally followed the Government's plans for controlling local government expenditure, and that its ability to go further is now severely limited?

Mrs. Rumbold

I hope my hon. Friend will recognise that this announcement will greatly benefit the prudent and sensible authority in Bury, and I trust that this will serve to show that the Government recognise the difficulties under which the authority may have been labouring until now.

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

Will the Minister concede that every prudent treasurer, including the city treasurer of Newcastle upon Tyne, will have already anticipated this recycling and built it into a recommendation for the finance committee? Is this not simply a vicious confidence trick on ratepayers up and down the country? Would she care to let the House know what percentage the £2.894 million which Newcastle is supposed to be getting back is of the money that the Government have pinched this year from the ratepayers of Newcastle upon Tyne?

Mrs. Rumbold

I think that that is rather a cheap remark. The treasurer of Newcastle upon Tyne and other treasurers may well have been cautious, but they did not need to be quite as cautious as they have been, because my right hon. Friend told them clearly in January that the money would be available. Although those treasurers may have prayed caution in aid and wanted to maintain their position, it is the councillors who should determine what a rate should be or should not be. It is the councillors who have been fully aware of the sums that have been available to them.

Mr. David Harris (St. Ives)

Does my hon. Friend agree that the £3.665 million which is being given to Cornwall under these arrangements makes nonsense of the pathetic propaganda attempt by the Liberals on that council to put the whole of the blame for an unnecessary 20 per cent. increase in rates on the Government?

Mrs. Rumbold

I support what my hon. Friend has said, and I agree with his sentiments.

Mr. George Gardiner (Reigate)

Will my hon. Friend accept that her statement is good news to all those who have always supported prudent spending councils, as in Surrey, and who resented it when they appeared to be penalised for so doing? Is it not obvious that there must be a better system for apportioning central Government funds among local authorities, which avoids taking with one hand and giving back with the other?

Mrs. Rumbold

I am grateful to my hon. Friend, and I am glad to know that the authorities which felt that they had not been as well served as they should have been feel much more secure in their position now. I refer my hon. Friend to the proposals which my right hon. Friend has made in his Green Paper, "Paying for Local Government".

Mr. Patrick Thompson (Norwich, North)

Will my hon. Friend be able to clarify what this statement means for a low-spending shire county such as Norfolk, which has followed careful budgeting over many years? Will she be able to explain to the leader of Norfolk county council, when she meets him later this week, what he will be able 'to advise for a change in the rate precept or spending levels?

Mrs. Rumbold

I have been trying to explain to the House that for Norfolk the amount that is now guaranteed as recycled money is £7.2 million. If the leader of Norfolk council is minded to look again at the precept that he is levying, he will see that it is possible for him to make adjustments accordingly to save money for the ratepayers.

Mr. Timothy Wood (Stevenage)

I was one of those who were deeply disappointed in the reduction of rate support grant for the home counties in particular, and I am relieved that prudent councils may now get more rate support grant. In Hertfordshire the initial loss of rate support grant was £20 million, and I am not sure whether my hon. Friend is aware that Hertfordshire county council has already set a rate precept increase of 21 per cent. How will the proposals that we have heard today help Hertfordshire?

Mrs. Rumbold

The proposals will help Hertfordshire in that it is now assured of receiving almost £12 million of recycled money. Perhaps that will be of some assistance to it in looking at its rates.

Mr. D. N. Campbell-Savours (Workington)

Is the Minister aware that when the Conservatives on the Conservative-controlled Cumbria county council were trying to fix a rate some weeks ago and realised the implications of the rate support grant settlement, like a bunch of municipal cowards they ran away because they realised that to set a reasonable rate and maintain services was impossible? Is it not equally fair to say that today's statement will effectively mean no more money? I have just spoken to the treasurer of Cumbria county council, and he says that the proposals will have a negligible effect on the precept. Is that not the truth?

Mrs. Rumbold

I think that it is difficult for someone to say that the proposals will have a negligible effect when it is certain that Cumbria will receive nearly £4 million extra. [Interruption.] Of course, it does have some effect. The treasurers who were being prudent and advising their authorities not to take the extra money into account may well have been able to influence the councillors whose decision it is, I have to reiterate, not the treasurers, to take the money into account. One hopes that now that they have a guarantee from the Secretary of State they will think again.