Rates (Hansard, 19 March 1986)

§ 2. Mr. Hardy
asked the Secretary of State for the Environment what is his estimate of the average proportion by which domestic rates will increase in England and Wales in 1986–87.

§ 15. Ms. Clare Short
asked the Secretary of State for the Environment what is the latest estimate of the average increase in domestic rates for 1986–87.

§ The Secretary of State for the Environment (Mr. Kenneth Baker)
A number of authorities have yet to set their rates, but it seems likely that English general rates will rise by about 12 per cent. and domestic rates will rise by between 13 and 14 per cent.

§ Mr. Hardy
Is this not the seventh successive year in which the Government have compelled local authorities to levy rates well in excess of the rate of inflation and created an utterly inequitable and confused situation? Is the Minister aware that a responsible local authority, such as Rotherham, now has to levy a much higher rate as a consequence of the abolition of the metropolitan counties, which was supposed to be an economy?

§ Mr. Baker
I have been advised that the increase for Rotherham is 25 per cent. The underlying reason is that 276 expenditure in Rotherham next year is budgeted to go up by 13 per cent. I have to say to the hon. Gentleman and to all local authorities that the figures show that authorities' budgets now show an average expenditure increase of 9 per cent., which is double the rate of inflation. That is the main reason for higher rates increases this year.

§ Mr. Harris
Is my right hon. Friend aware that some district councils in Cornwall have cut their rates? Is not the lesson to be drawn that it is up to every county council to look at its expenditure in good time and, with the utmost care, to see where sensible savings can be made?

§ Mr. Baker
I agree with my hon. Friend. At least one of the district councils in Cornwall, Penwith, has cut its local rate. The Cornwall county council rate has gone up for the simple reason that the Liberals are calling the shots; and where they call the shots, the rates go up.

§ Mr. Allan Roberts
The Conservatives are calling the shots in Sefton and they have not increased expenditure. In fact, they have admitted that they cannot cut services any more, having already cut them to the bone, and that there will be a 20 per cent. rate increase. Will the Minister explain all that? Will he also explain why all the balances have been thrown into the budget equation by the Conservatives in Sefton and why they are leaving to the new Labour administration, after May, a bankrupt borough?

§ Mr. Baker
The reason is that the outgoing metropolitan county councils have, on the whole, during the past year increased their spending quite dramatically. They have used their balances, and there is little left on which the successor councils can count.

§ Mr. Kenneth Carlisle
Does my right hon. Friend agree that it is an unhappy state of affairs when rates are increasing more than the rate of inflation? Although he may not be able to avoid that this year, will he reassure us that the Government will do everything possible to ensure that we do not have a similar increase the following year?

§ Mr. Baker
I have considerable sympathy with what my hon. Friend says. Those rates increases are regrettable, but they reflect the sharp increase in local authority expenditure next year. The figures that I have given represent an increase in expenditure of between 9 and 10 per cent. My hon. Friend will recall that before Christmas I said that the Government were prepared to fund expenditure roughly at the rate of inflation—3.5 to 4 per cent. If authorities spend higher than that, the ratepayers will have to bear the result. I accept that several authorities are economical and thrifty, and there are several in Lincolnshire. I shall bear in mind what my hon. Friend said and try to ensure that they have a better deal next year.

§ Mr. Simon Hughes
The Secretary of State said that when rates go up in some places it is because the Liberals are calling the shots. Does he accept that we are consistent, in that rates have gone up when we have said that we needed to increase services in councils inherited from the Tories, and that inconsistency is on the right hon. Gentleman's side? His commitment was to cut costs and hold services, yet he has failed fundamentally, and throughout the nation, to achieve that objective.

§ Mr. Baker
The hon. Gentleman will not be pleased when he sees the figures. Rates rises in hung counties amount to 20 per cent., on average. Time and again—in Cumbria, Cornwall, Devon, Oxfordshire and Somerset, where there are hung councils—that leads to higher spending and higher rates—[Interruption.] It is not due to a cut in grants, because this year the amount of central Government grant to local government will be £11.4 billion, and next year there will be an increase of £400 million, giving a total of £11.8 billion.

§ Mr. Spencer
In view of the fact that only 34 per cent. of householders pay full domestic rates, does my right hon. Friend agree that the present situation shows that it is high time that payments were placed on the shoulders of individuals who enjoy the services, not on the property in which they live?

§ Mr. Baker
My hon. and learned Friend is right. That is the main thrust of the Green Paper that I have published. My hon. and learned Friend has every right to feel aggrieved, because the proportion of the electorate who pay rates and vote in Leicester is about the figure that he gave. That allows Leicester council to contemplate a rate increase next year of 80 per cent.

§ Dr. Cunningham
Why does the Secretary of State not accept that the Budget Red Book is planning an increase in rates of over £2 billion? The Budget Red Book plans an increase in rates of 15 per cent., on average. That is what the Government announced yesterday. Why does the right hon. Gentleman also pretend that the Government are not shifting burdens from the taxpayer to the ratepayer? Again, that is what the Red Book shows. Taxes are being reduced miserably, but the burdens are being shifted consistently on to ratepayers. Is that not why, in the shire counties in particular, for which we have all the information, rates are averaging almost 20 per cent.? In Tory-controlled shire counties the rates averages are higher than in Labour-controlled counties. The average for Tory counties, of which there are 10, is 17.6 per cent. There are nine Labour-controlled counties, and the average is 15.8 per cent. Those are the figures. Is it not appalling that a Government who twice promised to abolish the rates have increased the rates in real terms by 82 per cent.?

§ Mr. Baker
The hon. Gentleman knows that I have produced a Green Paper, which is for consultation, which will lead to a radical change and to the abolition of the rates. Referring to the level of grants, the figures that I have given confirm what is in the Red Book. I said that local government expenditure, most regrettably, is going up next year by between 9 and 10 per cent. The hon. Gentleman referred to the shift between the ratepayer and the taxpayer. I must tell the House and the hon. Gentleman that the amount of grant that we shall pay out this year is £11.4 billion. Next year it will be £11.8 billion. We are increasing the amount of grant next year, but, in spite of that, we have higher expenditure and higher rate increases.