Rates

HC Deb 30 April 1987 vol 115 cc397-9

6. Mr. Holt

asked the Chancellor of the Exchequer what estimate he has made of the impact on the economy of the level of local authority rates and spending now announced for 1987–88.

The Chief Secretary to the Treasury (Mr. John MacGregor)

Local authorities in Great Britain are planning to increase their current expenditure by more than 8 per cent. this year over last, well above inflation and what the Government believe to be necessary. The excess will be met from the reserve, and will not add to the planning total, but this inevitably means less is available for other services. The result of this overspending is rate increases averaging nearly 7 per cent., so it also means a higher than necessary additional impost on businesses.

Mr. Holt

Does my right hon. Friend agree that the Audit Commission has established that there are potentially £2 million-worth of savings that could be made within local government, particularly if places such as Cleveland cut out the £250,000 being spent this year on political advertising at the ratepayers' expense?

Mr. MacGregor

I agree with my hon. Friend. By a slip of the tongue I think that my hon. Friend said £2 million-worth of savings. In fact, just to get it clear, the Audit Commission believes that £2 billion-worth of savings are available. He is absolutely right about Cleveland. I understand that that Labour-controlled council is increasing its total expenditure by over 13 per cent. this year, which is the third highest increase for the counties. It is no wonder, therefore, that Cleveland has the second highest county council rate in England, and that is bound to have a heavy adverse effect on businesses there. My hon. Friend is entirely right.

Mr. Robert Sheldon

Before the right hon. Gentleman quotes the Audit Commission too much, he should recall that the head of the Audit Commission, John Banham, now the head of the Confederation of British Industry, has gone on record as saying that local government is more efficient than central Government. Should the right hon. Gentleman not be looking to his own areas of expenditure rather than berating those local authorities?

Mr. MacGregor

The right hon. Gentleman, who is always fair in these matters, will know that we have done a great deal in that respect. We have got the numbers of civil servants in central Government down substantially without reductions in the effectiveness of services. In many other ways, and through many initiatives, we are making substantial savings in administration and in the cost of the programmes. I entirely agree with the right hon. Gentleman that it is important to achieve efficiency in central Government as well as local government, and we devote a great deal of our time to doing that.

Mr. McLoughlin

Does my right hon. Friend agree that, although most Conservative local authorities have increased rates by 5.5 per cent., Labour, alliance and hung councils have increased their rates by about II per cent.? Will he also consider what the alliance leader of Derbyshire county council said? She said that she supported the Labour party on most matters but could not support it on its rate increases. Is that not gross hypocrisy on the part of the alliance? Is the alliance trying to have it both ways by supporting extra spending without considering the consequences of such spending? Will he acknowledge that Derbyshire is the highest rated council in the country?

Mr. MacGregor

On the latter points, my hon. Friend is entirely right. Indeed, I listened with interest to what he said about the alliance leader in his county. It rather mirrors what the Liberal and Social Democratic Members do in the House. They urge a good deal more expenditure, vote against tax cuts and then do not know where to go from there. I agree also with what my hon. Friend said at the beginning of his question. It is significant that rate increases in Conservative councils this year are 5.4 per cent., whereas in Labour councils, other than rate-capped councils, they are 12.4 per cent. That speaks for itself. The burden on domestic ratepayers and businesses is clear.

Mr. Campbell-Savours

Is it not true that the new rating system—the community charge—will have a dreadful, catastrophic impact on many industrial towns and their economies in the northern region? Have the Government measured the impact that the new tax will have in so far as it will wipe out tens of thousands, hundreds of thousands, indeed millions, of pounds from spending power in such communities?

Mr. MacGregor

When the hon. Gentleman talks about business, he is talking, not about the community charge, but about the new non-domestic national business rate that we shall introduce. He will discover that many businesses in his area will find that it is more beneficial to them than the present system.

Mr. Greenway

Will my right hon. Friend comment on the effect on people in Ealing, and my constituents in particular, of the rate increase of 65 per cent. that was imposed by Ealing council? That will represent an average increase of £5 or £6 per week, and some people will have to pay £12 a week. It will hurt the elderly, the disabled, industrialists, jobs, prices and everything else. Is it not wicked and disgraceful? Is it not typical of members of the modern Labour party? That is just what they would be like in government, and that is why they must be strongly rejected.

Mr. MacGregor

I entirely agree with my hon. Friend. He has clearly made the point about the impact of a Labour council in Ealing. Bearing in mind the rate increases in Conservative-controlled councils, I am sure that many ratepayers in Ealing will wish that they lived under a Conservative administration at local level and therefore benefited from the much lower rate increases that are happening elsewhere.

Mr. Nellist

When the Minister replied to the hon. Member for Langburgh (Mr. Holt) about the amount of money spent on political advertising, why did he not admit to the House that £42 million — [Interruption.] If the Chancellor would keep quiet, the Minister could hear me. The sum of £42 million was spent on the sale of British Gas. Hundreds of millions of pounds have been spent by the Government on political advertising of Rolls-Royce, British Telecom and the rest. The Minister prays in aid the Government's record on the Civil Service and the spending by central Government. If the Government are so clever, why are thousands of civil servants in Coventry and elsewhere out on strike this week because of pay cuts over the past seven years?

Mr. MacGregor

The hon. Gentleman is only envious that our policies on privatisation are so hugely successful and of great benefit to the economy and are being copied around the world. It is just a pity that he does not understand the significance of them.