Rate Support Grant (England)

HC Deb 09 December 1987 vol 124 cc465-534 4.51 pm

The Secretary of State for the Environment (Mr. Nicholas Ridley)

I beg to move, That the Rate Support Grant Report (England) 1988–89 (House of Commons Paper No. 163), a copy of which was laid before this House on 30th November, be approved. I announced to the House in November, following consultation, my decisions on next year's rate support grant settlement. Hon. Members will therefore be familiar with the report's contents.

However, I must remind the House that we have provided a generous settlement for local authorities. The aggregate Exchequer grant of £13,775 million is an increase of £750 million and 5.75 per cent. more than for 1987–88. Provision for local authority current expenditure, at £27,538 million, is 7 per cent. more than this year.

No doubt Opposition Members will complain about those figures. They go on about the £18 billion that they say we stole from local authorities. Let me nail that figure once and for all. In 1979–80, the last rate support grant settlement of the Labour Government, grant totalled £8,101 million. At 1988–89 prices, that is equivalent to £14,691 million, whereas in this settlement we are providing £13,775 million, which is £916 million less— not the £18 billion we so often hear about.

Dr. John Cunningham (Copeland)

How does the Secretary of State reconcile what he has just said with the parliamentary answer he gave me, using his Government's figures, which pointed out that the accumulated reduction in rate support grant since 1978–79 in England, at 1987–88 prices, is £3,896.2 million? He then listed all the figures and gave the cumulative total of £21,573 million.

Mr. Ridley

Because the hon. Gentleman asked what would be the difference if the rate support grant percentage had been maintained, despite the vast increase in local authority spending, so of course he gets a figure like that. I am giving him the true figures, not the ones he asked for. It is just as important to get the question right as the answer.

The settlement will allow non-rate-capped authorities to hold their spending broadly steady in real terms. Education authorities are enabled to increase their spending by rather more because of the additional allowance we have made for schoolteachers' pay.

Our expenditure plans make realistic provision for local authority expenditure. There is, of course, plenty of scope for authorities to make savings—for example, by taking advantage of the savings brought by competition, and implementing the efficiency savings identified by the Audit Commission. Authorities continue to spend more than I believe they should: the settlement therefore provides for a margin between the total of grant-related expenditure — authorities' need to spend — and the level of expenditure provision.

Mr. Peter Thurnham (Bolton, North East)

Will my right hon. Friend undertake to amend the figures on the education component of the rate support grant for Bolton council and check his other calculations?

Mr. Ridley

I understand that there has been a miscounting of the number of schoolchildren in Bolton. Those figures are in the report, and at the first supplementary opportunity the figures will be put right and money can be adjusted immediately afterwards.

Mr. Dennis Skinner (Bolsover)

Does the Minister believe—

Mr. Ridley

I have not given way.

Mr. Skinner

The right hon. Gentleman could give way now, if he wants to.

Mr. Ridley

I do not know that I do want to.

In making the settlement I have borne in mind the need for stability. The mechanisms for distributing grant and the methodology for calculating grant-related expenditure are therefore broadly the same as in the current year. This has been widely welcomed.

The 5p safety net at ratepayer level provides an important protection against grant losses and the lop cap at authority level on grant gains prevents what would otherwise be an unreasonable effect on the distribution of block grant. How much rates will rise will of course depend upon how much local authorities decide to spend. But ratepayers in areas where local authorities choose to budget sensibly should on average receive rate bills which increase by around the rate of inflation.

I refer to the storm damage which occurred last October. I have now completed my consultation with local authorities and the associations about my proposal to exclude from total expenditure — in effect, to relieve from grant losses—that 25 per cent. of an authority's spending on clearing up after the storms in October above the Bellwin threshold but not met by special assistance. I announced my conclusions in a written answer yesterday to my hon. Friend the Member for Eastleigh (Sir D. Price). It may help the House if I explain them in more detail now.

Authorities have pressed three points about the proposed exclusion. First, there are substantial costs which fall outside the Bellwin scheme. I had expected authorities to treat those costs as capital expenditure, but some do not believe it would be right to do so, although in some cases it must be cheaper for them to do so. If they treated it as revenue spending, they would lose grant as things stand at present. Secondly, if they decide to go down the capital route, they do not believe it is right that they should lose grant on the servicing costs. Thirdly, they cannot complete the emergency repair work required by the October storms by the deadline of 31 January.

They have argued that, despite the special assistance we have made under the Bellwin scheme, and the total expenditure exclusion I had proposed, the Exchequer would stand to make a profit from the storm. Whilst they were content to meet their own costs, subject to the special financial assistance, they believed it was wrong that they should lose grant on such exceptional, emergency expenditure.

Throughout, it has been the Government's intention to assist local authorities to meet the costs of the quite exceptional storm on 16 October. It has been no part of our policy that the Treasury should somehow make a profit as a result of expenditure which authorities could not have allowed for. In the light of local government's comments, I have decided to propose a wider expenditure exclusion which will remove any possibility of such a profit occurring as a result of authorities spending above the Bellwin threshold.

I propose to exclude from total expenditure not just the authorities' share of expenditure eligible for special financial assistance, but all revenue spending above the Bellwin threshold on clearing up the storm, and, in addition, the costs of servicing capital expenditure. It does not mean that authorities will be left with no burden to shoulder. They will be required to meet the full costs and grant consequences of their spending up to the Bellwin threshold, plus the 25 per cent. above the threshold not met by special assistance and any spending which is ineligible for Bellwin.

Dr. Cunningham

Does what the Secretary of State has just said mean that he is being less than candid with the House? If local authorities still have to bear the consequences of a I p rate, they will still be liable to pay grant penalties on that expenditure, and many of them will have to do just that.

Mr. Ridley

On 21 October, I explained that we assumed that authorities had made some provision for contingencies, including grant losses, which might occur. Over and above those contingencies assistance has always been available, to which I have constantly referred.

That is my revised proposal, on which I will be consulting local government. I have also been asked to extend beyond 31 January 1988 the time during which authorities may undertake Bellwin-type eligible work, or to dispense with a deadline altogether.

We are bound to impose some deadline if extra Exchequer assistance is to be granted prudently and correctly for works carried out in response to what is an emergency on a particular date. I am anxious, however, to respond, as flexibly as I can, to the comments of the authorities affected and to hon. Friends who have approached me on this matter. Accordingly, I am proposing a new date of 1 March 1988. I have also been asked to provide additional GRE against the costs of servicing capital expenditure on storm damage. My proposal to exclude servicing costs from total expenditure would make such an addition to GRE inappropriate.

Following my announcement, local authorities will have a clear idea of how the Government are prepared to help in the work of putting right storm damage. To make it absolutely clear, we are providing 75 per cent. grant on eligible spending above the threshold. This is cumulative, so that if another Bellwin emergency occurs this year, or later this winter, eligible expenditure on that emergency can be added together to claim grant. We are proposing to exclude all revenue expenditure above the threshold, whether eligible or not, on the clearing up operation for the calculation of grant loss. We are proposing to exclude all debt charges incurred as a result of storm. We are allowing an extra month for authorities to complete the necessary emergency work for which grant can be claimed. We have also offered extra capital allocations.

It is, I believe, a generous package, which meets the legitimate demands of local government. The next step is for local authorities to make their claims, whether for special assistance or for capital allocations, and my Department will deal with them as quickly as possible. Today's debate is principally about the settlement for 1988–89. However, I am today also sending authorities our proposals for supplementary reports for earlier years. I am planning to make three supplementary reports shortly after Christmas. These will he the reports for 1983–84 and 1984–85, based on audited figures, and a further interim report for 1986–87. The main purpose of those reports is to adjust grant entitlements in the light of the latest information about authorities' expenditure in each of ,:he years concerned. If the House approves them, they will be implemented in April.

As the House will be aware, in each of those years there was grant recycling. That means that, if one authority gains grant because it has reduced its expenditure, then other authorities which have not reduced expenditure will lose grant. The amounts involved in recycling can be quite large. That is particularly so for 1986–87, because for that year the slopes used in the formula for calculating entitlements were steepened to provide greater pressure against high spending. That was to compensate for the removal of targets and holdback. In aggregate, authorities' returns now show their estimated expenditure in 1986–87 to be some £208 million less than they returned last June. If that represents the true picture, it is welcome news.

A few authorities have increased their expenditure, and will lose grant. Those authorities which have reduced expenditure by proportionately more than average will gain grant. But those authorities which have reduced their expenditure, but by less than the average, will find that they also will lose grant. This is an unsatisfactory feature of grant recycling, and indeed is one of the reasons why we decided to scrap it for the current financial year and the next two years. However, the law requires the system to operate for earlier years as was intended. The House will have an opportunity to debate those reports in January. If they are approved, they will be implemented in April.

Four other reports will be made in 1988–89. Among other things, we will use these reports to correct an error made in the 1986–87 settlement concerning the Greater London council's expenditure on highways, known as the "Bromley error". The Local Government Finance Bill published last Friday includes a clause which will amend my powers so that the error can be corrected. In order to do that, I will need to determine new multipliers for authorities in supplementary reports for 1986–87, 1987–88 and 1988–89.

Grant changes resulting from correction of the Bromley error for 1987–88 and 1988–89 will be implemented as soon as possible after the supplementary reports are made. The implementation of the 1986–87 report will be held over to 1989–90. Ratepayers in Bromley, Kingston and the other boroughs affected can be sure that, in due course, they will receive their correct grant entitlement.

On the related matter of rate limitation, the House will also wish to know that I have reached decisions on the applications from the only two authorities—the London boroughs of Southwark and Tower Hamlets — which asked for their expenditure levels for 1988–89 to be redetermined at a higher figure. In the case of Southwark, I have decided not to increase the expenditure level but to confirm it at the original figure of £134.193 million, which I determined in July this year. In the case of Tower Hamlets, I have decided that a small increase of £2 million would be appropriate — bringing its expenditure level next year to £126.033 million. Associated with 'hat increase for Tower Hamlets is a requirement that the authority reports to me at intervals about the steps it is taking to improve its efficiency in certain areas identified in its application. The other 15 authorities selected for rate limitation in 1988–89 chose not to apply for a redetermination, so their expenditure levels remain as originally determined in July.

Mr. Simon Hughes (Southwark and Bermondsey)

I welcome the Secretary of State's acceptance of the case put by Tower Hamlets when it asked for redetermination, although he will not be surprised that I regret that he could not do the same for my borough of Southwark. What was his view on the application for redetermination of ILEA and those of the joint boards which also asked him to set a higher limit?

Mr. Ridley

It is typical of the hon. Member for Southwark and Bermondsey (Mr. Hughes) that he welcomed the increase in the limit for Tower Hamlets without mentioning his regret that the ratepayers of that borough will have to pay more money, but I shall let that pass. My right hon. Friends the Secretaries of State for Education and for Transport and the Home Secretary will make their final decisions and publish them to the House on the services for which they are responsible.

Indeed, I am announcing today, in a written answer, the proposed rate limits being notified to all 17 of the authorities designated for 1988–89. Those limits are based on the expenditure level for each authority and take account of the amount of block grant it is estimated to receive and, where appropriate, the position of its financial reserves. I should emphasise that, under the terms of the Rates Act 1984, the limits are still provisional at this stage. I hope that most of the 17 authorities will agree the proposed limits. If not, they will be able to make representations and I will consider the matter further. Finally, if there is still no agreement on the limit, an order will be laid before the House for it to determine the matter in the new year.

The effect of the proposed rate limits varies at individual authority level from an implied increase of 11–5 per cent. in the local rate in Tower Hamlets to a reduction of 43.5 per cent. in Ealing. The overall effect of the limits is an average reduction across the 17 authorities of just over 9 per cent. in local rate levels—equivalent to some £140 million less in rate bills when compared to those faced by ratepayers in those areas in the current year. Overall, therefore, this represents very good news for domestic and business ratepayers in those areas of high local authority spending.

In addition to the 17 authorities subject to rate limitation, the Inner London education authority and the 19 joint authorities in London and metropolitan areas are also subject to precept limitation in 1988–89. As I said to the hon. Member for Southwark and Bermondsey (Mr. Hughes), details of the expenditure levels and proposed precept limits for those authorities will, as usual, be announced in due course by my right hon. Friends, when they are ready to do so.

I recognise that this is not very exciting stuff. Indeed, I fear the heyday of RSG debates has probably passed already and there is likely to be only one more such debate. Domestic rates and RSG have become endangered species. This is the last but one settlement of this kind. Few if any will regret their passing—not even the hon. Member for Copeland (Dr. Cunningham) who said last week that he was not interested in defending the status quo. I am grateful to the hon. Gentleman for that.

Next week we will start to consider the new system—hon. Members may regard today either as the lull before the storm, or the hour before the dawn, as they wish—subject to a three,line Whip. Under the new system, we will get away from slopes, thresholds, nets and caps, holdback, targets and grant forfeit. We say farewell to them with few regrets.

There will be two major simplifications. First, grant entitlement will not be related to actual expenditure. Grant will be allocated at the beginning of each year, and will not subsequently change. We shall no longer need supplementary reports going back three, four or five years to make final adjustments.

Secondly, there will no longer be resource equalisation based on rateable values. It is equalisation that moves large amounts of grant around the country, and produces results that are often impossible to explain to hon. Members, let alone for them to explain to their constituents. In future, need will be the only factor which influences the distribution of grant. That will not only be simpler, but it will also be fairer. Next week I will invite the whole House to support those proposals. In the meantime, I commend these proposals to the House as the right ones at this time.

5.12 pm

Dr. John Cunningham (Copeland)

It is the Government's assertion that the British economy is strong, that the country is prospering and that we are doing rather well. Yet today we are asked to approve the same mean and aggressive Government proposals for financial support to enable local authorities to maintain public services as we had to do in recent, more difficult years. Apparently, our asserted prosperity makes no difference to the Government's judgment about how they should support ratepayers.

I had to smile at the intervention of the hon. Member for Bolton, North-East (Mr. Thurnham) and the Secretary of State's reply, which more or less summed up the Government's attitude. The Secretary of State often gets his sums wrong when he is giving grant away, but he always seems to get them right when he is taking money away from local authorities.

No attempt has been made to ease the burden on ratepayers. That burden has been increasing consistently, often dramatically, and always deliberately in every year since the Conservative Government came to office in 1979. Instead of masquerading as the friend of the ratepayer, the right hon. Gentleman should bear in mind — he must know this—that the average, rebated domestic rate bill in 1979–80 was £155; in 1987–88 it will be £428. That represents an absolutely staggering increase since the Government came to power. Since 1980, domestic rates have, on average, increased by no less than 13.6 per cent. every year. That is the effect of the rate increases. When I intervened earlier the Secretary of State rather disarmingly said that he was giving me the right figures — I assume that all the figures are the right figures because they all come from parliamentary answers given to my questions. From the Government's figures it is clear the average rates increase each year over the past eight years has been 13.6 per cent.

Those increases have occurred because the Government have deliberately, dramatically and consistently reduced their support to local authorities and to ratepayers. That is the most obvious and important reason why rates have become a significant problem for those on small incomes, those with fixed incomes and people livimg in inner city or rural areas.

The proposals before the House make no attempt to tackle the problems of the inner cities. In spite of the complexities and deficiencies of the rate support grant, it remains a good way of providing extra cash to help in the necessary, but under this Government neglected, attack on poverty, unemployment, discrimination and dereliction in our urban areas. Again, we see that the authoritarian, central powers of the Rates Act 1984 are used to enforce legally the Government's political judgments on local authorities and that is in direct conflict with the decisions of the local people in local elections. Today we have witnessed the Secretary of State's continuing attempt to mislead people about the Government's inadequate response to the unavoidable costs faced by ratepayers following the extraordinary storms in October. I shall deal with each of those aspects in turn.

The Government's proposals for rate support grant for 1988–89 have the familiar features and purposes of Government policy — a failure to meet the established spending needs of local councils to maintain decent and effective levels of service and the Government's decision to impose again a Treasury clawback tax when councils spend above the Government's arbitrarily-imposed expenditure limits.

The system will work to increase grant when services are reduced in quality and range and when expenditure is cut. Against that well-established background, it is not surprising that various local authority associations—the Association of County Councils, the Association of London Authorities and the Association of Metropolitan Authorities — have serious objections to the Government's proposals. The Secretary of State has talked about the huge sums involved, but it is worth reflecting on the fact that the block grant figure of £9,482 million works out as little as £201 per head of the population in England. It is not true that this vast sum, which it is difficult for people to imagine, means huge financial support for the population. These are relatively modest amounts based on the sum per head of the population.

Mr. Max Madden (Bradford, West)

Will my hon. Friend tell us what reduction has taken place since the Government were elected in 1979 in the proportion of local government expenditure covered by central Government? Will he draw attention to the problems of Bradford which emphasise what he is saying? Uniquely, Bradford has an increasing population, yet it is being penalised by loss of grant and has seen a reduction in rate support grant since 1979 of more than £70 million.

Dr. Cunningham

My hon. Friend is referring to the question that I asked the Secretary of State this afternoon. In 1979 the Labour Government provided rate support grant at a level of 61 per cent. of relevant expenditure. That figure has been systematically reduced to 46 per cent. under the Conservative Government since 1979. Although I do not have the figures for the city of Bradford in my head, I know that, as a result of those reductions, the accumulated national loss of grant is £21,573.6 million, using the figures provided by the Secretary of State. In spite of what the Secretary of State said, I assume that those, too, are real figures.

The provision for local authority current expenditure—the measure of expenditure which determines the level of services provided—represents an increase of less than 4 per cent. over the current year's budgets. That is a more meaningful measure than the 7 per cent. increase in the provision for 1987–88, quoted by the Secretary of State. That provision was an unrealistic assessment of what authorities were likely to spend in the current year. The 4 per cent. increase is less than the Government's latest estimate of general inflation in the year 1988–89 and fails to reflect authorities' likely year-on-year increases in costs.

The expenditure groups—the bodies made up of civil servants and local authority administrators—forecast that local authorities will need to spend slightly in excess of £29 billion in the coming financial year simply to maintain current service levels. There is, therefore, a £1.47 billion current expenditure shortfall in what the Secretary of State is asking the House to accept. Those are the best available figures and they have been arrived at by civil servants in the Department of the Environment and by officers of the local authority associations. The Secretary of State knows what those figures are, yet he insists that what he is recommending is fair and generous. Of course, it is not. It is a serious shortfall in maintaining the status quo.

Mr. John Maples (Lewisham, West)

The hon. Gentleman suggests that the only way that local authorities can reduce their spending is by cutting services, but that is palpably untrue. Does he agree that rate-capped authorities have enormous scope for making savings by cutting waste and increasing efficiency?

Dr. Cunningham

I was not making that assertion. I was making a different point: that the Secretary of State's recommendation falls a long way short — £1.47 billion short — of what is needed just to maintain current programmes.

Mr. Ridley

I am a little astonished by this point. If, by some misfortune, the hon. Gentleman ever finds himself in my shoes, doing the job of Secretary of State, will he give an undertaking to let local authorities have, both in provision and grant, as much as they ask for on every occasion?

Dr. Cunningham

No, I shall not give such an undertaking. It is Labour policy to allow grant to grow at the rate of growth in the economy and so bring additional support to local authorities for services and to ratepayers. That is a reasonable and practicable proposition, but we could not guarantee that every year local authorities would get exactly what they asked for. However, that system would be far more likely to meet their legitimate needs and demands than has the system operated by the Government for the last eight years.

Mr. Thurnham

Does the hon. Gentleman agree that his party was thoroughly defeated at the general election because the electorate would not accept the way the Labour party accepted profligate and illegal spending by extremist Left-wing councils?

Dr. Cunningham

No, I do not accept that. There were many reasons why the Labour party was not successful in the election. The hon. Gentleman is entitled to his opinion. The reason that he gives may have been a factor, but it was not the only reason. However, this is not the occasion to go into the reasons. If the hon. Gentleman wishes to attend some of our listening conferences, we could debate those issues then.

Mr. Simon Hughes

Does the hon. Gentleman agree that the Government's response to local authorities' demands is to say that this year there must be a cut in the current committed expenditure of 5 per cent., or £1.5 billion, and that there will be a cut in the areas of greatest deprivation, including the inner cities which they claim to be helping? They will suffer most. They will get the smallest slice of the cake and they will be most heavily penalised.

Dr. Cunningham

The hon. Gentleman is right. That is indicative of the internal conflict within the Government in this respect. The Prime Minister said, virtually on the day of victory, that the Government would give priority to helping communities in the inner cities, but they continue to deny local authorities the necessary resources to tackle the job more effectively.

I want to support my comments, as the Secretary of State disingenuously expresses some surprise about them. He knew those figures before we did. That view is endorsed by the Association of County Councils and is shared by all local authority associations. In a recent letter to me, the ACC said: To the extent that shire counties seek to protect services and to implement much needed service developments, they will suffer severe block grant losses. Present indications are that over £200 million of shire counties' block grant will be returned to the Treasury; this alone will cost the equivalent of a 5p rate and will necessitate precept increases which, on average, will exceed 10 per cent. The AAC would accept the Government's right to form a global judgement on what the economy can afford by way of aggregate local authority expenditure. However, if, as on this occasion, that global view falls well short of the 'present policies' forecast of the Expenditure Steering Groups, Ministers must recognise the practical implications of this at local authority service level. That is an emphatic answer to the point raised by the hon. Member for Southwark and Bermondsey (Mr. Hughes). The Association of County Councils' comments are exactly in accord with the views of all the other local authority associations.

The 1988–89 settlement represents little change, and little change in methodology, compared with the current year, but the Government are maintaining their severe grant regime designed to increase grant when services are cut and penalise authorities which increase expenditure. The Government are, in effect, planning a 5 per cent. cut in local authority expenditure, and it could be even worse than that.

I come again to the point made by the hon. Member for Southwark and Bermondsey, that it makes nonsense of Government claims that they want to bring additional resources and more help and support to the people of the inner cities, when all that they are doing is making the problems of those local authorities and communities even harder to resolve. It would have been quite within the power of the Secretary of State to recalculate grant-related expenditure assessments and thus bring more resources to the inner cities. It would have been one of the quickest ways in which the Government could respond to the challenge posed by the problems of the inner cities. Yet the right hon. Gentleman has deliberately chosen not to do it.

Mr. Richard Holt (Langbaurgh)

Will the hon. Member care to comment on the fact that the urban development corporations have already brought in money from the private sector, which the local government sector simply would not have done? In Teesside this already amounts to £100 million worth of private money.

Dr. Cunningham

Yes, of course. It is incontestible that urban development corporations have brought extra resources to inner cities—and a lot of it is in the form of public expenditure. But we are not in favour of this creeping corporate state approach to our towns and cities. We have just seen an announcement this week. Disgracefully, it was not made in the House, so no hon. Member was able to question the Secretary of State about his decision — a quite cowardly way to announce Government policy. The Secretary of State laughs. If he had the guts and the courage to believe that the House would support what he was doing, he would announce his decision here and hon. Members would have an opportunity to discuss and ask questions about it. He seemed not to want to do that or to subject himself to the judgment of the House.

I can tell the right hon. Gentleman that, in respect of that announcement, in at least one case—that of Leeds —the Government's decision on policy is likely to result in less investment, because existing plans already in train are threatened by that decision. Much more by way of investment, including private sector investment, already in the pipeline will be completely blocked by the Government's decision, which seems to have been taken without any proper consultation, any thought or any understanding of the situation.

Of course, it is true that urban development corporations will attract private sector investment and involvement, not least because of the public expenditure commitment—the servicing, the availability of the land and the freedom from planning controls. All those benefits are bound to attract investment. I would just caution the hon. Member for Langbaurgh (Mr. Holt), however, to read the words of the director general of the Confederation of British Industry. He has warned the Government publicly against by-passing local authorities in the inner cities, because, he says, that sort of approach will not solve the problems.

There is, therefore, much room for argument about the Government's approach, but I certainly do not applaud either the nature of the recent decisions about urban development corporations or the manner in which the right hon. Gentleman announced them in a written reply on Monday.

The Government's policy on grant distribution is objectionable. The Government's main aim still appears to be a reduction in the level of local authority services, despite the growing needs of the communities that those authorities serve. Unemployment may be falling generally, but it is still very high among people living in the inner cities in particular, despite the growth of jobs for people who commute into London. Many people in inner London are still subject to very high unemployment. There is still discrimination against people in black and ethnic minority communities and, what is more, the Local Government Bill—in spite of our amendments, which have all been rejected—will not help that situation and could, in some respects, make it even worse.

I am astonished by some of the implications of what the Government are doing. I want to make a particular point about the precise meaning of the Government's proposals on housing benefits. Representations have sought to clarify exactly what is suggested and what is meant by the Government's proposals.

It seems to us that local authorities will be required to pay increased housing benefit, yet the increased expenditure that they incur as a result and that they cannot avoid may itself be subject to penalty. It is a preposterous state of affairs. I cannot understand why, in the consultation process, the Secretary of State has refused to clarify the situation.

Let me illustrate what I am trying to make clear to the House. The Government suggest that they will make certain amounts available to local authorities for the statutory cost of their share of housing benefit. In 1986–87 they made available £237.5 million, in 1987–88 it was £250 million and they propose £289 million in 1988–89. But the actual cost to local authorities in 1986–87 was £252 million and it is estimated to be £262 million in 1987–88. There is no estimate available yet for the current financial year, but the trend is obvious. There is a gap between what the Government are making available and what local authorities are required by law to pay. If they incur that additional expenditure, they are likely in many cases to incur penalty on top of that. No one seems to have taken any account of that. I hope that we will be given some explanation from the Minister for Local Government when he replies.

The Government have also consistently underestimated the provision required for the administration of housing benefit. A similar comparison demonstrates that point well. In 1984–85 they made available £82 million; the actual cost was £120 million. In the coming financial year, 1988–89, it is suggested that they will make available £187 million; the best available estimate is that the cost will be in excess of £190 million. I hope that we can have some explanation of the Government's position in that regard as well. It is quite intolerable for the Government to impose these legal requirements on local authorities, then not properly fund what they require the authorities to do, then penalise them for making the expenditure that they cannot avoid making—and then still claim that they are interested in protecting the ratepayers. It just does not add up.

I turn briefly to what the Secretary of State had to say about the Rates Act 1984, because, here again, some important questions are unanswered. Will Ealing be rate-capped with an expenditure limit that is actually below its grant-related expenditure assessment? What can possibly be the justification for that? The grant-related expenditure assessment was introduced by this Government. It is supposed to denote what local authorities are required to spend to support an adequate level of service. The expenditure limit in Ealing is below that level. —[Interruption.] If the right hon. Gentleman is going to contest the figures, I will give way, but he seems to indicate that there is nothing wrong with that.

Mr. Ridley

I am trying to help.

Dr. Cunningham

The right hon. Gentleman is certainly not helping the ratepayers of Ealing in taking the view that he does about the state of affairs in that borough.

Will the right hon. Gentleman carefully and, I hope, properly discuss with the rate-capped authorities—in a way that he did not do on expenditure limits—the full implications of his announcement today? I should also like to repeat the question put to him by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) when he made his statement on the rate support grant a few days ago. Why does the right hon. Gentleman not announce the criteria that he will use with regard to the Rates Act 1984? Why should the House and, more important, local authorities not be told exactly what criteria he will use? I suspect that it is for the same reason that we have always heard from the Secretaries of State of this Government —the Government want to rig the criteria and to fit them up to get the local authorities that they want for political and other purposes that suit their political ends. There are no legitimate or objective criteria in the right hon. Gentleman's mind.

With regard to what the right hon. Gentleman said about rate limitation—I am grateful to him for giving me a copy of the written reply that he is making today —why has he set a rate limit for Camden that does riot allow the authority to raise the revenue to reach the expenditure limit that he set? There seems to be at least a 5p shortfall in what will be required. Similarly, for Hackney there seems to be an even larger shortfall of 11p between the expenditure limit that the right hon. Gentleman is imposing and the rate limit that he is announcing today. What is the explanation of those differences? How does the Secretary of State expect those two boroughs, which are already financially hard pressed, to make up the shortfall? Will the Minister explain that when he replies to the debate?

The right hon. Gentleman's comments about storm damage were far from frank and do not produce the result that he said that he intended. Local authorities will still pay over the odds for reparations that they must make because of the extraordinary storms in October; they will still pay penalty on expenditure. Before explaining the reasons for that, I should remind the House of what the Secretary of State said to the House: I would be horrified and astonished if either my Department or the Treasury were to make a profit from any authority as a result of that night."—[Official Report, 30 November 1987; Vol. 123, c. 611.] Despite all the right hon. Gentleman's blandishments, that is exactly what will happen. The Treasury will make a profit out of ratepayers, whose local authorities will have to foot the bills for clearing up and making good damage to buildings, roads and parks. I can quote no better authority than the Conservative-controlled London borough of Barnet. I should like to know what the right hon. Member for Finchley (Mrs. Thatcher). who represents Barnet, has to say about the matter. It would be interesting to know whether the right hon. Lady supports the view of her Secretary of State for the Environment or the Tory leaders of the London borough of Brent, who worked to get her re-elected in her constituency. In a letter dated 23 November 1987—the right hon. Gentleman has this letter—the chief executive and town clerk of Barnet says: For Barnet the scheme requires a local contribution equal to the product of a penny rate, after which the Government will contribute 75 per cent. The effect is that the council will have to finance the first £612,500 of the costs of rectifying the storm damage, together with 25 per cent. of the balance if the ultimate bill is above that figure. As the council's budget is in excess of its grant-related expenditure assessment, all additional expenditure will bring a grant loss of £70,000 for each further £100,000 spent. Thus, even at a 1p rate level, the effective cost to the council could exceed £1 million. Of that £1 million, six times the amount of that grant loss — £420,000 — will go to the Treasury in grant penalty. Of course the Treasury will make a profit out of the storm. That is the state of affairs even after the right hon. Gentleman's statement to the House today. They are the facts of the matter. It is true not only in Barnet but in a swathe of Tory-controlled local authorities and in some Labour-controlled London boroughs in inner and outer areas. Nothing that the right hon. Gentleman has said today will change that. The right hon. Gentleman said that he would be horrified if that were to happen, but it will happen. What will he do about it, apart from being horrified? Being horrified will not help the ratepayers of Barnet, Kent, Sussex or Surrey. Being horrified will not help anybody; it will not even help the right hon. Gentleman. I am not sure that we want to help him, but we want to help ratepayers and local authorities.

The right hon. Gentleman's statement—even at the third attempt today—is not candid and honest about Government policy. It is quite the reverse. He is seeking to pull the wool over the eyes of his Back Benchers, which is not too difficult, but I do not know how he has the nerve or gall to try to get away with it. We shall obviously write to the right hon. Member for Finchley, ask her view and see whether she supports him. However, the right hon. Gentleman must do a lot better than his statement today to convince Labour Members that he is horrified about the implications of Government policies. We simply do not believe him.

The miserable Conservative record of misleading ratepayers—this is only the latest example—for reasons of political dogma, to undermine collective provision of public services, to push people into paying more, to push them into opting out and accepting private solutions to their problems, is deplorable. It is a miserable prospect. Local government will be less fair and less accountable and will provide less adequate services if the poll tax and uniform business rate are introduced.

I agree that the right hon. Gentleman was quoting me accurately. We hold no brief for the present ramshackle, contradictory and inefficient system. It is his and the Government's system; it is not ours. We denounce it, just as we denounce the proposed alternative of the poll tax.

5.47 pm

Sir Rhodes Boyson (Brent, North)

One of the benefits of not holding office is that one can fully support one's constituents. My constituency is being unfairly treated by the Government at the present time. Brent was rate-capped in 1987–88, but it is not being rate-capped for 1988–89. According to the figures that I have been given, Brent's expenditure for this year is £183.6 million. Thus, it is not 12.5 per cent. but 11.7 per cent. over grant-related expenditure. If that budget had been more than £183.6 million and had been 12.5 per cent. over GRE, Brent would have been rate-capped. The real expenditure figure in Brent.I have been considering them with my council group and council leader—is £223.6 million, which is well over 12.5 per cent. over GRE. That is £40 million more than the council intended to spend. Of that £40 million, £16 million has already been covered by creative accountancy, funny money or whatever the phrase may be, and £24 million was intended to be covered by the sale of the town hall and the schools. However, the banks that had been thinking of buying those properties and leasing them began to think twice about what they were doing. Therefore, that £24 million was not raised.

There have been some cuts made by the hard Left Labour-controlled authority of Brent.

Mr. Tony Banks (Newham, North-West)

The right hon. Gentleman wants some more.

Sir Rhodes Boyson

The hon. Gentleman is right, I do want some more. I am glad that the hon. Gentleman agrees with me. Perhaps that is the beginning of salvation on the Opposition Benches. The sensible Opposition Members would also like some more cuts.

That intervention has forced me to mention the fact that there are now two Labour parties in Brent. There is the old Labour party and the new Labour party and there are two leaders. They fight one another when they meet in the council chamber. I would be glad to arrange a party to go and see them at some time.

Mr. Tony Banks

That sounds rather like a description of what takes place in the House between Conservative Members when the ex-Leader of the Conservative party and ex-Prime Minister starts knocking seven bells out of the present Leader of the Conservative party. Why should the right hon. Gentleman be so surprised?

Sir Rhodes Boyson

The difference is that Conservative Members listen to one another. The right hon. Member for Old Bexley and Sidcup has never had his seat in the Chamber taken over. When he spoke in the House last week he spoke from his usual seat.

I did not intend to mention what has happened in Brent but Opposition Members desire to know. There was a vote and a new leader was elected for the Labour party in Brent.

Mr. Elliot Morley (Glanford and Scunthorpe)

That is democracy.

Sir Rhodes Boyson

Yes, that is democracy. There are glimmers of advancement on the Labour Benches. Well done. Perhaps Opposition Members are learning something.

I believe that the vote was 18 to 17, so the new, moderate leader was elected by only one vote. However, at the next council meeting, before the moderates could arrive, the hard Left had arrived along with thousands of others imported along with a man called Ted Knight. I do not know where he comes from but I have seen his name in the newspapers. They arrived with megaphones and took over the bench of the elected Labour leader. The mayor had to adjourn the meeting because it ended in uproar. There is no comparison between that and the cheerful agreements and disagreements among Conservative Members when they are seeking the truth. All Conservative Members, whether on the Left or Right of the party, are seekers of the truth. I may belong to the Left-wing of the party but hon. Gentlemen belong to the Right-wing. We discuss issues.

I must not be distracted because I do not like that sort of thing being published in the newspapers. It does the Labour party no good.

Mr. Morley

The hon. Gentleman is talking about the Government rate support grant, which is putting councils such as Brent all over the country into situations in which they are forced to make a choice. They have to decide whether to increase the burden on ratepayers by increasing the rates to make up for the shortfall in grants or whether to make cuts in services. That is the difficult choice that many councils are facing. If the hon. Gentleman is arguing for cuts and rate-capping, he has a duty to say where he thinks the cuts should fall.

Sir Rhodes Boyson

I have no doubt that if Brent was sensibly run it could work within its budget. I can give examples in the House of some of the expenditure that has taken place. Every committee chairman has a full-time political assistant at a cost of £15,000. I could cover the length and breadth of the expenditure in Brent at present.

Before I was misled by the heartiness of Opposition Members, I was saying that Brent has spent £40 million in excess of the £183.6 million. That expenditure is well over the 12–5 per cent. GRE, which would bring it into the category for rate-capping if the right figures were used.

Without rate-capping, the situation in Brent next year will be a nightmare. That has been the case this year in the borough covered by the constituency of my hon. Friend the Member for Ealing, North (Mr. Greenway). After cuts the budget will be £240 million. That is £50 million over the £190 million settlement expenditure assumption. A total of £16 million of that £50 million will be covered by creative accounting, or funny money, but that will still leave £34 million to be raised from the ratepayers. I believe that the Government grant is £90 million and if the expenditure continues at its present rate Brent will lose £47 million of Government grant. In order to balance its finances, it will need a rate of 420p in the pound for 1988–89. That will mean a rate increase of 60 per cent. That is why I rise to ask my hon. and learned Friend the Minister at this late hour to rate-cap Brent for the sake of businesses and people in the area.

Brent is already the fourth highest rated authority in London with a level of 256.8p in the pound. It is higher than Ealing, which will be rate-capped next year and it is higher than seven other London boroughs which will also be rate-capped next year, including Camden, Greenwich, Hackney, Lambeth, Lewisham, Southwark and Tower Hamlets. There are Conservative voters, Labour voters and even some Liberal voters who have been found in odd places from time to time. Those people do not talk about grant-related expenditure. I have never heard the figure of 12.5 per cent over GRE mentioned in the church halls or pubs. They compare the rates they are paying with those being paid next door. There are seven boroughs, eight, including Ealing, which will be rate-capped and they have rates lower than those in Brent. No man or woman in the street will believe that Brent is being given a fair deal. It is a nightmare.

For the sake of the continuance of business in Brent and for the contentment of ratepayers there, whatever their political view, I ask my hon. and learned Friend the Minister to rate-cap Brent. We have produced petitions for the rate-capping of Brent and they have been signed by Labour voters on the doorsteps as well as other voters. They do not want to see the rates rise any more than do Conservatives.

The Secretary of State referred to the lull before the storm, the break in the clouds or whatever imagery was used. He was referring to the coming of the community charge. The search for something with which to replace rates has been like the search for the Holy Grail. King Arthur and his knights are still riding looking for a better form of rating system. In fact, the way in which it drops through grant-related expenditure suggests that it is a "holey" system.

I do not believe that the community charge by itself, which is now being proffered as the new Holy Grail, will solve all the problems of the boroughs in London and elsewhere. We need other things as well. I know that my right hon. and hon. Friends and Opposition Members will have ideas as to what they believe should be done. We should look at the whole question of financing local government in this country and the responsibility of local government. It is time we set up a Royal Commission to study that. For example, responsibility for education is being taken away from local government through the opting out scheme and in certain cases the responsibility for housing and planning is being taken away from local government. The commission could look at the duties of local government and how its money should be used.

Mr. Tim Rathbone (Lewes)

I should like to remind my right hon. Friend of the excellent report on local government produced by Lord Redcliffe-Maud. Unfortunately, when a Conservative Government enacted legislation to reform local government they did not go the whole way envisaged in that report. The recommendations in the report might provide a short cut and make unnecessary the Royal Commission, which otherwise my right hon. Friend is right to advocate.

Sir Rhodes Boyson

I welcome my hon. Friend's intervention. I have that report at home.

I disagree strongly with the size of local authorities. With the reduction in the responsibilities of local authorities we can bring down their size. Compared with France, with its 37,400 communes, we have almost semi-regional government. The local government reorganisations in 1964 and 1972 were disastrous for Britain. I said so at the time and I still hold that view.

During the war, we took away the names of railway stations in case there was a German invasion. I think that we destroyed the names of places during the reorganisation of local government because we thought that we might be invaded from outer space and we did not want people to know where we lived. If anybody in Brent is asked where he lives, he says Kingsbury, Wembley or Willesden—not Brent.

That local government reorganisation took people away from their organic units, within which they knew people and where they belonged. Both Conservative and Labour Governments were responsible for that. Independents within the parties had less chance when they had to depend upon the party machine to be elected. In many cases, the people elected were not local people.

Those local government reorganisations took place at a time when we worshipped size. The tower blocks were going up along with the big comprehensive schools and the industrial conglomerates. The big tower blocks are now coming down and the big comprehensive schools and conglomerates are being broken up.

We need an enabling Bill, although not for further Government-organised local government reorganisation. The Government always make a mess of whatever they reorganise. They only do something properly by accident.

Mr. Tony Banks

The right hon. Gentleman has changed his mind.

Sir Rhodes Boyson

I have always said that. I can recommend a book of mine to the hon. Gentleman. I shall send it to him tomorrow. I welcome disciples from anywhere, even from the east end of London, where I once taught.

Mr. Bowen Wells (Hertford and Stortford)

I want to help my right hon. Friend on the matter of the rates that Brent ratepayers are likely to pay as a result of the current settlement. Although my right hon. Friend the Secretary of State has allocated some grant under the settlement because of its overspend, the Social Democratic and Labour-controlled council in Hertfordshire will probably receive no grant. At present that money will go straight back to the Treasury. I suggest that my hon. Friend asks for that money to go to Brent.

Sir Rhodes Boyson

I am always delighted to have my hon. Friends helping me. I am sure that my hon. and learned Friend the Minister has heard what was said and that by the end of the debate he will have found a way to make that possible. When I go back to Brent, the people will be waiting in the streets and I shall ride through the streets in a chariot with my hon. Friend the Member for Hertford and Stortford (Mr. Wells). —[Interruption.] I must not disagree with my hon. and learned Friend the Minister because he must have time to think. He is obviously in full agreement; he simply has to find the mechanism to make that possible, and I am sure that he will find one in the Department of the Environment in the next three hours.

A commission is needed to look at all the responsibilities of local government. An enabling Bill should then allow those areas that feel that they have a unity of their own to decide for themselves how to organise their local government. As far back as the time of Chadwick and the Poor Law Reform Bill of 1834, when Britain was carved up into poor law unions, which took 34 years because people did not accept it, central reorganisation has been resented.

However, in 1835 the Municipal Corporations Bill allowed areas with a certain population to petition Parliament to define their own boundaries in order to become municipal corporations. The communities decided on their own size. Indeed, at present there is a petition in my part of Brent, in Wembley, for a separation from Brent. I trust that when the boundary commissioners get to work on this, they will not just be the handservants of the Departments or bureaucracy, but that they will recognise people's needs. If they want to know what public opinion is, they should ask the people by means of a referendum. Already, 10,000 people have asked for their own authority. If 95 per cent. of people say in a referendum that they want a particular area, they should be allowed to have it so that the monstrosities that have been created can be broken up.

Mr. Holt

My hon. Friend will remember that I was elected as an inaugural member of Brent council in 1964. At that time, we fought against amalgamation with Willesden. The strength of the petition then was even greater than the petition to which my hon. Friend has just referred. The Government did not have ears to listen then; I hope that they have ears to listen to what is said today.

Sir Rhodes Boyson

If the Minister has not been stirred by my words, he will doubtless be stirred by those of my hon. Friend, whose knowledge of Brent goes back further than mine.

In conclusion, I am asking for three things. First, I should like Brent to be rate-capped and I would prefer that to be announced today rather than tomorrow—the sooner the better. Secondly, a commission on local government should be set up to consider what local government is doing and how. Thirdly, as soon as possible there should be a move towards smaller units in which people genuinely believe and with which they would be involved.

Dr. Cunningham

Since the right hon. Gentleman is putting forward such profound and far-reaching proposals, is he telling the Government that they should set aside the Second Reading of the poll tax legislation until the matters that he raises have been dealt with?

Sir Rhodes Boyson

I would not say that, but it should be set aside until Brent has been rate-capped. When it has been rate-capped I shall settle for the continuance of the poll tax legislation. If that is not done, I shall have to agitate. It would be much more peaceful for Ministers if Brent were rate-capped so that we could settle down to a peaceful future.

6.6 pm

Mr. Simon Hughes (Southwark and Bermondsey)

After hearing the speech of the right hon. Member for Brent, North (Sir R. Boyson), perhaps we should expect an Order Paper with a new instruction to the appropriate Committee to consider a special procedure for the poll tax legislation next week. There is already one instruction on the Order Paper. Perhaps the right hon. Member for Brent, North will add another.

It was rather paradoxical to listen to comments about disputes between former and present Prime Ministers and former and present leaders of Brent council when there is clearly a large difference of opinion between the former and present Ministers for Local Government.

May I remind the right hon. Gentleman that he and others have an opportunity to begin to argue, as I would with him, for a return to a smaller local government, because the boundary commissioners have asked for submissions by the end of December on the redrawing of boundaries within Greater London. They have extended the deadline. Therefore, there is an opportunity to raise that issue within their consultations and I hope that the hon. Gentleman will make his submissions, together with others, by the end of the year, perhaps on Boxing day or some other equally under-occupied occasion.

I tried to table a new clause to the Local Government Bill that has just come out of Committee to permit the setting up of urban parishes in London, but it was ruled to be outside the Bill's long title. Therefore, sadly, this change apparently cannot be debated in the context of that Bill which is shortly to return to the House. However, it is an important question which raises issues that go to the heart of local government accountability.

There is another paradox about the substance of today's debate on the rate support grant settlement. Only last week we were debating the Urban Development Corporations (Financial Limits) Bill. The Government were moving, through the House, to abolish the parliamentary procedure which controls the upper limit of grant expenditure of urban development corporations. Literally, within a few days, the Government took away Parliament's power to control urban development corporations and continued parliamentary control of a whole range of aspects of local government, including specific controls over the levying of money by rate-capped authorities. It should be the other way round. If anything, controls on democratically elected local government should be reduced and controls on unelected corporations, all appointed by the Secretary of State, should be increased.

The Secretary of State, who is no longer in his place, pretended that today was another generous handout day for local government. There is, in a sense, more money, because things cost more than they did last year. The Minister and the House know well that in reality the Government propose a further real cut in local government funds and services. If the Government carry the day tonight, local government services will be reduced. The Government believe that local authority expenditure next year can be reduced to about £26 billion, even though the assessment of current expenditure is more than £1.5 billion more than that.

The Government say that local authorities next year can cut out £1.5 billion— 5 per cent.—of waste. That does not even include the additional £1.5 billion that civil servants and local authority officials agree is needed to retain services at their present level. Therefore, on the smallest estimate, the Government's own, there is at least £1.5 billion difference between what the Government are allowing and what the local authorities will have at their disposal, and on the other estimate there is a difference of about £3 billion. That difference means cuts. Services will be cut and local government will suffer.

Mr. Ian McCartney (Makerfield)

The hon. Gentleman has not touched on the cuts in the London fire service. Is he aware of the dispute between the Home Secretary, who sets the maximum expenditure limits for the fire service in London and elsewhere, and the Department of the Environment, which makes grant-related expenditure assessments? Because of the dispute over the Departments' calculations, the fire authority in London will receive no grant whatever. The largest municipal fire authority in the world will receive no Government assistance. Unless the matter is resolved in time for next year's financial contribution, London could be 800 firefighters short. Since July, I have been asking for a meeting to be attended by the Departments' representatives of the area fire services committee and myself. That meeting has been cancelled once and has still not been held, despite promises from both Departments. That is scandalous.

Mr. Hughes

I agree with the hon. Gentleman. If present arrangements continue, the London fire service, like the Inner London education authority and other authorities, may receive no money from the taxpayer. The emergency services in London—the fire and ambulance services and the police force—are all underfunded. They are under great pressure and can only do their job—often well beyond the call of duty—because of their commitment. Unless they get more money, we shall be putting at risk the lives and well-being of the capital city. That is especially true of the ambulance service, as we were reminded in the debate in the early hours of this morning.

Mr. Tony Banks

Does the hon. Gentleman agree that it is disgraceful — it could be bordering on the hypocritical if one might use that word in the House—for the Prime Minister to go along with the television cameras and be seen walking up the scarred escalator at King's Cross when she is in charge of a Government who have made savage cuts in the very emergency services to which she pays tribute?

Mr. Hughes

I share that view. While it is quite proper for the Prime Minister to pay such visits, they are barely acceptable when one considers that those who have been doing the hard work and going in to try to save lives know that they are being substantially starved of funds. Those in the emergency services are quite clear that they are being asked to do a job with horribly small resources. That should not continue, and a caring, concerned and responsible Government would not allow it to continue. I am afraid that those attributes have long been missing from the Government Front Bench.

The settlement today means cuts and it has not fooled anyone in the know. The county councils — the shire authorities—and the urban councils all say that they are gravely unhappy. If one wants evidence on the suitability or otherwise of the settlement, one should perhaps look to those who will receive—or not receive—the money. Let me deal with them in turn. The Association of County Councils, speaking for the shire authorities, says that it is particularly disturbed by ministerial comments which suggest that a 4 per cent. increase proposed for the shire counties represented a standstill in real terms. Quite apart from overwhelming evidence to the contrary from the Expenditure Steering Groups, the Government has itself claimed credit for making special provision, over and above general inflation, for teachers' pay and the police. If these commitments are to be accommodated within the overall figure of 4 per cent., then real reductions elsewhere are inevitable, particularly as the Government's own estimate of inflation for next year now stands at 4.5 per cent.; and Being labour-intensive, local authorities face higher inflation than the Government's figure, despite the fact that public sector pay awards generally are currently below those in the private sector. The shire counties are getting the best deal of all, so their comments are very important. They go on: Present indications are that over £200 million of shire counties' block grant will be returned to the Treasury. This alone will cost the equivalent of a 5p rate and will necessitate precept increases which, on average, will exceed 10 per cent. Ministers must recognise that services will be reduced. Ministers should admit it because that is the reality and those are the figures. The Government's so-called extra revenue expenditure represents a shortfall, or a cut —however one likes to term it — of nothing less than billions of pounds.

The hon. Member for Hertford and Stortford (Mr. Wells), who has just left the Chamber, also alluded to some ludicrous anomalies. Hertfordshire county council, which happens to be a balanced council, will not be the only county council to lose out. Surrey county council, which is controlled by the Tories, will lose out substantially, as will Oxfordshire, because of the caps and nets—because of the Government's curbs and restrictions. Such restrictions will not disappear under the poll tax system. They will remain, and they are entirely unsatisfactory and unhelpful.

The urban areas have an even worse deal than the shire counties. Overall, the practical effect of the margin of reduction of expenditure is to assist the lower-spending authorities rather than the higher-spending authorities. And it is the urban authorities which spend most because the need and disadvantage are greatest in their areas. I echo in different words the hon. Member for Copeland (Dr. Cunningham) who said that the rate support grant is the most powerful individual tool that the Government have, in any year, to redress disadvantage. The Government could allocate money in such a way to help remedy disadvantage in our community. They do not do it, and they have not done it again this year. The pretence that they are helping the inner cities and the disadvantaged —even adding in other moneys—is a misrepresentation of the real position. The Government have been taking money out of the inner cities. They have capped rates and prevented local authorities from raising more money, which has meant a reduction in services to the deprived and disadvantaged. I have the figures. The Government want spending next year to be only 4 per cent. above this year's budget for the counties and less for other authorities. The figure for the districts is 2–32 per cent., for metropolitan districts it is 3.49 per cent., for outer London boroughs it is 1.89 per cent. and for inner London boroughs it represents a cut of 2.78 per cent.

I know that the Secretary of State has made one concession and I expressed gratitude for that. Tower Hamlets, which is controlled by my colleagues and desperately needs money, has had its expenditure limit raised—not nearly enough, but we must be grateful for small mercies. However, my borough of Southwark desperately needs resources too. Its social services are strained to breaking point, but it is to get no more money at all. To other authorities in an equivalent position, suffering repeated crises in housing and social services, no extra money is forthcoming either.

Although housing is not dealt with specifically in the allocation, it is a local authority prime service, particularly where most people live in local authority accommodation. The Government announced an extra £25 million capital allocation for dealing with the homeless this year. That, too, is welcome. However, housing capital allocations overall are to be cut by 14 per cent. next year, and many deprived boroughs will receive no extra money—even from the small extra allocation for homelessness. In addition, coming over the horizon is the new dawn that the Secretary of State told us about—the poll tax. The poll tax will mean that the local authorities will need many more staff. The administrative costs will be enormous. My borough, for example, estimates that in the first year it will have a bill for an additional £8 million and thereafter a bill for £5 million annually. I invite the Minister to disprove that.

A non-party political body, the Rating and Valuation Association, together with the Association of District Council Treasurers — officers, not members — have produced a booklet entitled "Community charge—Poll Tax: The Facts", in which they state: Poll tax will require four times as many transactions between the public and town halls as at present. About 300 million additional receipts will have to be issued. Jobs will have to be created for cashiers, typists, rent collectors … housing benefit staff and bailiffs. We are talking about a requirement for massive extra staffing, yet local government Ministers say that local authorities must reduce expenditure above all by cutting staff, and that that is the key. That is completely inconsistent and ludicrous. I should welcome an explanation.

The Minister for Local Government (Mr. Michael Howard)

Has the hon. Gentleman asked the London borough of Southwark for its estimate of the costs of administering a local income tax, which is his party's policy on these matters?

Mr. Hughes

I have not, but I am willing to do so. A local income tax could be incorporated completely with the national income tax system. The computers exist. The difference is that the Minister's poll tax requires a different register and is differently compiled by different staff. It will require additional systems to those at present run by local or national Government. I am happy to take on the Minister on that issue because his Department's recent press release distorted and misrepresented the position. We shall undoubtedly come to this in our debates on the poll tax.

Although this may be the penultimate year for rate support grant statements in their present form, yet again the Government are screwing local government and clamping it in their stranglehold, which after seven years is growing no weaker. Local government is meant to provide local services. This year's rate support grant settlement means that local government will be less able to do what it is meant to do, even according to this Government, which is to serve local people by providing the services which they require. Local government will be less able to do that next year and in many aspects it will not be its fault; it is the Government's fault. The Government insist on running the country according to an economic theory administered by Ministers who do not understand what deprivation is. It means that local authorities are prevented from doing adequately what they are historically, constitutionally and socially required to do, which is to provide services, meet needs and work to serve their local communities. This is an unacceptable settlement and it should be rejected by both sides of the House.

6.22 pm

Mr. Harry Greenway (Ealing, North)

First, I ask the indulgence of the House if I leave shortly after speaking. There is to be a special mass for a distinguished deputy head of Our Lady of the Visitation school in Greenford who is retiring after 41 years and it is important for me to be present.

When my hon. and learned Friend the Minister replies, will he let me know whether the notification of the proposed rate limit set for Ealing for 1988–89 at 125.6p is consistent with the original determination?

Rates are unquestionably an unsatisfactory tax. One matter is certain and that is that the Labour party's proposal to base rates on the current valuation of houses would be extremely damaging to the people of Ealing and the south-east generally, where house prices have risen enormously. That would present them with much higher local taxation than any community charge or any other charge that can be envisaged. The policies of Opposition parties, including the Liberal party's policy of a local income tax, are unsatisfactory.

Mr. John Heddle (Mid-Staffordshire)

My hon. Friend has touched on an interesting point which needs to be broadcast wider than it is at present and that is the policy of the official Opposition. Does he agree that to base a form of local revenue on capital valuation amounts to nothing less than a wealth tax?

Mr. Greenway

I wholly share my hon. Friend's view that that would be a universal wealth tax. The point being made by my hon. Friend, with his background, is further reinforcement.

My constituents in Ealing have suffered a 65 per cent. domestic rate increase this year which has caused, and continues to cause, immense suffering. In particular, many elderly people are going without food to pay for the increase. Let nobody, whether a Labour supporter or a hard Left Labour supporter, minimise the suffering or be in any doubt about the suffering that that rate increase has caused.

The 58 per cent. industrial increase has also affected my constituents seriously. Factories have closed and jobs have been lost. People who were interested in coming to the borough to set up in business have not come. We have lost jobs because of that appalling, sudden increase. The fact that the borough council did not go through the legal consultation processes required of it with industry makes the position worse. That would have been the burden of the case which my constituents wished to put in the High Court against this excessive rate increase, had it been possible to raise sufficient money to do so. New jobs have not come to the borough and others have been lost on account of this high rate increase.

Mr. Tony Banks

rose—

Mr. Greenway

I have given way once and the hon. Gentleman knows that I am in a hurry to get to my constituency, so I ask him to understand if I do not give way.

The high rate increase also took purchasing power away from the community, so there is less business for the shops which were also faced with high rate increases. Factories, such as the Lyons group, faced a rate increase of £750,000, so prices on porridge, tea, coffee and other products had to he increased to meet the sum required by the council. Some jobs were lost. Therefore, there was a combination of high prices and lost jobs.

Mr. Banks

Will the hon. Gentleman give way?

Mr. Greenway

In addition, my constituents faced higher prices for smaller items, such as hair-cuts which increased by 50p. That is a large sum for pensioners, especially on top of increased rates, and their suffering cannot be imagined.

Mr. Banks

Will the hon. Gentleman give way.

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. The hon. Member for Ealing, North (Mr. Greenway) has made it clear that he will not give way and the hon. Member for Newham, North-West (Mr. Banks) should desist.

Mr. Greenway

Thank you, Madam Deputy Speaker.

My constituents welcome rate-capping for Ealing and note that Ealing council did not seek redetermination of the rate-capping announced by the Secretary of State in July. What are Ealing's rates likely to be under rate-capping in 1988–89? Can my hon. and learned Friend the Minister give me the estimated reduction in rates from their present level in the coming year, so that my constituents know where they stand? Does he see the need to cap not only rates, but expenditure by councils, such as Ealing and Brent, as a means of stopping their tricks with creative accounting and so on? Will he meet that need?

Already my constituents have on their backs for years to come a negotiated deferred loan of £100,000 million, as well as much more through tricks by which leases have been arranged which will involve future repayments of a high order. We do not want any more of that. By capping council rates the Government are demanding a certain level of expenditure, but are not achieving it because expenditure is not capped. Councils get away with spending more than they are officially allowed to spend by the devices that I have described.

High rates have brought excessive suffering to the elderly and few benefits to Ealing. The council has 143 committees now compared with about 40 under the Conservative administration. I cannot imagine what they all do. A couple were abolished this week: the antiapartheid committee has been rolled into another race committee, so we shall never again see direct evidence of £12,000 being spent on anti-apartheid activities, as we saw in July this year. But no doubt the new all-purpose race committee that has been set up will find a way to spend the money. The council has also abolished the police committee, which has existed for 18 months, despite the fact that the council is obliged by statute to have a consultative police committee. The committee in Ealing was anti-police, but even it has gone. The council has not had the courage to abolish the gay and lesbian working party, but we shall keep trying to get rid of it.

I understand that the council has doubled allowances to councillors to £16 a time. With 143 committees, some of whose meetings will last for only 30 seconds, councillors could make a great deal of money. Some councillors are making 400 per cent. more than they were. Indeed, I understand that some are making as much as £6,000 a year in expenses, which represents a great deal of money to my constituents.

Cleaning in the borough has been deprivatised, at a cost of £1 million a year to ratepayers, and complaints have increased enormously. People are always writing to me saying, "Our road has not been swept since deprivatisation." Since 15 October, the council has been able to say that it had to divert all labour to deal with the effects of the hurricane. But it is time that that excuse was put aside. It is nearly two months since the hurricane and, in any case, street cleaning must continue whatever happens.

Five Ealing Labour councillors are employed by other Labour-controlled boroughs. In its turn, Ealing council employs five Labour councillors from other boroughs. It seems to be new form of mutual aid. It is pretty deplorable, and my constituents do not think much of it.

Ealing, like all councils which have been rate-capped, will try to blame the Government if it has to reduce expenditure. We are sure that it will not reduce expenditure in the proper areas. It will not get rid of the large office block at the Great Western centre, which is more commonly known as the Kremlin, for obvious reasons—

Mr. Nicholas Soames (Crawley)

Why?

Mr. Greenway

That expenditure of £5 million a year could be ended tomorrow.

Mr. Soames

Why is it called that?

Mr. Greenway

There are good reasons. My hon. Friend must use his imagination. Expenditure could be reduced, although not in sensitive areas such as the provision of home helps. There is no need to reduce home helps or the number of teachers and other staff employed in schools. Rate capping could be met by reductions in areas where so much expenditure is not needed.

The people of Ealing, who have had to endure sudden enormous increases in rates, are worried because they cannot get information about council expenditure in some areas. When the council stopped libraries stocking The Times and The Sun, it was involved in a legal action which it lost. Costs were awarded against it. The council has spent a large sum of money on that, but, despite my efforts and those of my constituents, we have been unable to discover how much. The council invested £250,000 in the News on Sunday—we believe against legal advice—and that money has been lost because the paper has collapsed. My constituents, especially retired people, who will lose money because of that collapse, have not even had the satisfaction of an explanation from the council.

The House must consider ways in which ratepayers can take councils to court if they suddenly impose massive, unjustified rate increases. I helped some of my constituents to set up a fund against excessive rates which aimed to take Ealing council to court because of what we believed to be its illegal imposition of such a massive rates increase. We raised £35,000, and we ran our campaign to raise money alongside the ratepayers of Waltham Forest, who wished to take their council to court after a 62 per cent. rate increase. They lost their case on a technicality, and at that point we found it impossible to raise the full £50,000 that we needed. We had to drop our legal action against Ealing council, but we do not drop the charge that that rates increase was excessive and unreasonable. The fact that we cannot take the council to the High Court, although we have been given permission to do so, is a serious defect in our system of local finance and administration.

Council expenditure as well as rates should be capped. I agree with my right hon. Friend the Member for Brent, North (Sir R. Boyson) that there should be a complete reconsideration of local government expenditure and that teachers' salaries should be taken out of local government expenditure. Sudden sharp increases in rates are unjustified and cause massive hardship to individuals and businesses and they should be prevented.

6.37 pm

Mr. Gerry Steinberg (City of Durham)

Unlike the hon. Member for Ealing, North (Mr. Greenway), I shall not spend 20 minutes telling fairy stories. I was delighted to see you take the Chair, Madam Deputy Speaker, because it meant that I might be called to speak in the debate. Last week, I sat through the debate on the Education Reform Bill for six hours and was dismayed not to be called. But the last time that I was called to speak, it was by you. I am extremely grateful.

Council policies are governed by central Government. Local democracy is almost obsolete. Councils must fit their policies into financially restrictive guidelines laid down by central Government. Councils are given target figures for expenditure which are completely unrealistic. For years, most authorities—of all political persuasions —have accepted that the targets were inadequate. But when targets were increased, even at miserly rates which failed to meet inflation, grant was still cut. With targets increasing and grants decreasing, it is no wonder that local authorities must increase rates even to maintain their present services.

Minister after Minister has blamed local authorities for high spending and condemned rate increases when, in fact, it is the Government who have forced local authorities into impossible positions. It is not local authorities that have forced up the rates, but the Government and their policies. That fact has been substantiated by the Government's own Audit Commission, which clearly stated that it was not councils that were overspending, but that the structure of local government finance was to blame, and was in a shambles.

Even as far back as 1984 — to be precise, on 17 January—in an interview on the BBC's "World at One", the right hon. Member for Chesham and Amersham (Sir I. Gilmour), an enlightened Tory and a former Tory Minister, said: The reason the rates go up every year is because the central Government rate support grant is cut. Sir Robin Day, that well-known interviewer, responded: That is what the Labour Party says. The right hon. Gentleman replied: It is not a matter of what the Labour Party says. It is the truth! Rates have risen unnecessarily under the Tories, by billions of pounds.

I now wish to be parochial. As the ex-chairman of the finance committee of Durham city council, I wish to make a few observations about my constituency and district council. When block grant was introduced in my constituency in 1981, the city of Durham, which is a small district council, received £2.8 million in rate support grant, in other words, about 52 per cent. of its expenditure. The rates collected were £2.08 million, in other words, about 38 per cent. of the total sum that was spent. By 1986, the rate support grant had been changed to £2.051 million, which was less than 38 per cent. of expenditure, and the rates increased to over £3.5 million, in other words, to over 60 per cent. of expenditure. That was a loss of grant from central Government of over £600,000, which is almost a 25 per cent. cut. That was the equivalent of a rate increase of about 8p.

Furthermore, the cumulative grant loss since 1981 for the city of Durham council is a staggering £2.5 million. I know that it is only a small district council, but when one loses £2.5 million over that time, one cannot take that without increasing the rates.

I ask hon. Members: who has forced up the rates? Labour councils have won, and win, their elections on the strength of imaginative and caring manifestos, but they find it exceedingly difficult to succeed when grant is reducing and penalties are becoming more punitive over the years. Our crazy grant system works against an authority that spends to its approved target because authorities are rewarded for destroying services and spending less money.

Durham city council has always attempted to keep exactly to its targets. The councillors have been very good boys, but it has done them no good at all. They have had no rewards. To spend less would have meant spending below what the Government regard as their correct level of expenditure. In the years since 1981 in Durham, if grant had not literally been stolen from us, there would have been few, and small, rate rises.

The present grant system has forced up the rates nationally by over 150 per cent. and robbed Durham city of over £2.5 million. The 1988–89 rate support grant for Durham city is a disaster, once again. Durham's GREA has increased by only £50,000 from £4.157 million to £4.202 million. The target has been increased by £163,000, from £6.071 million to £6.234 million. Again, its grant has been reduced by a further £165,000, from £2.051 million to £1.886 million. Of that £1.886 million, £1.178 million is safety-netted, leaving the city council's true grant at a meagre £708,000.

A comparison between Durham and Hove in east Sussex, which has a similar population, demonstrates the ludicrous state of the rate support grant. For example, Hove's GREA has increased by £429,000 this year, from £7.524 million to £7.953 million. Its target, for some inexplicable reason, has increased by £2.066 million, from £6.209 million to £8.275 million. Its grant has increased by £1.575 million, from £6.025 million to £7.6 million. Hove gets almost a 100 per cent. grant for its expenditure. In fact, it could easily be 100 per cent.

Hon. Members should not misunderstand me. I do not begrudge Hove what it gets, but how can it be justified? The two district councils have basically the same populations but there is a discrepancy in grant and GREA. How can a grant system be fair and just when a district such as Hove receives such a high percentage of grant through the Minister giving it a favourable multiplier?

Mr. Heddle

Is not the hon. Gentleman making out a case for root-and-branch rate reform? Before he concludes his speech, will he remind the House of what he said at the beginning, that there was little accountability in local government at present? Will he tell the House how he proposes to improve that accountability? Will he explain, particularly to doubters such as me, how the introduction of a wealth tax, combined with a local income tax, which the Labour party proposes, will increase local accountability and make the system fairer for the ratepayers of Hove as well as those in his constituency of City of Durham?

Mr. Steinberg

I do not believe that accountability is in question at present. I agree with the hon. Gentleman. The rating and grant systems are absolutely absurd, but the present grant system was introduced in 1981 by the Conservative Government. It is in disarray. If there were a tax on capital values of property, at least that would be a fair distribution of wealth, with regard to those who can pay. It is no good introducing taxation for people who cannot pay. That is what has been happening. We now have an unfair system, which has been clearly proven by two similar district authorities.

I do not suggest for one moment that, in his allocations, the Minister makes political decisions. Hove council has 22 Conservative councillors, four Labour councillors, three Liberals and one independent. I do not suggest that that has anything to do with or any bearing on the allocation—

Mr. Ronnie Campbell (Blyth Valley)

And Hove has a Conservative Member of Parliament.

Mr. Steinberg

I forgot about that. But the system must come into disrepute when power is handed over to one single person—the Minister.

Mr. Tony Banks

There are some other points about Hove that my hon. Friend might not know about. It has high unemployment and, indeed, some of the worst social service provision in the whole of that part of the country. Despite the favourable treatment that this Tory Government are giving to a bunch of Tory stooges in Hove, the council is still not giving the level of services that hard-pressed London boroughs are giving.

Mr. Steinberg

I am grateful to my hon. Friend for giving me that information. I did not know that. It is typical and what one would expect.

Although a decision has not yet been made in Durham city this year, it seems certain that its rates may have to rise next year by about 10 per cent., just to stand still. With that 10 per cent., there will be little increase in the provision of services. The rates rise will be purely to compensate for the loss of grant—the same old story.

Rates in Durham city have increased from 24p to 43½p since 1981–82, simply because of the loss of grant and the iniquitous way in which GREA is calculated. That is an 81 per cent. increase, yet actual expenditure in Durham is up by only 11 per cent., while the retail price index has increased by only 33 per cent. Grant-related expenditure assessment components are nonsense and, as an example, I shall again compare Hove with Durham city. Hove receives £7 per head of population for private housing whereas Durham receives £1.37 per head. Hove spends £140,000 a year on concessionary bus fares and receives £13.54 per head of population, yet Durham spends £312,000 a year on concessionary fares and receives only £2.50 per head. That is ridiculous and must be regarded as crazy. Why should the GREA be different for authorities that appear so similar? Surely there must be something wrong with the system.

The Secretary of State recognises that the system is a shambles or he would not have targets, or "expenditure assumptions", as they are now called. The Government have put local government finance in disarray, and the Secretary of State today ridiculed it. Now the Government plan to make it worse by introducing the poll tax. They introduced the block grant, which was a tremendous fiasco. Now the poll tax is to be introduced, which will be an even bigger disaster. It has taken the Government eight years to get local government finance in total chaos, so introducing the poll tax is probably a natural progression for them. The only trouble is that local authorities and residents have been and will continue to be the sufferers — unless, of course, one lives in a £750,000 house in Dulwich or, better still, has two houses, as many Cabinet Ministers have.

6.52 pm

Mr. Tim Rathbone (Lewes)

I shall not take up the points made by the hon. Member for City of Durham (Mr. Steinberg), especially his comparisons with Hove, which is well represented by a friend and political neighbour of mine. I hope that the hon. Gentleman informed my hon. Friend the Member for Hove (Mr. Sainsbury) that he would compare the statistics as he did, because that would have been only a courtesy.

I contest the hon. Gentleman's contention that the Conservative Government have been eroding the amount spent on local government. One need only cast one's mind back to the days of runaway inflation at the end of the last Labour Government to see that the value of money given to local government, as to everything else, was eroded dramatically year by year.

I emphatically endorse the idea, put forward yet again and most sensibly by my right hon. Friend the Member for Brent, North (Sir R. Boyson) of a reassessment of the role and functions of local government. New methods of financing, however good they may be, are not the whole story. Local government will not be positioned correctly to do the job that it is meant to do for those whom it represents until there is the sort of reassessment advocated by my right hon. Friend.

I warmly welcome in a way that no hon. Member has yet done the statement made yesterday, and confirmed today by my right hon. Friend the Secretary of State, in announcing the Government's special help to those parts of the country so devastated by the 15 October storms. Those who have not visited the south of England—the county of my constituency, East Sussex, the neighbouring counties of West Sussex and Kent, north to Surrey and across the waters to Suffolk — cannot appreciate the devastation of that night. Everyone who has visited the area is astounded by the devastation, with trees broken off or blown over and houses damaged. The Government's help is welcome.

Mr. Tony Banks

I am following the hon. Gentleman's remarks closely. I agree with him entirely. I regularly travel to Hastings, and it is depressing to see, as one drives along the roads or travels by railway, how many trees in Kent and Sussex were uprooted by that storm. Is the hon. Gentleman wholly satisfied that Kent and East Sussex are receiving adequate resources from the Government to deal with the problems arising from the storm?

Mr. Rathbone

If the hon. Gentleman held his horses for a moment, he would be all the wiser.

We very much appreciate the ability to charge to revenue building works up to the end of next March without losing grant. I commend my right hon. Friend the Secretary of State because after March the revenue costs of borrowing to repair damage will not incur grant loss for three years and the deadline for Bellwin grants of 75 per cent. has been extended from January to 1 March.

I should like one small aspect of the extension to be considered. Some of the major repairs that must be made cannot be completed within that time scale. The rebuilding of Tideway school in Newhaven, which was devastated, leading to the whole school being evacuated, has meant considerable extra costs in providing temporary rented accommodation for schooling and extra costs in transporting pupils to the school. That will continue until the end of the summer term. The rebuilding will not be completed until some time in the summer, but the extra Bellwin-type cost will continue until the end of the summer term. The cost is estimated to be about £200,000, so we are not talking about small amounts. I ask my hon. and learned Friend the Minister for Local Government, who is carefully making a note of this point, to reconsider that expenditure, which is important for a county such as East Sussex.

I should like to correct an impression given by my right hon. Friend the Secretary of State when referring to the first 1p of rate which is paid by councils before the Bellwin formula applies. My right hon. Friend said once again, as he has said before in our positive conversations with him, that that was the amount that a good council would put aside. I wish to cite some figures as background. The 1p rate to be paid by the East Sussex county council produces £1.4 million, and expenditure at that level loses grant of £700,000 even if it is paid for out of a contingency fund. Had that money been notionally spent on such a fund, it would have meant a grant loss when the fund was formed.

My right hon. Friend the Secretary of State advocated the establishment of a contingency fund, but that would have meant the county council losing grant — mainly because of mistreatment in previous years—of £700,000 from the beginning of the year, whether or not it had spent that fund. The council will now lose grant from the moment that it expends from the contingency fund that must be established. The fact is that at no time since the Bellwin rules were introduced has the East Sussex penalty been lower than it is now, so that setting up such a contingency fund would have been even more costly to the ratepayers. I want to put that point on the record.

We are talking about huge amounts of money. The total expenditure envisaged by East Sussex is estimated to be £12 million—that is the financial measurement of the devastation caused by the storm. Under the new rules, the council can expect a grant from the Government of £3.5 million, decreasing the amount to be found by the council to £8.5 million. To that, however, must be added the loss of £700,000 grant, so that the total to be found by the council will be £9.2 million. I cite those figures to give the House an idea of the enormous damage in my part of the country.

I thank my right hon. Friend the Secretary of State for the way that East Sussex is being treated this year, compared with previous years. Nevertheless, it is a low threshold of praise, because I am really thanking him only for no further suffering. Nothing has been done to put right the sufferings of previous years — although following them, even the status quo is a more comfortable state for the council.

In a year's time, when the last rate support grant is announced, as a grand finale — a form of fireworks, perhaps — some of the moneys owed to East Sussex should be returned as a recognition of its being one of the best-run counties, if not the best run. That would be some recompense for its good housekeeping.

I fear that yet again this year I must join in what has become an annual bashing of my right hon. Friend the Secretary of State. I must raise the problem of the rate support grant settlement for Lewes district council, the major district council in my constituency. When grant-related expenditure was announced, it showed an increase of 0.83 per cent. compared with 1987–88. That caused enormous concern and I wrote to the Secretary of State about it in the middle of last month. I have not yet received a reply, but I appreciate the burden of work on his Department in recent times.

When the rate support grant was announced, we found that it was £311,000 below the figure for 1987–88. We were told that the methodology for calculating GRE was to be generally the same as for 1987–88. It is expected that between 1987–88 and 1988–89 the population of Lewes will increase by 2,642, or 3.1 per cent. The estimated increase in net committed expenditure—net of expenditure by towns and parishes — for 1988–89 compared with 1987–88 is £211,000, or 5.4 per cent. That is an interesting comparison with the increase of 5.75 per cent. in rate support grant nationally that was announced by my right hon. Friend.

The 5.4 per cent. increase in expenditure is within the suggested rate rise limit, especially if we discount the allowance for a 3.1 per cent. increase in population. However, the loss of £311,000 rate support grant will raise the estimated increase in expenditure from £211,000 to £522,000.

After allowing for inflation of 4 per cent., the 5.4 per cent. estimated increase means, in fact, only a 1.4 per cent. increase in growth, which is more than accounted for by the expected 3.1 per cent. increase in population. That shows that Lewes is an extremely efficient council, in stark contrast to some of the councils to which my hon. Friends referred earlier.

I shall write to my hon. and learned Friend the Minister setting out those details, and asking whether he will meet a delegation from the council, when I hope that he and his officials will explain the mathematics. I hope that he will reconsider the grant in view of the extremely efficient way in which the council is run.

It is, perhaps, almost an historic occasion to be participating in the wake for rate support grant, grant-related expenditure, rate capping and so on. I am somewhat less sanguine than my right hon. Friend the Secretary of State about the planned community charge —a subject which will be tackled in debate next week.

I thank you, Mr. Deputy Speaker, for giving me the opportunity to raise important, if local, points.

7.7 pm

Mr. Harry Barnes (Derbyshire, North-East)

I have some sympathy with the points made by the right hon. Member for Brent, North (Sir R. Boyson) about the halcyon days of local government before the introduction of legislation that rather aptly came into effect on April fool's day in 1974.

At that time, the system of rate support grant allowed local government to operate on a firm and sensible basis, and it is vital that we return to that position. An excellent urban district council in my constituency was abolished by the Local Government Act 1974. It fought rigorously for the interests of its people in Clay Cross. At that time, there was a "moderate" Government under the right hon. Member for Old Bexley and Sidcup (Mr. Heath). The position in the area has worsened considerably and a strong fighting policy needs to be adopted.

The Clay Cross urban district council was replaced by the moderate North-East Derbyshire district council. Its modesty has been shown by one of its leaders defecting to the SDP-Liberal alliance, following which there was a Conservative council, and then its last leader defecting to the Union of Democratic Mineworkers and the "moderate" Labour party. He was then soundly defeated at a by-election in Clay Cross.

A council with that tradition—it now has a collective leadership to avoid such problems—will not be seen to be too excessive. In the Prime Minister's terms, it will be seen to be prudent and reasonable. Yet the prudent and reasonable authority is being dealt with in a most harsh fashion by the rate support grant arrangements and by the Government's failure to respond to the problems that it faces. In their context, its problems are as serious as the gale damage problems that are faced by authorities in the south of England.

In north-east Derbyshire, there has been an underground fire in C'allywhite lane in Dronfield. It is on a private estate, although the district council has been obliged to take action to rectify it. At the moment, costs amount to £500,000. Various losses, legal and other charges will also be involved. This year, the council will be obliged to instigate a 25 per cent. rate increase to rectify the problem. There has been no movement on the part of the Government, despite repeated requests by the North-East Derbyshire council and hon. Members.

Furthermore, north-east Derbyshire faces the threatened closure of Renishaw Park pit. The closure of the pit and other businesses within the region will reduce the rateable value of the area. Subsequent job losses will mean that the local economy will suffer and less money will be available for local government purposes.

When I first came to the House, I tabled an early-day motion to attempt to get the Department of the Environment to meet a delegation about the Dronfield fire. We have heard that the hon. Member for Lewes (Mr. Rathbone) hopes that a delegation from his district council will meet the Minister. It was only after considerable pressure and the signing of early-day motions and other measures and actions that the Minister agreed to meet the Dronfield delegation. We were given tea and sympathy. When the Minister asked what was sought, a delegate told the Minister, "We want sympathy and support." The Minister's reply was, "You have certainly got sympathy." We have always had a smiling face and smiling responses but we have had no support or assistance.

In my maiden speech to the House, I referred to the details of the fire and the seriousness of the problems involved. Consequently, court action obliged the council, rather than the firms concerned, to take action. Funding has been sought to handle the crisis. That was the subject of an Adjournment debate, and there was a subsequent response from the Under-Secretary of State. We were told that we could not use the derelict land legislation to find funds. However, I suggested other measures to the Minister. He did not respond to them. I have elicited a "no" response from the Minister to a written question. One avenue for funds is the Bellwin scheme. It does not refer only to gales. It states: To provide special financial assistance to local authorities who, as a consequence of an emergency, would otherwise incur an undue financial burden in providing relief and carrying out immediate works to safeguard life or property or prevent suffering or severe inconvenience to affected communities. Those provisions apply exactly to this case and other cases that hon. Members could put forward. There have been deputations from Strabane about the floods on Northern Ireland. They were united deputations, involving Ulster Unionists and Sinn Fein members coming to the House to state their position. The Government should respond to that sort of unity and concern. There is a common interest whether there is gale, flood, or fire damage. Such matters should be responded to.

I also suggested that the Government could set up an emergency fund additional to the Bellwin scheme arrangements so that the entire amounts could be recovered. There could be some alteration to the public health legislation, under which councils are obliged, when there are safety problems, to take action to cause firms to act. Such firms may be driven into bankruptcy because they cannot handle a matter. The council must then take action and carry the costs. Adjustments of that nature must be responded to and seriously considered.

I asked a written question of the Secretary of State to find out the situation in respect of funding, since various points were not answered in the Adjournment debate. The Secretary of State replied: As I have told the House, it would not be appropriate to make central Government financial assistance available to help fund the remedial works necessary to put out the fire. My right hon. Friend, the Secretary of State, has considered North-East Derbyshire district council's request that unrecovered expenditure it incurs in dealing with the fire should be excluded from the definition of total expenditure, and has decided not to include it."—[Official Report, 2 December 1987; Vol. 1430, c. 629.] That means that, apart from using this opportunity, I have now had to present a ten-minute Bill that will refer not only to the underground fire at Dronfield but to other underground fires and disasters to show that there should be funding provided.

In addition to my constituents having to face a high rate increase to handle the emergency, they also face wider problems that affect the whole of Derbyshire. Derbyshire now faces grant capping, which will seriously affect it. The object of the grant cap is supposed to be to limit grant charges from year to year. In other words, an authority's proper grant entitlement is calculated and then a separate factor is applied to reduce that grant entitlement to an arbitrary limit that is set by the Secretary of State. The benefit of the reduction in grant is then shared out in small measure between all other authorities in the country who are not subject to a cap. By next year, the cap will cost Derbyshire ratepayers almost £70 million. It was introduced as a transitional measure in 1986–87, following the Government's abolition of the targets and grant penalty system. The important point to understand about the grant cap issue is that it is completely unrelated to the council's spending policy and that there is nothing that the council can do to eliminate the cap. No cuts that it may impose, nor other action that it may take, will eliminate the measure.

Should Derbyshire ratepayers continue to be penalised at a rate of £20 million a year so that a small benefit can then be provided for other authorities? The annual national value of the cap is equivalent to around only 0.5 per cent. of the block grant pool that is available to other authorities. Its continued use can no longer be justified.

North-east Derbyshire residents are additionally in a difficult position in regard to the fire. The barrier that the council provided at considerable expense seems to have been breached in one area. The fire is extending towards gas supplies in south Yorkshire. The crisis still exists and funding is still required. I ask the Government to look seriously at the position to see whether assistance can be given, and to consider the other points raised on the grant cap in Derbyshire.

7.19 pm

Mr. George Howarth (Knowsley, North:)

Unfortunately, the right hon. Member for Brent, North (Sir R. Boyson) is no longer in the Chamber, but I was interested in his remarks about the past and the possible future of local government, particularly as I served on an urban district council in the early 1970s, which has now gone the way of many of those bodies since the Local Government Act 1974. I look back on those days with rosy and warm feelings, no doubt in the same way as other hon. Members do, but it strikes me that the reduction of the size of local government would be a major undertaking and not quite as simple as the right hon. Member for Brent, North, even with his vast experience, might imagine.

For example, what would we do with education? Would we move it up or down a level? Other considerations would make the changes somewhat more complicated than the characteristically populist solution described by the right hon. Member. Nevertheless, I am sure that his sentiments were genuine. While I empathise with his looking back to the rosy days before 1974, it is not as simple as that. The time is approaching when we should look at the functions and size of local government, although I am not sure whether now is the right time.

The rate support grant settlement will affect urban areas, particularly Merseyside and my constituency. The Government, with their much trumpeted initiatives on the inner city and urban areas —I hope that that includes outer areas—have made a small but significant shift in the settlement away from metropolitan districts, where most stress areas are. Those stress areas will have an increase in funding of 7.4 per cent. The Government have taken a slightly meaner approach to metropolitan districts than to the rest of the country, which is somewhat strange when the Government claim to be helping urban and stress areas. It is strange that metropolitan districts should be under attack.

Currently, about four of the 36 metropolitan districts are spending less than the grant-related expenditure assessments, which means that 32 are spending more. Are the Government saying that those 32 have got it wrong and the four have got it right? If so, that is a strange way of approaching relations with local government, and the matter should be reconciled.

The rate support grant settlement for Merseyside will be increased by 6.7 per cent., which is significantly less than for the rest of the country, which will receive an increase of 7.5 per cent. Whatever may have taken place in the past to affect the Government's relationship with some constituent authorities in Merseyside may not have had any bearing on the changes, but I think that all hon. Members would concede that Merseyside has major problems caused by the demographic and industrial changes which have taken place over several decades and longer.

Successive Ministers, including the Prime Minister on one or two occasions, have been to Merseyside to look at the problems. The right hon. Member for Henley (Mr. Heseltine) has taken a great interest in Merseyside. Most people have accepted the evidence of their own eyes. There is considerable decay and many problems.

I do not go along with the school of thought that we should whinge about everything on Merseyside because everything is so bad. There are many good things on Merseyside. There are some good things in local government and good things caused by local government having allowed the voluntary sector to undertake certain functions. I do not agree that we should always bleat about Merseyside, but anyone looking at the problems would have to concede that the solution must involve the central Government directing resources into stress areas of Merseyside, including parts of Liverpool, Knowsley and Birkenhead. The stark truth is that anyone looking at the problems of urban dereliction and inner cities must concede that point.

I concede that local government must sometimes take different and radical approaches to tackle problems. In Knowsley, the settlement is slightly more than 7.9 per cent., which is higher than that for the rest of the country and more than the rate support grant settlement for Merseyside. At first glance, I thought that I should have to congratulate the Secretary of State—until I started to analyse the changes that the Government expect local government to take on board and how those changes will affect the settlement.

First, the administration of changes to the housing benefit, recently passed with some opposition from Opposition Benches, will cost my local authority some £300,000. That is a considerable sum of money, which is necessary if the changes are to be administered humanely and decently. We are still waiting for the debate on the rights and wrongs of the poll tax, but it is estimated that my local authority will have to employ 90 staff to deal with its introduction, which will cost approximately £1.5 million for additional accommodation, administration and staff.

The introduction of competition is another factor. As recently as yesterday, the borough of Wirral, which was controlled by the Conservatives, re-let the privatisation of cleaning services. An in-house tender from local authority staff has succeeded in replacing the private contractors who have been doing the work for two or three years. The Minister may say that that is competition and that the Government do not object to local authorities winning tenders, provided they are competing with private enterprise. The Liverpool Daily Post reported this morning that the Conservative leader attributed the success of the in-house tender to the changes in the way in which local authority officers had done their jobs and had prepared the in-house tender so that it would be acceptable.

That confirms a problem in my constituency. The preparations for the introduction of competition are estimated in next year's budget to cost something like £220,000. The local authorities used consultants to do that. Local authorities will have to cover those additional costs which result from measures that the Government have introduced, and which will not be met by the rate support grant settlement.

Another problem which is common to all local authorities is that of pay awards. I do not object to the various pay awards—far from it. In my local authority, two thirds of the costs of all services involve salaries and pay. They vary from the administrative and technical grades which were given about 7 per cent. to the pay award to manual workers which was about 10 per cent. In regard to the teachers' pay award, there is a residual amount to be paid from a previous award and the current year's pay award still has to be settled, but it appears that the overall increase in the cost of teachers' pay will be over 10 per cent. That means that there will be a settlement of 7 or 8 per cent. If we add up all those problems, and the cost of pay awards, we see that the Government proposal is likely to be inadequate, even in my borough which does comparatively well compared with others on Merseyside.

Another of my worries is that the grant at GREA level will be £48.6 million. If we assume that we will spend something like 8 per cent. above GREA, the grant will be reduced to £46.2 million, a loss of £2.4 million. I know that the Government have accepted the inconsistencies and problems, and have promised to change the system, but, having accepted the need for change, why will they not change the system straight away, this year? Why do they not say, "We will make the change now, and we will set the level of expenditure at GREA and we will not penalise those who are on the threshold, or just on one side of it"?

All those problems, and their financial consequences, do not mean much until we examine the problem on the ground, and what it means to live in an urban area. We have heard some graphic illustrations of the effects of storm damage, with which I have some sympathy. I travelled in south-east England and I was moved by the fact that lots of trees were lying beside the road. I sympathise with hon. Members who have such problems. The truth is that in areas such as Knowsley, urban and industrial decay are facts of life. They were not created by the people who live there. They are the result of structural changes in the economy, the recession, regional policy and the lack of industry being directed into such areas. Industrial and urban decay are common everyday experiences.

We need to improve education. I do not think that the education system is wonderful. I do not agree with the Government's proposals, but I believe that changes can be made in the education system in Britain and in my constituency, which will not necessarily cost a lot of money. If young people who live in my constituency are to have an equal chance in life, more money needs to be spent on their education. That will not happen under the present proposals.

We also need extra resources to improve the environment. Nothing is so impoverishing as to drive around some of the housing estates in constituencies such as mine and look at the problems, some of which have been created by local authorities. Those problems involve the design of the estates and the resources that are available to improve and maintain them. It is an impoverishing experience to live in an area where the environment is poor and getting worse. As a result of the RSG settlement there will be no additional resources to deal with those problems.

I accept that there are many things wrong in the country. However, the malicious attitude that the Secretary of State has adopted towards local government will do more harm than good. I accept that things go wrong in the management of local authorities. I spent 14 years working on a local authority and such organisations employ many people and are involved in the operation of complicated procedures, some of which have been introduced by legislation. It is inevitable that, in those circumstances, local authorities occasionally get things wrong. I believe that there is always scope for increased efficiency within a local authority. I do not believe that there is anything anti-Socialist or anti-citizen in saying that —certainly most of my constituents would agree.

Things are not improved by the bashing approach that has been adopted by the Secretary of State. Improvements are made as a result of consent and discussion and by respecting the fact that local authorities represent the true, elected voice in their communities. I believe that the Secretary of State is mistakenly — the RSG settlement reflects that — managing the whole national process of local government with a mixture of malice and, on occasions — as demonstrated in this debate — incompetence. I find that breathtaking, but, more to the point, I find it deeply disappointing.

7.36 pm

Mr. Barry Field (Isle of Wight)

I make no apology for being parochial because I believe that I am correct in saying that I am the only hon. Member who speaks for an entire county council.

All the political parties on the Isle of Wight have recognised the problems caused to that island by the rate support grant. That consensus goes back to the days of my predecessor but one, Mark Woodnutt. Certainly, in the days when the constituency was represented by Stephen Ross—yesterday he was ennobled in another place—he did a considerable amount of work in endeavouring to convince the Association of County Councils of the merit of the island's case. Indeed, when my right hon. Friend the Member for Henley (Mr. Heseltine) was Secretary of State for the Environment he agreed to take up the island's case. It is a matter of much sadness to the island that, at that time, the ACC refused to allow adjustments to be made that would have benefited the island.

The island is unique in a number of instances. Over the years the council has continually made applications for assisted area status, but has failed to convince the Government that the island should be such an area. I believe that the stumbling block may be that the decision is judged on a regional basis. Despite our high unemployment, our infrastructure and local government difficulties, the problem is that the island is judged against the backdrop of one of the most prosperous regions in the United Kingdom.

As a result of the Council for Small Industries in Rural Areas and the Development Commission, the island enjoys rural development area status. I believe that that is unique for an entire county. The county is also designated as a travel-to-work area by the Department of Employment. I am not an expert, but I venture to suggest that that is rather remarkable when one considers that the island is 60 miles wide. I do not believe that many travel-to-work areas in the country cover such a distance.

The island suffers considerable difficulties because it is an island. My right hon. Friend the Secretary of State for the Environment should consider that, under the present RSG settlement, the Isles of Scilly are given special treatment. That treatment reflects the consideration given to the finance of those islands, the small population and the dislocation caused by that archipelago. Although we have consistently failed to persuade the Department of the Environment of the merits of our case, we should receive similar treatment to that afforded to the Isles of Scilly and to the Scottish islands.

Plant and machinery costs a great deal more, as do materials, because they must come across to the island by ferry. Although the island is only 88 miles from London as the crow flies, it has been estimated that that round trip is equivalent to a journey of 300 miles when the time on the ferry is taken into consideration.

Let me give my right hon. Friend an illustration of the difficulties faced by local government on that island and the increased costs that we must bear as a result. I especially direct my right hon. Friend's attention to a serious fire that occurred last night on the island. Unfortunately, that fire has led to the temporary loss of 60 jobs. I am sure that my right hon. Friend will appreciate that, when such a fire occurs, there is no way in which a fire engine can board a ferry—the journey takes some 40 minutes and that assumes that the fire engine would be waiting for that ferry when the fire broke out. As it is impossible for the island to rely on back-up facilities from other counties, the authority has the extra cost of supplying additional fire appliances.

There is a well-known joke about being a long-distance lorry driver on the Isle of Wight. We do not have any motorways or trunk roads—it can be argued that our roads lead to nowhere. The island loses out substantially because of our transportation difficulties.

Hon. Members will be aware that this year the ACC made a representation to my right hon. Friend for the abolition or the safety net. I believe that I am correct in saying that if the net were abolished only three county authorities would lose as a result. Yet again, the Isle of Wight would be one of those authorities. Therefore, we are delighted that my right hon. Friend has decided to keep that safety net. It offers a considerable advantage to the island.

I received a letter today from my right hon. Friend about a matter that I had previously raised with him regarding the short-sightedness of the Treasury valuer in not asking for a reduction in the rates on an area covered by the prison that is currently unoccupied—in fact, that part of the prison is uninhabitable at the moment—and for those prison officers' houses that have been sold either to the local authority or on the open market. The amount that is required to be repaid to the Treasury dates back to 1982–83. In the normal course of events, when such an amount is discovered on a year-on-year basis, an adjustment is made to the rate support grant. I drew my right hon. Friend's attention to the matter because, if the sum must be repaid in the current year—we very much hope that we may find a way around that—it will be equivalent to a charge of £2 per head of population of the island. It is a substantial sum of money for our local government to find.

I am anxious about the longer term because the measure may have an effect on the base level of our community charge, although I welcome that charge. The unified business rate in both boroughs will drop substantially, by over 7 per cent. in one borough and by 4 per cent. in the other. We must not incur any extraneous expenditure that might have a detrimental effect on the base level for the community charge.

We have had the promise of a payment of some £55,000 for the storm damage caused by the hurricane. If we judge this on the sum per head of population, we see that my right hon. Friend the Secretary of State has treated the Isle of Wight generously. I am delighted that he should have done so because our county motto is, "All this beauty is of God" and we are looking forward to restoring that beauty. My right hon. Friend visited Osborne house earlier this year. He will appreciate the devastation caused by the severe weather and he saw the island at its best.

When we made our annual deputation to my right hon. Friend to discuss our rate support grant, we discussed the storm damage and asked whether a form was available to make application for compensation. We were told that there was not, but that we should write and request additional capital allocation. We did and were told by the Department of the Environment that we should fill in the appropriate form. We received a letter on 20 November, telling us that a form was available. In the reformation of rate support grant, which we all welcome, perhaps the Isle of Wight will have played a tiny part in history as it made the Department of the Environment invent a form to apply for compensation for storm damage.

7.47 pm

Mr. William O'Brien (Normanton)

The hon. Member for Isle of Wight (Mr. Field) may represent a whole county, but several hon. Members can speak on behalf of their counties. I can speak about issues affecting the five districts which make up the area of west Yorkshire. He referred to several issues regarding local authority administration on the Isle of Wight. We share his concern, particularly about the fire service.

The hon. Member said that the Isle of Wight had assisted area status. We wish that we could obtain such assistance for areas of industrial dereliction where unemployment is high, yet Wakefield, which is in my constituency, is denied assisted area status. The hon. Member is fortunate to have such Government assistance. However, I am disappointed that local government has little to look forward to in the rate support grant report presented today by the Secretary of State.

When I look at the report and the detail of what is quite an extensive document, I see that it is signed by the Secretary of State for the Environment and the Secretary of State for Transport and has the consent of two of the Lords Commissioners to Her Majesty's Treasury. I am disappointed that there is no reference to anyone from the Home Office. When it comes to fire service and civil defence provision, the Home Office has the responsibility for setting standards, as it has for police forces. The Department of Health and Social Security is involved in provision for joint financing between local authorities and health authorities. Then there are community services: a good many people have been transferred from Health Service provision to local authority provision, but there are no extra resources of any significance in this document to assist either community services or joint financing. It means that in many cases the local authority must carry the full burden of schemes which had originally been jointly financed between it and the health authority. The fact that councils now have to make total provision for these jointly financed schemes means a tremendous call on local resources.

It' the Secretary of State is to judge the worth of those schemes, we must have services that give value for money. To do that, local authorities must be helped. There must be some examination of the level of local authority expenditure which will allow them to provide the services that people demand, in my area as in other areas.

In my area there is a great demand for the services that the local authority provides. Every weekend I am approached by constituents who have problems arising from social services, and from housing, particularly for the elderly and disabled. People look forward to meeting their local authority representatives so that they can put their case for better services. Yet because of the restrictions applied by the Secretary of State to local authorities, my constituents and those of other hon. Members are denied the services to which they are entitled.

What gives me the greatest cause for concern is the provision of fire cover in the west Yorkshire area. This area covers five district councils — Leeds, Bradford, Kirklees, Wakefield and Calderdale. Special provision must be made to ensure that we get a proper fire cover to the standard laid down, in the main, by the Home Office. The Home Secretary lays down certain standards of fire cover which are then passed on to the fire services in west Yorkshire and to the joint committee that administers them, yet we have the ridiculous situation in which the Secretary of State for the Environment decides what the level of expenditure must be, thereby making it very difficult for the fire services to provide the necessary cover to the correct standard.

In February 1985 the Central Fire Brigades Advisory Council published a report entitled "Report of the Joint Committee on Standards of Fire Cover". Among its conclusions and recommendations, the report said: We emphasise the importance of proper categorisation of risk for the operation of meaningful recommended standards of fire cover, and recommend that fire authorities should, on receipt of revised composition guidance from the Home Departments, review the categorisation of risk in their area in the light of it". In other words, fire services were requested to examine areas of fire risk and to build up to the recommended cover.

In west Yorkshire in 1988–89 the amount required to reach the required standard of cover is £39.2 million. The initial expenditure limit announced by the Department of the Environment is £36.4 million, so when it comes to providing the necessary service in west Yorkshire we have a shortfall of £2.8 million. There are areas in west Yorkshire where the fire risk is exceptional and where the resources of the fire service are so stretched that it is difficult to ensure that the necessary standards are achieved and maintained. The fire services' authority is faced with such a dilemma that representations have been made to the Home Office, asking it to approve the maximum possible amount to ensure that proper standards of service are achieved.

An initial expenditure has been announced at £36.4 million. Yet the amount required just to stand still, taking into account inflation and so on, for the west Yorkshire civil defence and fire authorities is £37.8 million, so we have a shortfall of £1.4 million, even though we are just standing still. This is a devastating situation where, to meet the standards of fire cover laid down by an advisory body which was established to make recommendations and advise authorities, it will cost £39.2 million. Yet the difference between that figure and the initial expenditure limit that has been announced is £2.73 million.

Mr. Allen McKay (Barnsley, West and Penistone)

Will my hon. Friend take into account the fact that the south Yorkshire fire service, which also made recommendations to the Home Office and to the Secretary of State, is in a similar position? It is in danger of having to take appliances off the road. The problem is compounded by the fact that the adjacent services in each area cover for one another in the event of a major fire. This means that someone has to decide whether that cover can be given, because, if it is, it tends to dilute the fire cover that it is possible to give in an individual force's area.

Mr. O'Brien

I am grateful to my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) for drawing attention to the fact that south Yorkshire is facing similar problems as those of west Yorkshire on fire cover. My hon. Friend is correct with regard to the cross-boundary service that supplements fire cover on the boundaries.

If something is not done to help fire authorities in west and south Yorkshire, the service that people are entitled to will deteriorate. When a catastrophe occurs there will be no point in the Prime Minister or any other Minister coming to the area to offer condolences. The Government have a responsibility to ensure that an adequate level of service is maintained.

The standards of the service are set not by the fire service in west Yorkshire or by the joint committee but by an official, established body, which ensures that in a high fire risk area there is proper cover. We in west Yorkshire are concerned—I am sure that the same applies to south Yorkshire — that there are areas of high fire risk in which there is doubt about the level of cover.

I hope that the Secretary of State will note the problems facing local fire and civil defence authorities. In west Yorkshire, six special appliances have had to be demanned. A further reduction in financial resources to that extent is equivalent to the demanning of five pumping appliances, 12 specials or a combination of either. If the expenditure levels that are needed to provide proper fire cover are not agreed by the Secretary of State for the Environment and the Home Secretary there will be a further reduction in fire cover in the area.

For the service to stand still in the coming year it would require an additional £1.3 million, or a 3.8 per cent. increase over and above the announced limit. The base budget for 1987–88—I hope that the Secretary of State is noting these figures; I notice that he is doing some jottings, but I shall supply him with them if he wishes—is £34.6 million. The commitment for increases in pay up until March 1989 will require a further £2.3 million. The services pension commitment will require £274,000. Expenditure over and above the influence of the authority —loan charges—amounts to a further £120,000. Phased recruitment, which will take into consideration wastage, will cost £278,000, and the increment for public holidays will cost £221,000. Total expenditure for the service to stand still is £37.8 million.

Provision must be made for the appointment of uniformed personnel, in accordance with the establishment scheme. That scheme is reflected in the standard of cover that has been suggested and laid down by the body that I referred to earlier. In accordance with the establishment scheme, the total cost of appointed uniformed personnel is £792,000.

Loan charges on capital plant are inescapable and will amount to £261,000 for 1988–89. The maintenance of buildings to prevent further deterioration will cost £300,000.

Taking those figures into consideration, the service requirement to ensure that the standard of cover is adequate to meet the recommendations laid down by the authority is £39.2 million. As I said earlier, there is a shortfall of £2.7 million. A 7.5 per cent. increase is required to maintain the standard of cover to which people are entitled.

With regard to capital expenditure, there are a number of issues that the fire service cannot ignore, such as fire appliances and equipment, which cost £912,000. Other vehicles must be replaced to ensure that the standard of service is maintained. The authority must undertake major refits of equipment. New pumping stations must be established, because where there is development and an extension of local authority services they are a necessity. North-west Leeds is scheduled for a new pumping station.

With regard to the provision of water supply and hydrants, there must be capital expenditure of £60,000 by the west Yorkshire fire authority to maintain these services. I have grave reservations that unless assurances are given in the Public Utility Transfers and Water Charges Bill, which we are considering in Committee, or unless provision is made in that legislation that will give proper and adequate cover for fire services, problems could develop. If the Secretary of State runs true to form, we shall have to pay for water and services for fire cover. If that happens, the West Yorkshire fire service and the joint committee will have burdens placed on them over and above the matters to which I have referred.

The energy conservation programme for west Yorkshire has cost £100,000. There is a wealth of evidence that the authority is doing all that it possibly can to obtain value for money. The report on the standard of cover makes it clear that a detailed review of fire risk categories must be carried out for the entire area. The west Yorkshire fire authority has undertaken an extensive exercise in that regard. Certain areas in west Yorkshire have been identified as being in an high-risk category. I plead with the Secretary of State to take note of the position and to ensure that we have adequate fire cover to meet the problems that our fire services committee envisaged. This district audit service is supportive of the authority's case. In its report on the accounts of west Yorkshire it concludes: Though the failure to meet Home Office standards and guidelines on attendance at incidents has no direct financial cost to the Authority, there is, nevertheless, potentially a cost to the community if, by such failures, life and property is needlessly and avoidably lost. The Fire Authority should, therefore,

1. (a) continue to press the Home Office to approve the proposed established plan, and
2. (b) seek redetermination of its expenditure limits based on the approved plan."

That is the purpose of my appeal to the Secretary of State this evening. When he is dealing with rate support grant he should bear in mind the protection of life and property in west Yorkshire. The standards that are set by the Home Office should be given some serious thought. The Secretary of State and his officials should be considering the representations made by west Yorkshire and should lift the expenditure limit to the £39 million for which it is asking.

Again in its report, the audit office said: Any reduction from the redetermination bid submitted by the authority means that the recommended standards of service cannot be implemented in West Yorkshire. I want to put that on record in the House. If the Secretary of State does not take into consideration some of the important issues that are being reflected by the Home Office, the people who audit the accounts of west Yorkshire fire and civil defence authority and the joint committee, I want to ensure that the responsibility for any failure that may occur in west Yorkshire because of the lack of resources is the clear responsibility of the Secretary of State for the Environment. Everyone involved in fire cover in west Yorkshire believes that there should be some redetermination of the level of expenditure. Anything less than that redetermination is the responsibility of the Secretary of State and the consequences that follow will also be his responsibility.

I referred earlier to the search for value for money. The authority has been trying to become more efficient and effective. Pumping appliances have been reduced from 94 to 79. Special appliances have been reduced from 43 to 38. Control room personnel have been reduced from 90 to 58 and the proposals put forward in the current year to try to obtain value for money suggest a further reduction in pumping appliances from 79 to 77 and in special appliances from 38 to 36.

Many other initiatives have been pursued vigorously which have resulted in reduced resources employment. The reserve appliances have been reduced from 20 to 16. As my hon. Friend the Member for Barnsley, West and Penistone said, we have reserves so that if there is a call from a neighbouring authority the vehicles and equipment are ready. However, the authority in west Yorkshire has said that a saving of £250,000 can be made by reducing the reserve appliances from 20 to 16.

There is also the question of increased efficiency. There is a reduction in the premises available. The capital investment in energy conservation is an effort to increase efficiency and obtain better value for money. There is a training school in west Yorkshire which has increased the fees charged to external clients with a view to increasing the income by a further £250,000. Therefore, there is extensive involvement by the people in the west Yorkshire area and those on the joint committee, which, as I have said, comprises representatives from the five authorities I have mentioned.

Having taken all that into consideration, there is the question of the shortfall of £2.7 million from the requirement to ensure that the standard of cover is maintained. There is also the question of the provision that has been made in the budget we are considering now. If the Secretary of State is not prepared to redetermine the expenditure level of the fire cover in west Yorkshire, I fear for some of the people who depend upon that fire cover.

There is also the problem of the reduction of the services provided by the health authorities. There has been a reduction in the provision of resources from the regional health authority to the Wakefield and Pontefract area health authorities. As a result, there are now additional calls upon the local community services. Unless there is additional funding for those community services there will be a further fall in the services provided by the Wakefield local authority. I ask the Minister and the Secretary of State to redetermine the expenditure level of local authorities and to redetermine the grants being made available, particularly the rate support grant. Let us have some realism back in local government.

I served in local government for over 30 years before coming to the House. At no time has morale been as low as it is now. I ask the Minister to realise that. The Government should take into consideration the work being done in providing services more so now than ever before. They should ensure that the resources are provided so that the services can be maintained. I would consider anything less than that to be a criminal act against the people who depend upon the local services.

I appeal to the Minister and the Secretary of State to give some careful consideration to the provisions in the Local Government Bill. Anything less than that would not be in the best interests of the communities we all serve.

8.19 pm

Mr. John Marshall (Hendon, South)

My right hon. Friend the Secretary of State said when he opened the debate that this would be the penultimate debate on the rate support grant. Everyone who has been in local government will say amen to that. It has been said that the Schleswig-Holstein question was once understood by three people, one of whom was dead, one of whom had gone mad and the third of whom had forgotten all about it. It would be fair to say that the rate support grant is equally well understood.

I was chairman of a local government finance committee when the rate support grant system was introduced. It seemed to me then, and subsequent events have confirmed, that this system is unfair to different local authorities. It was based on the assumption that expenditure in a particular base year bore the same relationship to need in different local authorities, but that is untrue. Certain local authorities, such as Barnet under the energetic leadership of councillor Leslie Pym, heeded the advice of Socialist Secretaries of State of the Environment that the party was now over. But many other local authorities completely ignored that advice and continued to spend, spend, spend.

Within London, a number of local authorities, such as Wandsworth, Ealing and Hillingdon, had changed control in 1978, and there was still a substantial amount of fat to be taken out of the system, as my hon. Friend the Under-Secretary of State did with such conspicuous success in Wandsworth. When I was chairman of the finance committee in Ealing, we found that we could make a substantial reduction and still provide adequate services which would give the ratepayers a good deal. The success of our policy is confirmed by the fact that the Leader of the Opposition was happy to live in Ealing during those years, enjoying the services that we provided and paying the rates that we charged.

As the system has developed, it has become difficult for authorities such as Barnet, which had economised over the years and had got rid of the fat in the late 1970s, while others still had a substantial reservoir of excess cost that could be taken out of the system.

The grant-related expenditure assessment system is based on many variants and manages to cover its subjective approach by a veneer of precision. To tell local authorities that a figure is going up by 9.1 per cent. rather than 9 per cent. implies a spurious accuracy. However sophisticated computers may be, and however large the variables may be, we cannot be as accurate as that. To Conservatives, it is an alien philosophy that the Government should tell a local authority, of whatever political persuasion, that its expenditure should go up by a certain percentage. That implies a knowledge of the local scene which the bureaucrats in Marsham street will never have.

We are discussing tonight the rate support grant for 1988–89. Whatever decisions local authorities may take in the light of that grant will have only a limited impact upon expenditure in the financial year 1988–89. If, as a result of these grant decisions, the London borough of Barnet were to recommend the closure of a school, by the time the consultative procedure had been completed, it would make no difference to expenditure in 1988–89. At best, it would make only a limited difference.

Parents would have to be consulted and the Secretary of State for Education and Science would have to make a decision, and by the time all that procedure had gone through the next year's rates would not be affected. One must remember that decisions taken in local government will have a limited impact in the next financial year and the real benefit will come somewhat later in the local authority's life. The system did not take that into consideration either.

All Conservative Members will look forward with relish and enthusiasm to the Second Reading of the Local Government Finance Bill next Wednesday and Thursday because that Bill will get rid of much of the nonsense that has affected local government for too long.

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. The hon. Gentleman is rather anticipating what we shall be debating next week. We have not yet had the business statement.

Mr. Marshall

I am sorry, Madam Deputy Speaker, but certain rumours are going round the House, which may be right or wrong, that we shall be debating that legislation next week. I think that in his opening remarks my right hon. Friend the Secretary of State said that it was likely that we would be debating the subject next week. Therefore, I was merely showing the great care with which I listened to what my right hon. Friend said so brilliantly when he opened the debate.

Madam Deputy Speaker

I shall listen with great care to what the Leader of the House has to say tomorrow.

Mr. Marshall

Shall we take a wager about whether I am right or wrong?

Madam Deputy Speaker

I am not a gambling woman.

Mr. Marshall

I am glad to hear it, Madam Deputy Speaker.

Let me deal now with certain factors affecting the London borough of Barnet. My right hon. Friend referred to the Bromley case. That case affects several London boroughs, of which Barnet is one. As a result of the Bromley case, we in Barnet have been deprived of grant which it is, and always was, the Government's intention should come to Barnet. It would be helpful if, when my hon. Friend replies, we could be told what percentage of the Bromley error will be made good before rate fixing in 1988. Clearly that is an important factor in determining the Barnet rate next year.

Barnet has had an actuarial valuation of its superannuation fund which shows that the fund is already heavily overfunded. We do not see why we should be encouraged to put even more money into that next year. Currently, superannuation funds are subject to quinquennial review. But the stock market, even with the recent downturn, has been so buoyant in recent years that more frequent reviews might well be justified to ensure that funds are not overfunded. I hope that when my hon. Friend replies he will be able to give us an assurance that within the next few months the Government will be able to make a statement on that matter.

On behalf of the London borough of Barnet, I welcome the comments made about storm damage. We should now suffer less than we might otherwise have done, so we welcome that statement.

Let me deal now with competitive tendering in local government. I may be anticipating the debate which I now understand will take place next Monday night, of which we have had due notice, but it is fair to say that in looking at the rate support grant report one must consider the way in which local government spends our money. In all my 17 years in local government I have always been convinced that competitive tendering between the private and public sector gives the ratepayers a much better bargain than they would otherwise get.

I well remember being a member of Aberdeen town council at the same time as the hon. Member for Oldham, Central and Royton (Mr. Lamond). At that time, we had a debate about whether the old police station should be knocked down by direct labour or by a firm selected through competitive tendering. I voted for competitive tendering. Needless to say, the hon. Gentleman voted for direct labour. We had a vote in committee, which I won, and we went out to tender. The private contractor offered to do the work for 20 per cent. less than the in-house organisation. However, by then the hon. Gentleman's party had a majority and it voted for the acceptance of the in-house tender.

I am glad to say that the then Labour Secretary of State for Scotland ordered Aberdeen town council to give the work not to the in-house organisation but to the private contractor. I was glad to see that even a Socialist Secretary of State could opt for a private contractor. Since then, in the London borough of Wandsworth, under the energetic leadership of my hon. Friend the Under-Secretary, we have seen how competitive tendering can work well.

The experience of the London borough of Ealing was similar. For example, we found that our school meals service could run much more efficiently with an outside contractor, saving hundreds of thousands of pounds. One day my son came home from school and said, "Daddy, why are the meals so much better now?" I said, "My boy, you are learning a basic political truth. The meals are now provided by an outside contractor. It is saving the ratepayers money and you, the consumer, have told me that you are getting better meals." I suspect that a similar story could be told right across the country.

We know that competitive tendering has saved the Health Service £100 million a year. When the Local Government Bill receives the Royal Assent, we shall save the local authorities just as much. The hon. Member for Knowsley, North (Mr. Howarth) said that it would cost his authority £220,000 to prepare for that Bill becoming law. I suspect that the savings will be out of all proportion to that small additional cost. He told us about the Wirral case, in which the in-house tender had been successful. I listened with interest to what the hon. Gentleman said, and what he did not tell us was whether the in-house tender had been less than it would have been before competitive tendering was introduced. The fact that he did not tell us leads me to suspect that there has been a saving to the ratepayers in the Wirral, which everyone must welcome.

It is not just by competitive tendering that local government can get better value for money and produce a more cost-effective service. The Audit Commission has produced many examples of savings that local authorities can make—particularly in education. Throughout local authority areas in England and Wales — it was confirmed at Scottish Question Time today that the same applies in Scotland — far more school places are provided than are needed. That is bad both educationally and economically. It means that we have a large number of schools providing an inadequate range of choices. Pupils cannot get the fully comprehensive education that a comprehensive school should offer if the number of children entering the school is very small. It is bad economics to keep open schools in which the ratios tend to be wrong and to heat classrooms that few pupils will use. That is the economics of the madhouse.

I hope that I have demonstrated that there is scope for local government to save substantial sums and produce better services for ratepayers. I look forward to that process continuing as a result of the Local Government Bill and to reasonable rate increases across the country this year as a result of the rate support grant settlement for 1988–89.

8.33 pm

Mr. Pat Wall (Bradford, North)

I shall address most of my remarks to the difficulties of Bradford metropolitan district council, which I understand are shared by only four other local authorities— Birmingham, Sunderland, Cleveland and a local authority in Derbyshire. Before I deal with that problem, which arises from the Government's use of the so-called multiplier, I should like to take a general look at the background against which this debate is taking place.

My hon. Friend the Member for Copeland (Dr. Cunningham) estimated that, since 1979, the percentage of local authority expenditure accounted for by rate support grant has fallen from 61 per cent. to 46 per cent. According to an excellent document produced by the local government officers, the figure in London has fallen from 65 per cent. to 40 per cent. The penalty imposed for so-called overspending over that period has now reached a staggering £29 billion.

All this has taken place at a time of growth in unemployment, hitting urban and inner-city areas in particular. The consequence of the economic facts after eight years of Conservative government has been a massive increase in the problems associated with social deprivation. About 43 per cent. of our population would be classified as poor by any civilised standards. This process has placed increased burdens on many local authorities. While there is a desperate need for increased provision of social services, housing and urban renewal, the Government continue their attack on the rate support grant and thus on local authorities' ability to grapple with the problems.

The so-called beneficiaries of Thatcherite popular capitalism have not escaped, either. In a desperate attempt to maintain services, councils have resorted to massive increases in rates. The more prosperous 53 per cent. of our community, as well as many of the poorest, have had to make their contribution by finding the money for those increases. Contrary to Conservative Members' propaganda, high rates also represent a reduction in living standards. The Government have forced local authorities into a terrible dilemma. They have to choose between adding to the already appalling unemployment figures and cutting services to desperately needy families, and cutting people's living standards by increasing rates above the cost of living or the average increase in earnings.

The Government boast of an increase of £750 million for the coming financial year, yet the local authorities estimate that they need £1.2 billion if they are to stand still. That will mean even further reductions in the standard of services over the coming 12 months.

The debate takes place against the background of attacks on local government arising out of other legislation to be introduced by the Government. Howard Davies, the controller of the Audit Commission, estimates that if all the Government's legislation on education, housing, social services and privatisation goes through, local authority expenditure will drop from around £30 billion to £20.9 billion and that manpower requirements will fall by 37 per cent. That figure represents 500,000 employees.

When I hear Conservative Members and irate ratepayers say, "Sack some of those idiots at the town hall," I must ask them to consider the problem in human terms. In most areas, the local authority is the largest employer. When one talks about making cuts by reducing the number of staff in local government, one is talking about sacking one's neighbour. A teacher talking in those terms would be talking about sacking fellow teachers. It is like going into a pub and saying to someone employed in the accounts department of a local authority, "Your job should go; otherwise my rates will be increased." If we consider the problem in those human terms, we see what nonsense such remarks are. The report estimates that less than half of those 500,000 employees will find a job in the private sector. That means adding 250,000 people to the unemployment figures.

Mr. Irvine Patnick (Sheffield, Hallam)

The hon. Gentleman says that people will not get jobs in the private sector. How does he know? On what facts are his remarks based? What report does he have?

Mr. Wall

I have used the figures cited by Howard Davies, the controller of the Audit Commission. He should have a fairly good insight—certainly more than the hon. Gentleman or me — into local government manpower and the effects on it of privatisation of education and housing as well as direct privatisation in local authorities.

Mr. John Marshall

Does the hon. Gentleman agree that those figures can be true only if there is substantial overmanning in local government? Why should other industries which have ceased to be overmanned stall pay for the overmanning of certain local authorities?

Mr. Wall

The hon. Gentleman is assuming that under this process the services will remain as good as they are today, but my hon. Friends and I feel that they will deteriorate enormously, as have services to British Telecom customers, and the cleaning and canteen services in hospitals. The poorest in our society — hospital cleaners and catering workers—were forced to bargain their pitiful wages against the prospect of losing their jobs. If that is the sort of society that the hon. Gentleman wishes to justify in order to cut costs, he can justify it. I want no part of it; nor do my colleagues.

Mr. John Marshall

Will the hon. Gentleman gibe way?

Mr. Wall

No, it is getting late and other hon. Members wish to speak. It would be most unfair of me to take up the remaining time that is available to them.

The whole object of this process, even of those who get a job afterwards, is to drive down the average level of wages.

Mr. Peter Thurnham (Bolton, North-East)

rose—

Mr. Wall

Let me finish.

The Chartered Institute of Public Finance and Accountancy estimates that, under the Government's housing proposals, rents will increase by between 20 and 30 per cent. The report estimates that rents will increase in the City of London by 125 per cent., in Hackney by 160 per cent. and in Camden by 220 per cent. Yet in Hackney, where homelessness has increased 600 per cent. since 1979, Government cuts have meant that the council can employ only two extra members of staff to deal with that growing problem.

Cuts have had other effects. The average earnings of street sweepers in Southwark have been reduced from £140 to £80 a week because of the abolition of bonuses. In Birmingham, the privatisation of direct labour organisations has reduced the number employed from 715 to 452.

Earlier I pointed out that, in many areas, the local authority is the largest single employer. Even in the Greater London area, only 500,000 manufacturing jobs are left. The reason why local government has become the biggest employer is not because it has employed additional people, but because manufacturing industry has declined seriously during the past 10 years. In only two Greater London local authorities is the council not the largest employer of labour. That is around Heathrow airport and in Dagenham, where the Ford Motor Company employs the largest number of workers.

Jack Layden, chairman of the Association of Metropolitan Authorities, said recently: Authorities stand to lose over £600 million in grants as a result of not being able to reach the Government's set figures. This will result in rate increases well above the forecast. The preliminaries to the community charge will also be most vicious and will hit the poorest most with the ending of the 100 per cent. rate rebate from April next year.

I said that I wished to speak about Bradford, as I represent a Bradford constituency. Bradford has its share of the social and structural problems which abound in the north and many other inner-city areas. The European Community Commission in its recent report on the economic position of our area has shown that 35 per cent. of the working population continue to be employed in manufacturing, which is above the national average of 27 per cent. In services, our proportion is the opposite: 56 per cent. compared with the national average of 61 per cent. Even in our traditional manufacturing area, there has been a shift in employment from manufacturing to the service sector. That is due, not to any large increase in job opportunities in services, but to the catastrophic drop in total employment, amounting in the old Yorkshire heavy wool industry, which is part of Bradford and the surrounding area, to 15,000 people in 1979–81, which is 7.9 per cent. of the working population. Over the 10 years to 1981, textiles and engineering lost 17,000 jobs, and mechanical engineering lost 4,600 jobs.

More than 30 per cent. of Bradford's schools were built before 1906. Forty per cent. of Bradford's sewers are more than 100 years old and we have constant problems of collapsing sewers which require renovation or renewal. Our backlog of housing repairs amounts to some £130 million, representing the sum that we would receive in 10 years from the total housing investment programme for our city. We are saddled with numerous ancient and outdated industrial buildings, mostly on sites now too small for modern development, yet we are one of the worst supported in terms of urban aid grants.

Unusually, we have an increasing population, and thus increasing needs in education, housing and other areas. We have a large immigrant population, mainly of Asian origin, and we urgently need measures to improve the facilities in which they live. We have 8,000 people on our housing waiting list. That is a formidable list of our needs, yet we are only one of five local authorities which face the maximum reduction under the Government's so-called multiplier, with a factor of 1.1.

The Government's GRE works on the cosy assumption that rates will be equalised throughout the country if every local authority spends to the grant-related expenditure figure. That makes the broad assumption that all areas have similar problems and all have similar resources to finance the meeting of those needs.

Mr. Alfred Morris (Manchester, Wythenshawe)

My hon. Friend has spoken about matters of deep human concern. Is he aware that many local authorities now have to choose, not which of their discretionary powers to use in favour of disabled people, but even which of their legal duties to fulfil?

Mr. Wall

I am well aware of that. My right hon. Friend will recall that, when he first stood for Parliament, I was a teenage constituency secretary. I think that some of his interest comes from a meeting at that time with my sister, who happens to be handicapped. I know from the number of letters that I receive that people need showers, baths and all sorts of things, and I know of the incredible waiting lists. We are not fulfilling our obligations.

Government cuts in rate support grants are to force down expenditure on staff and services in local government. The more an authority spends above GRE, the more it loses. The greater its efficiency on GRE, the more grant aid it gains. Because of the unfairness of that system, the Government then introduced the target system, supposedly based on historical spending patterns. For most local authorities, that figure was similar to, or a little above, GRE. For Bradford, it was considerably less. Therefore, the authority spent below GRE and was still penalised.

We estimate that the authority has lost some £38 million since 1986–87 which has led to high and entirely unfair rate increases. The abolition of the target system last year led to great expectations, but the Government then introduced the multiplier, which meant that last year we received only part of the shortfall, further reduced following the revolt of the shire counties and the sympathetic hearing given to them by the Secretary of State.

In answer to a question from my hon. Friend the Member for Bradford, West (Mr. Madden) on last week's statement on the rate support grant, the Minister said that Bradford had received £60 million extra. That received some publicity in the local press. I am assured by the local authority finance department that the figure was not £60 million but £16 million. The fact remains that we have lost £38 million over three years and we are still being penalised, even when spending below GRE.

We are morally entitled to that money, and we are entitled to a fair evaluation of the needs of our metropolitan district. That £38 million is not merely an arithmetical device, or a theoretical nicety; it means that we must set a rate 10 per cent. above that of our neighbours—for example, those in Leeds—to achieve the same level of services. I am certain that my hon. Friends from the Leeds area do not think that they are particularly well treated. An extra £38 million will have been collected from Bradford ratepayers over what would have been the case had we received our full entitlement to rate support grant. That is equivalent to a rate of 87p in the pound.

It means that, over three years, Bradford ratepayers will have paid the following extra rates: £32 for a terraced house with a rateable value of £37; £146 for a pre-war semi-detached with a rateable value of £168; £174 for a post-war semi-detached house with a rateable value of £200; £348 for a detached house with a rateable value of £400; and £522 for a large detached house with a rateable value of £600.

That represents an average for all domestic dwellings in the metropolitan district of £110 per ratepayer—this in the West Riding, which is No. 9 in the list of nine industrial areas which have the lowest rates of pay. Those are actual sums paid by ratepayers, so we can quantify the cost of Toryism and the Tory Government to ratepayers in Bradford. There are many more hidden costs in social deprivation, cuts in services and the sacking of people employed in local government. Over the years, more people are beginning to realise that, and more of them will see the need to change the Government.

8.50 pm

Mr. Peter Thurnham (Bolton, North-East)

I am rather sorry to be following the hon. Member for Bradford, North (Mr. Wall). Had his predecessor been here, he would have been sitting on this side of the House and I would have had to follow someone else. We valued the contribution made by his predecessor, and I hope that he will return to the House before too long.

If the electorate of Bradford, North stopped to think about some of the things that the hon. Gentleman said, they would be glad to change back to the former Member. His statement that earnings have been driven down because of privatisation does not square with the facts. Average earnings have increased at a record rate under this Government during the process of privatisation, and much faster than they did during the nationalisation from which we suffered when the Labour Government were in power. The hon. Gentleman talked about the catastrophic drop in manufacturing employment, but we must ask how much of that was due to the massive increases in rates that were imposed upon those companies.

Mr. Stuart Holland (Vauxhall)

Perhaps the hon. Gentleman would like to know that, in reply to a recent question from me, the Chancellor of the Exchequer said that rates for industrial companies represent less than 1 per cent. of total costs. That must answer his question.

Mr. Thurnham

That serves to illustrate the complete ignorance of Opposition Members about the importance of costs. The hon. Gentleman talked about 1 per cent., but over 10 years that would represent 10 per cent. of costs. No company could manage that burden year after year.

Mr. Holland

The hon. Gentleman is talking about taking privatisation in the economy as a whole and the rate of wage increases in the economy as a whole. He should realise — I do not know whether he is a trained economist—that he cannot do that. It is a non sequitur. Even his arithmetic is wrong. He said that 1 per cent. a year over 10 years comes to 10 per cent. But less than 1 per cent. is less than 1 per cent.—that is less than the accounting errors of our best-managed companies. If the hon. Gentleman wishes to give strictures to the Opposition, he should address himself to the arguments of my hon. Friend the Member for Bradford, North (Mr. Wall) and not make such flatulent statements.

Mr. Thurnham

The hon. Gentleman is driving himself further into a hole. If a company accumulates costs over a period, they become a substantial burden. The point cannot be escaped.

I am delighted that we can say that this is the penultimate occasion on which we shall work our way through the machinations of rate support grant. It is some years since I was in local government, and I cannot say that I follow the basis of the calculations any more easily now than I did then. It is pleasing to know that the settlement is generous and will allow non rate-capped authorities to hold their spending broadly steady in real terms. The generalisation will allow some authorities to do better than others.

I thank my right hon. Friend the Secretary of State for his reassurance that the error in relation to students in further education will be adjusted. Perhaps it will go down as the Bolton error. We have heard a great deal about the Bromley error—of which I was previously unaware—but when we have our ultimate debate next year, we may refer to the Bolton error. I suspect that there may be some knock-on recalculations in respect of other authonties.

It is a great delight to know that the era of capping, netting, holdbacks, targets, grant forefeits, slopes and thresholds will be relegated to the dustbin and that we can move to the much simpler and more beneficial system about which we may hear more next week if we have the debate that we all expect. Today's debate may not be terribly exciting, but the debate next week may provide the excitement that has been lacking today.

The RSG provision allows for an increase in spending of 7.45 per cent., but my local authority discovered that its allocation was only 6.8 per cent. Even after allowing for the increase in the provision for the further education of students, Bolton's increase will be only about 7.1 per cent., so it will still have a shortfall. The authority believes that the highways budget is short by £470,000. It is admitted that the change in the method of calculating the highways grant has meant a reduction of £257,000, which is still far short of the sum which the local authority sought. Would it be possible to reconsider the provision of a safety net for that item? As my local authority is being penalised, compared with the average rate of increase for all authorities, a safety net may help.

The authority was also worried that further adjustment may be needed in the calculation of the education component, especially in relation to teachers' wages. I am grateful that the Under-Secretary will meet a delegation from my council next week, when the points will be discussed in more detail.

I hope that that visit will enable my hon. Friend to point out the great benefits of putting services out to tender. A reduction of more than 10 per cent. on those services could save £300 million a year nationally. On that basis, in my authority, putting services out to competitive tender would mean a saving of about £1 million a year. It has always surprised me that local authorities were not keener to follow the private sector, which has put services out to private tender as much as possible.

For instance, a company as well known as Marks and Spencer in the high street does not manufacture any of the goods that it sells. All those goods are put out to competitive tender. If ever there was a firm that could say, "Why don't we make all these things ourselves?" it would be a firm such as that. In some cases, it takes the whole of the output of a supplier. If it is wise for Marks and Spencer to put all its products out to competitive tender, surely it is wise for all local authorities to do exactly that. It is extraordinary that so many weird and wonderful arguments are produced about why it should not be necessary. Someone once said that it should not be necessary because these things are necessities. What could be more necessary than food and clothing?

I thank my hon. Friend the Under-Secretary for giving us the opportunity to come to see him next week, and I hope that at that meeting we shall be able to explore some of the points that I have made.

8.59 pm

Mr. Harry Cohen (Leyton)

The hon. Member for Hendon, South (Mr. Marshall) described the rate support grant as being understood by three people—one dead, one mad and one who had forgotten all about it. That sounded like the Department of the Environment team who are responsible for the rate support grant report. One cannot call them the good, the bad and the ugly because there is nothing good about the report, but there is plenty that is bad and ugly that will flow from it. There will be further cuts on a wide scale and at all levels in the public services.

I have been speaking to my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) who is the Labour spokesman for the disabled. He told me that local authorities will be forced to break the law by the Government. They cannot even choose between the discretionary duties that they wish to perform for the disabled. They have to choose between which legal duties they will carry out. Thus the Government are forcing the local authorities to break the law, which is a scandal. Waiting lists for help for the disabled will be made worse under the report.

Mr. Alfred Morris

Is my hon. Friend aware that the advice given to me as Minister for the Disabled was that waiting lists are illegal? To keep people who are severely disabled waiting for help, is really outside the law if they have been assessed as to their needs. It is a very serious matter if local authorities have to choose not just which of their discretionary powers to use, but even which of their legal duties to fulfil.

Mr. Cohen

That is exactly the point. I am grateful to my right hon. Friend. It should be the Government who are before the courts when that law is broken, not the local authorities.

The Association of Metropolitan Authorities described the effect of the report. It stated that the aggregate Exchequer grant will represent just over 46 per cent. of relevant expenditure in 1988–89. That compares with 61 per cent. in 1979–80 when the Government came to office. Had that 1979–80 grant percentage been maintained for next year, the aggregate Exchequer grant would have been £4.4 billion higher than is now proposed. Rate bills up and down the country would now be 25 per cent. lower had it not been for the reduction in Government grant to the local authorities. The AMA states further: To meet the Government's target local authorities would be required to reduce the level of services by 5 per cent. or increase rates well above the rate of inflation. Such reductions in service levels are unachievable in one year even if they were desirable. In London, the Government are also forcing a downward spiral in public services in borough after borough. The Association of London Authorities says about the report and Government policy: The Government's main aim appears still to be a reduction in the level of local authority services despite the growing needs of the communities they serve. That is particularly so for authorities with the greatest deprivation.

The ALA also talks about the need for decent housing, and comprehensive social services, improving the quality of life, and giving an equal chance in life for the disadvantaged, but it says: The Government consistently underestimates the level of service provision needed, and compounds that with savage grant penalties for any spending above the Government-assumed levels. Some of the most deprived authorities are rate capped as well, and no attempt is made to link the level of spending allowed by such authorities to what is needed to provide decent services for the most oppressed sections of the community. With this report and all their previous measures the Government are increasing poverty.

They talk about rejuvenating the inner cities, where there are the greatest problems and the greatest poverty, but the report will increase the plight of inner cities and areas with inner-city problems in London. My authority has been rate-capped for the first time and the council's budget for next year will be based on a rate set by the Government. It will be limited to £142 million, which is a cut of one sixth. But the services have not diminished by one sixth; the community's need has increased in recent years. The Government have imposed a £30 million cut on Waltham Forest—equivalent to the whole social services budget for the area. Social services—the Government's supposed policy of community care will be a policy of community neglect because of these cuts — will be affected. Every service will be affected, but especially social services and education.

Last year there was a rates rise of 62 per cent., caused by the neglect of the previous council—which was Tory-controlled, with Liberal support—and the £40 million stolen by the Government including penalties. Ratepayers were charged £1.63 for every £1 spent. That was a scandal. That was a Tory rates rise. It was a deliberate manipulative move to punish all those who had voted out Tory council members in a previous local election. It was made also for party political reasons connected with the general election. I believe that the right hon. Member for Chingford (Mr. Tebbit), who made a big fuss and was a member of the Government who stole the £40 million from my borough, was never asked by the Waltham Forest ratepayers association about that money. If he was asked, his comments have not appeared in the columns of the local press. The right hon. Gentleman should have been made to answer.

The Waltham Forest ratepayers association has been well financed, the Tories being among its main contributors, for their own manipulative reasons. The ratepayers association's case was thrown out of court. Its lawyer accepted that a rates increase of more than 30 per cent. would be needed simply to stand still. What an indictment of the Tory Government's policy towards Waltham Forest, and what proof that they were responsible for the rates rise.

Another reason for the Tory rates increase was to pave the way for Tory cuts. That is what the rate-capping robbery is all about. The rates will decrease next year, but so will the value for money for Waltham Forest ratepayers as more money is taken from the borough to be put directly into the hands of the Exchequer.

I shall give examples to show how the Tories do not care a fig about Waltham Forest ratepayers. There is the poll tax, about which we shall hear much more in the House. Waltham Forest was cited as an exemption which would have to run two systems—rates and poll tax—for four to five years. When I asked who would pay the administrative costs of running two systems, last week the Government said, "The ratepayers of Waltham Forest." That shows that the Government do not care a fig for those ratepayers.

What is happening about the storm damage? It is estimated that the storm damage will cost £2.1 million, but the Government grant will be only £700,000—a shortfall of £1.4 million to be found by the ratepayers. Even worse, the penalty imposed by the Government of £1.63 for every £1 spent will cost the ratepayers another £880,000.

Mr. Holland

The Tories say it was an act of God.

Mr. Cohen

The penalty is not an act of God; it is an act of the Tory Government.

Rate capping will hammer the voluntary organisations. They have already suffered from the abolition of the GLC, which helped councils with grants. They are also being hammered because the Government have taken away the traditional urban aid. A small amount of money given to voluntary organisations produces enormous value for the community as a whole. It is pump-priming; it is self-help— something that the Government are supposed to want. It is all about providing local services that ease the burden on the National Health Service and the social services. The voluntary organisations help people to cope with the misery in the community. Age Concern, Dial-a-Ride and play groups for the under-fives will be hammered by rate capping. Education and social services will also suffer, but I will not mention those in detail tonight; I shall save that for a future occasion.

Housing in my area is among the worst 2.5 per cent. in the country. There are enormous waiting lists and a serious homelessness problem. The general state of disrepair needs to be tackled. Yet for every £1 that the council spends on repairs, the Government charge it £1.63. The Government are the Rachmans in housing. There are thousands of jobs at risk, so it is no wonder that nine trade unions held a public protest, which affected every council department, against rate capping. The Government's policy in Waltham Forest is one of private payment for public squalor. I warn them that there will be increased public protest against rate capping, which is a bad and ugly policy that does nothing to help provide essential services.

9.13 pm

Mr. Irvine Patnick (Sheffield, Hallam)

The hon. Members for Leyton (Mr. Cohen) and for Bradford, North (Mr. Wall) have explained everything to the House. The hon. Member for Bradford, North pointed out that since 1979 the sewers have collapsed, schools need major repairs — and on and on went his litany. The hon. Member for Leyton offered no alternative policy; he simply wanted more money, but with no improved efficiency, no changes and no value for money. He wants his council to continue with its old ways.

My right hon. Friend the Secretary of State said that this is the last but one rate support grant debate. When the new system is introduced in 1990 the level of local authority spending will be clearly and directly reflected in the level of community charges.

Mr. Eric S. Heifer (Liverpool, Walton)

What about services?

Mr. Patnick

The hon. Gentleman seems to enjoy making such interventions. We cannot determine services until the system is introduced in 1990. However, I assure him that what happened in Liverpool will not happen in other cities.

Mr. Heffer

What happened in Liverpool?

Mr. Patnick

I leave that for the history books.

The ratepayers in Sheffield want a rate freeze for the next two years and do not understand why the city has not been rate capped for 1988–89.

Mr. Heffer

The hon. Gentleman referred to Liverpool. The Liverpool district council built 5,000 houses, seven sports centres, a new park, and kept rents down. It kept rates down to 9 per cent. It also provided 4,000 new places for nursery school kids. It did more than any council in the country, and we are proud of it.

Mr. Patnick

I am grateful to the hon. Gentleman for regaling us with the story of how Liverpool went bankrupt.

If Sheffield city council decides to put services out to tender before the local government legislation becomes law, it will save ratepayers' cash. It does not need to wait for the enactment of the legislation. It can do it now. The council seems to disregard the fact that more staff equals higher rates. Its payroll increased from 30,000 employees in 1980 to 33,000 in 1985. That was before the abolition of county councils.

Sheffield council and others should have examined ways of reducing their rates bills. The level of rates will depend on the budget decisions made by each authority. All authorities owe it to ratepayers and to prospective community charge payers to do all that they can to keep spending down. This year, Opposition Members brought out a consultative paper called "Local Government Reform in England and Wales". It can be summed up in a few words. The policy was to end surcharges, disqualification of councillors and rate capping. It added up to more profligacy and extremist behaviour by Left-wing councils.

The rate support grant will provide Sheffield with a block grant of over £114 million, if it keeps its expenditure broadly constant. It has been estimated that, in real terms, it will enable the council to reduce local rates by at least 80 per cent. next April.

My right hon. Friend the Secretary of State for the Environment said: if they"— that is, local authorities— do not spend more than the realistic provision that I have announced that we propose, the average increase in rate bills for non-rate-capped authorities should be around the rate of inflation, though as always there will inevitably be considerable variations around that average." —[Official Report, 23 July 1987; Vol. 120, c. 498.] My right hon. Friend the Secretary of State for the Environment is a much maligned person. When he rate-caps cities such as Sheffield, some people think that he is wonderful. But when he does not do so, they think that he does not care about them.

It has been obvious for a considerable time that something needs to be done about rates. The rate base needs to be widened so that the burden is not unfairly concentrated on too few shoulders. We must ensure that a substantial proportion of electors have a direct financial interest in their local authority's decisions. There should be a clear link between changes in expenditure and changes in local tax bills. At present, rate bills are a poor indicator of what is happening to local authority spending.

This is the third time that I have enjoyed listening to a debate in the House. Sadly, for reasons best known to other people, I have not been called upon to speak previously. I have enjoyed listening to the fight. It would appear that everything that the Conservative Government have done is wrong. Opposition Members have rubbished every proposal, but no alternatives have been put forward. No thought has been given to the matter.

How would Opposition Members cope with the matter except by spending more money? I have heard no alternative to the community charge. No great solution has been offered by any Opposition Member. It has been a yah-boo situation. The party of the hon. Member for Southwark and Bermondsey (Mr. Hughes) has explained no policy on the matter. Opposition Members rubbish the Government, but do not put forward any alternatives because they want to enjoy the debate for sport. I should have loved to hear one solitary suggestion from Opposition Members that would enable a Conservative Member to say, "What a good idea. Why didn't we think of that?"

9.19 pm

Mr. Jeff Rooker (Birmingham, Perry Barr)

The hon. Member for Sheffield, Hallam (Mr. Patnick) would probably disagree with me—

Mr. Patnick

It is not about Sheffield?

Mr. Rooker

No, it is not about Sheffield. It was agreed between the Department of the Environment's civil servants and the local authorities associations' civil servants that local government in the next financial year would have to spend not less than £29 billion to maintain services at their present level. The Secretary of State has fixed that expenditure at £27.538 billion. There is a shortfall, which I raised with him when he made his statement about a week ago, of £1.47 billion. Nobody disputes those figures.

Mr. Ridley

I do.

Mr. Rooker

The Minister disputes them. That is fine; I will be glad to hear what he says when he winds up the debate.

The Government will cut by 5 per cent. the amount they should spend to maintain the present local government services for the next financial year. The Secretary of State stated that local government services were spending too much, but central Government will not decide what services should be cut. The Minister offered no examples today of where services should be cut.

Many of my hon. Friends referred in their excellent speeches to local authority social services, which, unlike the police services, do not receive special treatment in their budgets. The cuts in the National Health Service place a greater burden on local authority social service budgets than on any other sector of local government. The cuts affect people who must be cared for by their family, relatives or neighbours, who require home help services, and tuck-you-in and get-you-up services. People who are unable to have operations and have to stay in their own homes need more services, but they are unavailable because the Government have imposed further cuts on local authority social services. The Secretary of State can say only that it is not very exciting stuff. It is not exciting to Conservative Ministers because they neither understand nor care about the consequences of their policies.

My hon. Friend the Member for Copeland (Dr. Cunningham) referred to the effect on housing benefit and the penalties imposed by the Government on the provision of housing benefit services by local government. From April 1988, the 100 per cent. rent rebate system will disappear for everyone who currently enjoys it because their income is so low. Questions asked by hon. Members about where the income support will come from for people on the lowest incomes are fobbed off to the DHSS, and the shortfall as from 1 April next year, when the cuts will come in, has not been explained.

The present rating system—this must be repeated ad nauseam so that there can be no misunderstanding—is not the one inherited by the Government from the Labour Government. It is not the system that operated from 1974 to 1979 — the one that has been wholly discredited by the Government, who seek to rubbish it and make it more complicated at every opportunity so that they can make their alternatives seem more popular. The present system is of the Government's own making. They have made a mess of the present rating system. Any fool, even those fools, have shown that income tax can be cut —[GOVERNMENT MEMBERS: "Fools?"] Yes, the Government are fools. Anyone can cut income tax by placing a burden on the ratepayers.

The nation is more highly taxed than ever before. The tax burden on the British people has never been higher under any Government that any hon. Member cares to name. One of the reasons for this is the direct effect of trying to cut tax on one section of the community and shifting the burden onto another, the ratepayers. As one of my hon. Friends said, the average rate increase in England since the Tories came to power is 13.6 per cent. per year. The direct effect of central Government withdrawing the rate support grant to local authorities has been, whatever the Secretary of State might argue, £21 billion.

Mr. John Marshall

Will the hon. Gentleman give way?

Mr. Rooker

Not at the moment.

The direct effect this year is that the average rates bill for dwellings in England is £5 a week higher than it need be. That £5 a week is a direct result of the Government rigging the rate support system during their years in power. The Government show that they have no understanding of the issues in larger cities. The inner-city areas and the outer estates of those large conurbations have suffered more than the rest of the country from the withdrawal of central Government support. Ministers boast about getting the private sector to invest by bribing them with public money, but that cannot stand up as a policy. It will not work. The private sector will not invest unless it can see some strategy. It will not invest on a scale that will replace the withdrawal of public money by Government diktat unless there is a strategy for those areas. That strategy can come only from the elected local authorities. No business man in his right mind will invest money, even if he is bribed to do so by Government grants, unless he can see a plan for the area where his investments are to take place—not just for the road or the few acres of his investment.

The Government have a specific aim — the rate support grant adds to it — to drive local government away from dealing with our larger cities. We know that that is the case. It is the stated position, not necessarily of the Department of the Environment, but of the Department of Trade and Industry. Ministers have said that the Government cannot afford to waste time on Labour-led local authorities. When Cabinet Ministers say that they will not waste their time simply because local authorities are Labour-led, we know that that is re-buttressing the Prime Minister's avowed public pledge to attempt to snuff out of existence a political party which she happens to dislike. In a democracy, the Prime Minister has publicly voiced her intention to snuff out a political party simply because she does not like it. It happens to hold more local power than the party in government.

When that publicly voiced intention of the Prime Minister is repeated by members of her Cabinet, it is little wonder that bodies such as the CBI, which is led by someone who knows a thing or two about local government, say that we cannot ignore the local authorities. Mr. Banham has often been quoted as saying that the councils were efficient and effective in many respects. He said: The answer is not to bypass councils, but to make them work properly. The Government seek simply to ignore them because they are Labour-led.

We have had many references to the effects of storm damage, first from my hon. Friend the Member for Copeland and repeated by many hon. Members, and to the effect on local authorities. The Secretary of State thinks that he has moved to meet some of the demand. Indeed, the hon. Member for Hendon, South (Mr. Marshall), who sought to intervene, welcomed the Secretary of State's statement today, in so far as it affected the London borough of Barnet. I am not certain whether the hon. Gentleman was in the Chamber when my hon. Friend the Member for Copeland opened the debate. If he was present, he must have been reminded of his own local authority chief executive's letter to the Secretary of State on 23 November.

That letter made it absolutely clear that the London borough of Barnet was, in effect, going to be fined £420,000 simply because of its efforts to deal with the storm damage. The letter said that the penny rate in Barnet is £612,500. However, that authority does not have a piggy bank. The Secretary of State seems to believe that local authorities should have such a bank of contingencies. He is penalising those authorities that do not have such a piggy bank. He has penalised Barnet and made a profit from that borough of £420,000. The Prime Minister will remain silent about this matter, but why on earth is the hon. Member for Hendon, South welcoming such a statement?

Mr. John Marshall

Did the hon. Gentleman riot hear my right hon. Friend say that, where storm damage is capitalised— the London borough of Barnet will be able to do that: indeed, the leader of that council confirmed that this morning — no penalty will be charged on the interest relating to that capitalisation? Will the hon. Gentleman tell me how he squares his statement that we are now more heavily taxed than ever before with his oft-repeated statement that we spend far too little money on every social service?

Mr. Rooker

I will send the hon. Gentleman his own Government's parliamentary answers about the rise in the tax burden. In real terms, the average tax burden on the British people was £30 billion higher this year than it was in the last year of the previous Labour Government—the so-called "high-taxing" Labour Government. I can give the hon. Gentleman chapter and verse on exactly how that figure is made up.

Mr. Ridley

What about a cut?

Mr. Rooker

The London borough of Barnet will suffer a cut in expenditure. What the hon. Member for Hendon, South fails to realise is that the product of the penny rate in Barnet must be spent before any assistance is given. The borough must spend £612,500 and the effect of spending that penny rate will result in a penalty of £420,000.

If the hon. Member for Hendon, South wants any further examples, we only have to turn to east Sussex. In an effective speech, the hon. Member for Lewes (Mr. Rathbone) pointed out that his local authority reckoned that it would have to spend £12 million—the estimated cost of storm damage. The authority would receive assistance, over and above the base set out in the Bellwin rules, of £3.5 million, leaving a sum £8.5 million. The hon. Gentleman said that the consequences of spending the £8.5 million would result in that authority suffering a grant loss of £750,000. That means that the authority must spend £9.2 million. The Secretary of State told his hon. Friend the Member for Eastbourne (Mr. Gow): I would be horrified and astonished if either my Department or the Treasury were to make a profit" —[Official Report, 30 November 1987; Vol. 123, c. 611.] But the Treasury will make a profit of £750,000 out of the ratepayers of East Sussex county council as a result of one night's storm damage. That cannot be justified. The hon.Member for Hendon, South may seek to justify that in Barnet, but I do not see how he can seek to justify that in East Sussex. The statement that has been made by the Secretary of State does not meet the claims of local authorities, and amounts to nothing less than deception.

Many of my hon. Friends made interesting speeches, but before I mention some of them in detail I shall mention a couple of speeches from the Conservative Benches. 'The hon. Member for Ealing North (Mr. Greenway) — he has apologised for his present absence—referred to the problems of the price of a haircut due to the rate increase in Ealing. If he thinks that is a problem now, he should wait until the revaluation of barber shops is carried out as a result of the unified business rate. I am afraid that there will be many long-haired people in Ealing as a result of the unified business rate.

The right hon. Member for Brent, North (Sir R. Boyson) made a typical speech—all his speeches are the same whether he is on the Front Bench or the Back Benches—

Sir Rhodes Boyson

They are all good.

Mr. Rooker

Yes, indeed — they are always entertaining. I only wish that the right hon. Gentleman had said the same things when he was a Minister. Today he called for smaller units of local government. In many ways that is a valuable suggestion. There is no question but that the units of local government are too big. Let us consider the right hon. Gentleman's borough of Brent. I always work out the size of a borough by the number of Members of Parliament it has and Brent is a three-Member constituency. The city of which I have the honour to represent part is a 12 Member constituency so the right hon. Gentleman will see that I share some of his views.

My hon. Friend the Member for Derbyshire, North-East (Mr. Barnes) raised the important issue of the Dronfield fire. I ask the Minister to take my hon. Friend's representations more seriously than hitherto. Underground fires are a serious matter and local authorities cannot provide the necessary funding to cope with them.

My hon. Friend the Member for Knowsley, North (Mr. Howarth) drew attention to the massive sum of money required to start up the poll tax. We shall consider that matter in detail next week and I do not intend to deploy the arguments tonight.

My hon. Friend the Member for Normanton (Mr. O'Brien) said that insufficient money was provided to give ratepayers in West Yorkshire adequate fire coverage. If Ministers do not take account of these speeches, it will be no good councils queuing up to get back into the black as soon as possible after the next fire, because another fire will surely occur and result in deaths if the fire service is inadequate.

My hon. Friends the Members for Bradford, North (Mr. Wall) and for Leyton (Mr. Cohen) made excellent speeches. The cuts in social services in Bradford are without parallel.

We ask Ministers to listen to us. We know that they do not understand. They do not represent these areas, and they do not visit them sufficiently often. We ask them to listen to the voices of the people who represent those areas, to get away from the idea that local authorities are wasting their pot of gold and to consider the need for more money to maintain existing services. None of my hon. Friends has called for more money or for expanded services. They are simply seeking to defend the status quo. This requires £1.4 billion extra public expenditure. We must raise that money before we can spend it. That is why we disagree with the rate support grant settlement, and why we shall vote against it.

9.37 pm

The Minister for Local Government (Mr. Michael Howard)

This is the last but one debate on the rate support grant settlement. I doubt whether these debates will be much mourned or much missed. They were described by my right hon. Friend the present Secretary of State for Education and Science as occasions when the disgruntled speak to the disenchanted in front of the disbelieving.

The complexity, indeed the incomprehensibility, of the system is accepted on both sides of the House. It is difficult enough for local authorities to understand how their grant entitlement is made up and it is virtually impossible for the ratepayer to arrive at any real understanding of why he pays what he does.

However, this year, relief is at hand. The days of the present system are numbered. We are seeking to put in place a new system which will get rid of all the worst features that have bedevilled local government finance for so long. We shall put an end to resource equalisation, that bizarre concept which seeks to equalise not what people pay in different parts of the country—that is what the new system will seek to achieve—but the rate poundage levied by local authorities in different parts of the country. We shall put an end to slopes, penalties and all those devices that have made the present system so complicated and the results of which have been described so vividly in some of the contributions to the debate. We shall restore the link between those who vote, those who benefit from the services provided by local authorities and those who pay for those services. Meanwhile, we must make do with what we have and make the best of it. That is what we have done.

Within the constraints of the present system, the RSG settlement is, as my right hon. Friend the Secretary of State said, a generous one. The aggregate Exchequer grant is increased by £750 million or 5.75 per cent. on 1987–88. It means that rate bills need, on average, to increase by no more than the rate of inflation. The fact that Opposition Members persist in describing the settlement as a cut says more about their use—or misuse — of language than about the facts.

Mr. Simon Hughes

Why is it then that, whatever their party, the spokespeople for the Association of County Councils and for district councils and metropolitan authorities, through their representative associations, unanimously say that the net result of the settlement is that there is a shortfall or cut—it comes to the same thing—of at least £1 billion and possibly more, even excluding some of the high wage settlements? How can they all agree? If the Minister is right, they must be wrong. Or are they right and the Minister wrong? That is more like it.

Mr. Howard

It is in the nature of such associations of that kind that they will rarely, if ever, be content with a settlement. To describe this settlement as a cut is accurate only in the sense that my right hon. Friend the Secretary of State defined a cut when he announced the settlement just a few days ago: if someone asks for an increase of 100 per cent. and is given an increase of only 50 per cent. it is described as a cut of 50 per cent.

Dr. Cunningham

Is it true that the Minister's officials from the Department of the Environment, working with the secretariat of the local authorities' associations, came to a figure necessary to maintain services which is £1.4 billion higher than the settlement announced by the Secretary of State? Is that true or not?

Mr. Howard

No, it is not true.

Dr. Cunningham

It is true.

Mr. Howard

If the hon. Gentleman will listen and wait, instead of expostulating, he will have the answer.

It is not true. The figure of 1.4 billion, to which both the hon. Member for Copeland (Dr. Cunningham) and the hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred, is not a figure which emerged from that working group. The figure of £1.4 billion emerged from the local authorities' associations themselves.

Dr. Cunningham

So you agree with them?

Mr. Howard

No, I do not agree with them. A lower figure emerged from that group. The group considered the matter on the basis that present policies were to be considered. We think that there are many areas in which present policies should not be considered and in which savings can be obtained.

The hon. Member for Copeland in the course of his remarks—

Mr. Steinberg

rose—

Mr. Howard

No, I will not give way because I want to deal with the remarks of the hon. Member for Copeland. He has raised a number of points and asked for answers, and I will do my best to provide them. He asked, first, whether Ministers would meet rate-capped authorities to discuss rate limits. It is now for authorities to consider proposed rate limits and to decide whether to accept them. If individual authorities wish to discuss their limits with Ministers, we shall do our best to accommodate them.

The hon. Member suggested that the rate limits for Camden and Hackney were too low by, I think, 5p in relation to Camden and 11 p in relation to Hackney. We believe that he has used a mistaken calculation to arrive at those figures. We think that our figures are perfectly correct. Perhaps I can write to the hon. Member and tell him where we think he has gone wrong.

The hon. Member also raised the reform of the housing benefit system which, from next April, will provide local authorities with adequate support for expenditure properly incurred, while giving the greater incentive for prudent administration. The change in the housing benefit grant-related expenditure reflects the change being made in the housing benefit system generally. In general, authorities that lose GRE from the new arrangement will gain from the corresponding increase in subsidy, and those that lose subsidy will gain in GRE.

About 97 per cent. of housing benefit is financed directly by central Government. Only the residual 3 per cent. and administration fall to be met by local government, and an allowance is made for that expenditure in GREs. This year's settlement makes full allowance for costs expected to fall on local authorities. The change to the GREs this year, discused with the local authority associations, is designed to provide incentives to local authorities to operate the system efficiently.

The hon. Member for Copeland also mentioned Ealing and its expenditure limit. Ealing had the opportunity, like all other rate-capped authorities, to ask for a redetermination of its expenditure limit. As the hon. Member knows, two authorities made applications for redetermination.

Mr. Cohen

One authority received nothing. The other authority received some money but strict conditions were imposed and it must report back to the Minister.

Mr. Howard

Very reasonable conditions were imposed on the redetermination that was granted to the London borough of Tower Hamlets. It is odd that the hon. Gentleman should say that those who applied received nothing, because that is manifestly not the case.

Dr. Cunningham

I am grateful to the Minister for responding to the questions that I put to him on a number of detailed matters. It is extraordinary that what he said a few moments ago seems to repudiate the basis of the work of the joint working party between his Department's officials and the local authority associations.

Mr. Ridley

It is a house of cards

Dr. Cunningham

From a sedentary position, the Secretary of State says that it is a house of cards. What he is saying is that it is a total waste of time for local authorities to bother to talk to the Goverment and their officials.

My question concerns the Minister's comments about housing benefit. Is he giving the House an assurance—a guarantee—that if local authorities have to spend more on housing benefit than the Government are allowing for, that expenditure will be exempt from penalty?

Mr. Howard

No, of course, I am not giving that guarantee, and I have not said that such a guarantee would be appropriate. Local authorities will not incur any penalty with regard to spending on housing benefit unless they exceed the GRE, which is specifically provided in the settlement for housing benefit. [Interruption.] The settlement is based on the proposition that reasonable provision is made for those expenses, and that matter was discussed with the local authority associations.

My right hon. Friend the Member for Brent, North (Sir R. Boyson) raised some interesting matters. I can well understand his passionate views about Brent council. I share his frustration that I must disappoint him about the rate-capping of that council. Following his meeting with my right hon. Friend the Secretary of State, he knows why Brent was not selected in July, and that decision cannot be changed now. All I can say to my right hon. Friend is that Brent will have to watch its step. If it increases its spending to the extent that he has prophesied it may return to the sector for selection in 1989–90, although I cannot speculate on what the criteria might be.

My right hon. Friend made a number of interesting suggestions. He will understand that, in the light of the legislative burden that faces the Department, his suggestion of an enabling Act was particularly attractive, and I wish that we could readily accede to it.

My hon. Friend the Member for Ealing, North (Mr. Greenway), who explained why he would be unable to be present during the wind-up speeches, asked specifically about Ealing's rate limit. It is based on the original expenditure level that was proposed in July. The proposed limit means that there will be a 43.5 per cent. reduction on 1987–88, which I am sure will be welcomed by the ratepayers of Ealing.

I am sorry that I missed the speech of my hon. Friend the Member for Hendon, South (Mr. Marshall). He asked about the Bromley error and whether Barnet would know, before it sets its rate, what percentage of lost grant would be returned during 1988–89. We shall be correcting the effects of the error for 1987–88 and 1988–89 as soon as Parliament has approved the supplementary reports. The final year, 1986–87, will be implemented in 1988–89, so Barnet will receive roughly two thirds of what is due next year and my Department will be sending local authorities full details shortly. I have written to my hon. Friend about the revaluation of superannuation funds. We are discussing whether there is a case for changing the existing rules, which require quinquennial revaluation.

If confirmation was required of the generosity of the settlement, it was provided by the speech of the hon. Member for Perry Barr who waxed eloquent, as is his wont, about a number of matters but devoted a relatively small proportion of his speech to the settlement. I cannot think of a more eloquent testimony to the soundness and generosity of the settlement.

At the outset I referred to the fact that the new system, which we hope to be debating shortly, will avoid all the worst features of the present system. Under the new system, local authorities will know before the start of the financial year exactly how much money they can expect from central Government. They will be able to plan the amount they propose to spend, secure in the knowledge that the money they receive from central Government will not be affected by their spending decisions and also in the knowledge that they will ultimately be accountable for their spending decisions to those who have to pay the community charge.

Of course, local authorities do not need to wait until the new system of financing local government is in place in order to increase their efficiency, reduce waste and improve the value for money that they offer their residents. They do not even need to wait for the enactment of the Local Government Bill, which completed its Committee stage yesterday, in order to secure those improvements. A total of £3 billion of expenditure will be subject to competition under the provisions of that Bill. There are other services where large savings are available and other areas that offer great scope for extra efficiency.

Take, for example, the level of rent arrears. The 20 worst local authorities have together a debt burden of over £100 million arising out of rent arrears. The disparity between authorities with similar problems is enormous. In London, south of the river, Southwark's rent arrears amount to no less than 24 per cent. of its rent roll. Lambeth's are a similar proportion, while in Wandsworth next door the percentage is 6.8 per cent.

The district auditor for Southwark has identified a number of areas where savings could be obtained. Changes in the way in which its vehicle fleet is managed could, for example, save £1 million a year. Southwark's response to this information was somewhat cautious. Its treasurer has said that with maximum co-operation and agreement with the work force it would probably take two or three years to achieve the majority of the savings. He was no doubt right to be cautious.

Southwark's record leaves a great deal to be desired. Its leader has said: The Town Hall is on the verge of collapse. Money spent in many areas is wasted. The services are demonstrably poor and give no reason why people in Southwark should trust the Labour Party to run the council". It is against that background of Labour local government — "Labour government in practice and action", in the time-honoured phrase of the hon. Member for Sheffield, Brightside (Mr. Blunkett) — that we approach the contributions to the debate made by the Opposition Members. They have made several different claims about the additional money they say should be available to local authorities from the taxpayer.

One of the most beloved statistics, certainly of the hon. Member for Perry Barr, is the £4.4 billion that he said local authorities would have had available to them if the grant percentage had remained at 1978–79 levels. My right hon. Friend the Secretary of State has already made it clear that the difference in cash terms is much more relevant and that is a much smaller sum.

Let us consider the figure of £4.4 billion used by the hon. Member for Perry Barr. It is a figure which begs many questions. Is the hon. Gentleman saying that the Labour party would have increased grant by that amount had it been in a position to do so? If not, it is difficult to see what relevance there is in that point.

If, on the other hand, the Labour party would have increased grant by that amount, it is a pity that it did not say so at the time of the general election. That alone would have added an extra 3p to the standard rate of income tax— over and above the doubling of income tax that would have been needed to make good the Labour party's other spending pledges.

It is no use the Labour party coming to the House day after day, night after night, calling for extra spending for everything under the sun while the right hon. and learned Member for Monklands, East (Mr. Smith) claims at the same time that the Labour party is not a high-tax party.

Early this year the Labour party produced a discussion document on those matters. It suggested that all controls on local government spending should be removed. Is that the Labour party's policy? Is that what the hon. Member for Copeland would have done if, perish the thought, he had been entrusted with these matters?

Hon. Members

Answer.

Dr. Cunningham

I am more than happy to answer that question, not least because we have answered it many times before. I shall try to speak in English, although I understand that gentlemen from public schools in the south have difficulty understanding someone with my origins.

Of course, a Labour Government would cash-limit its grants to local authorities. We have made no secret of that. But nor have we made a secret of the fact that what local authorities raise on their own account should be free from central control. That is the fundamental difference between us and the Government.

Mr. Howard

I am delighted to hear that. At its face value, it appears to show that the Labour party has some semblance of a policy for at least that aspect of local authority affairs.

The hon. Gentleman has been his party's spokesman on these matters for four years. But when the hon. Member for Perry Barr was appointed to his present position in June, he told the newspapers that he had asked what was his party's policy on local government and was told, "We haven't got one." The hon. Gentleman has an engaging turn of phrase. He was reported in The Independent on 24 September as saying: Putting it at its baldest, we haven't got a policy. That is the actual truth. That is the truth about the Labour party's condition. That is the basis on which it approaches these matters. That is why the hon. Gentleman, entirely understandably, spent so little time on the settlement.

Small wonder no one takes the hon. Gentleman or his party seriously on these matters. Small wonder that the Opposition are a sterile Opposition, entirely negative in their contribution to the debate.

However, I must not do the Opposition an injustice, because the hon. Member for Copeland made one revealing remark. I think that he intended it as a promise to local authorities. He said that he was prepared to promise that, if the Labour party was ever in government, the growth in Government grant to local authorities would keep pace with the growth in the economy. I have a strong suspicion that, given the likely growth in the economy under any future Labour Government, that cannot be taken as much of a promise by local authorities. If that is the best that the hon. Gentleman can do, local authorities will not be very impressed.

The settlement is far from perfect, but it is the product of a system which is in its death throes and we can look forward with hope to the new system that is appearing over the horizon and that will at long last restore to local government the clarity, fairness and accountability that it has for so long been lacking.

I commend the settlement to the House.

Question put:—

The House divided: Ayes 281, Noes 220.

Division No. 108]	[10.00 pm
AYES
Aitken, Jonathan	Bruce, Ian (Dorset South)
Alison, Rt Hon Michael	Buchanan-Smith, Rt Hon Alick
Allason, Rupert	Budgen, Nicholas
Amess, David	Burns, Simon
Amos, Alan	Burt, Alistair
Arbuthnot, James	Butcher, John
Arnold, Jacques (Gravesham)	Butler, Chris
Arnold, Tom (Hazel Grove)	Butterfill, John
Aspinwall Jack	Carlisle, John, (Luton N)
Atkins, Robert	Carlisle, Kenneth (Lincoln)
Atkinson, David	Carrington, Matthew
Baker, Nicholas (Dorset N)	Carttiss, Michael
Baldry, Tony	Chalker, Rt Hon Mrs Lynda
Banks, Robert (Harrogate)	Channon, Rt Hon Paul
Batiste, Spencer	Chapman, Sydney
Beaumont-Dark, Anthony	Chope, Christopher
Bellingham, Henry	Churchill, Mr
Bendall, Vivian	Clark, Hon Alan (Plym'th S'n)
Bennett, Nicholas (Pembroke)	Clark, Dr Michael (Rochford)
Benyon, W.	Clark, Sir W. (Croydon S)
Bevan, David Gilroy	Clarke, Rt Hon K. (Rushcliffe)
Biffen, Rt Hon John	Conway, Derek
Biggs-Davison, Sir John	Coombs, Anthony (Wyre F'rest)
Blackburn, Dr John G.	Coombs, Simon (Swindon)
Body, Sir Richard	Cope, John
Bonsor, Sir Nicholas	Cormack, Patrick
Boscawen, Hon Robert	Couchman, James
Boswell, Tim	Cran, James
Bottomley, Peter	Critchley, Julian
Bottomley, Mrs Virginia	Currie, Mrs Edwina
Bowden, A (Brighton K'pto'n)	Curry, David
Bowden, Gerald (Dulwich)	Davies, Q. (Stamf'd & Spald'g)
Bowis, John	Davis, David (Boothferry)
Boyson, Rt Hon Dr Sir Rhodes	Day, Stephen
Braine, Rt Hon Sir Bernard	Devlin, Tim
Brandon-Bravo, Martin	Dickens, Geoffrey
Brazier, Julian	Dorrell, Stephen
Bright, Graham	Douglas-Hamilton, Lord James
Brittan, Rt Hon Leon	Dover, Den
Brown, Michael (Brigg & Cl't's)	Dunn, Bob
Browne, John (Winchester)	Durant, Tony

Dykes, Hugh	Lawson, Rt Hon Nigel
Emery, Sir Peter	Lee, John (Pendle)
Evennett, David	Lennox-Boyd, Hon Mark
Fallon, Michael	Lightbown, David
Fenner, Dame Peggy	Lloyd, Peter (Fareham)
Field, Barry (Isle of Wight)	MacGregor, John
Fookes, Miss Janet	McLoughlin, Patrick
Forman, Nigel	Maples, John
Forsyth, Michael (Stirling)	Marshall, John (Hendon S)
Forth, Eric	Marshall, Michael (Arundel)
Fox, Sir Marcus	Martin, David (Portsmouth S)
Freeman, Roger	Mates, Michael
French, Douglas	Maude, Hon Francis
Gardiner, George	Maxwell-Hyslop, Robin
Garel-Jones, Tristan	Miscampbell, Norman
Gill, Christopher	Moate, Roger
Glyn, Dr Alan	Morris, M (N'hampton S)
Goodhart, Sir Philip	Morrison, Hon P (Chester)
Goodlad, Alastair	Moss, Malcolm
Goodson-Wickes, Dr Charles	Neale, Gerrard
Gorman, Mrs Teresa	Nelson, Anthony
Gow, Ian	Neubert, Michael
Gower, Sir Raymond	Newton, Tony
Grant, Sir Anthony (CambsSW)	Nicholls, Patrick
Greenway, Harry (Ealing N)	Nicholson, David (Taunton)
Greenway, John (Rydale)	Nicholson, Miss E. (Devon W)
Gregory, Conal	Onslow, Cranley
Griffiths, Sir Eldon (Bury St E")	Oppenheim, Phillip
Griffiths, Peter (Portsmouth N)	Paice, James
Grist, Ian	Patnick, Irvine
Ground, Patrick	Patten, John (Oxford W)
Grylls, Michael	Pattie, Rt Hon Sir Geoffrey
Gummer, Rt Hon John Selwyn	Pawsey, James
Hamilton, Hon A. (Epsom)	Porter, David (Waveney)
Hamilton, Neil (Tatton)	Portillo, Michael
Hampson, Dr Keith	Powell, William (Corby)
Hanley, Jeremy	Price, Sir David
Hannam, John	Raffan, Keith
Hargreaves, A. (B'ham H'll Gr')	Raison, Rt Hon Timothy
Hargreaves, Ken (Hyndburn)	Redwood, John
Harris, David	Rhodes James, Robert
Haselhurst, Alan	Rhys Williams, Sir Brandon
Hawkins, Christopher	Riddick, Graham
Hayes, Jerry	Ridley, Rt Hon Nicholas
Hayhoe, Rt Hon Sir Barney	Ridsdale, Sir Julian
Hayward, Robert	Roberts, Wyn (Conwy)
Heathcoat-Amory, David	Roe, Mrs Marion
Heddle, John	Rossi, Sir Hugh
Hicks, Mrs Maureen (Wolv' NE)	Rost, Peter
Hicks, Robert (Cornwall SE)	Rowe, Andrew
Higgins, Rt Hon Terence L.	Ryder, Richard
Hill, James	Sackville, Hon Tom
Hind, Kenneth	Sainsbury, Hon Tim
Hogg, Hon Douglas (Gr'th'm)	Sayeed, Jonathan
Holt, Richard	Scott, Nicholas
Hordern, Sir Peter	Shaw, David (Dover)
Howard, Michael	Shaw, Sir Giles (Pudsey)
Howarth, G. (Cannock & B'wd)	Shaw, Sir Michael (Scarb')
Howe, Rt Hon Sir Geoffrey	Shephard, Mrs G. (Norfolk SW)
Howell, Rt Hon David (G'dford)	Shepherd, Colin (Hereford)
Howell, Ralph (North Norfolk)	Shepherd, Richard (Aldridge)
Hughes, Robert G. (Harrow W)	Sims, Roger
Hunt, David (Wirral W)	Skeet, Sir Trevor
Hunt, John (Ravensbourne)	Smith, Sir Dudley (Warwick)
Irvine, Michael	Smith, Tim (Beaconsfield)
Jack, Michael	Soames, Hon Nicholas
Jackson, Robert	Speller, Tony
Janman, Timothy	Spicer, Jim (Dorset W)
Jessel, Toby	Spicer, Michael (S Worcs)
Johnson Smith, Sir Geoffrey	Squire, Robin
Jones, Gwilym (Cardiff N)	Stanbrook, Ivor
Jones, Robert B (Herts W)	Stanley, Rt Hon John
Jopling, Rt Hon Michael	Steen, Anthony
Kellett-Bowman, Mrs Elaine	Stern, Michael
Key, Robert	Stevens, Lewis
Kilfedder, James	Stewart, Allan (Eastwood)
King, Roger (B'ham N'thfield)	Stewart, Andrew (Sherwood)
Knapman, Roger	Stradling Thomas, Sir John
Knight, Greg (Derby North)	Sumberg, David
Knox, David	Summerson, Hugo

Tapsell, Sir Peter	Walker, Bill (T'side North)
Taylor, Ian (Esher)	Waller, Gary
Taylor, John M (Solihull)	Walters, Dennis
Taylor, Teddy (S'end E)	Ward, John
Tebbil, Rt Hon Norman	Wardle, C. (Bexhill)
Temple-Morris, Peter	Warren, Kenneth
Thompson, D. (Calder Valley)	Wells, Bowen
Thompson, Patrick (Norwich N)	Wheeler, John
Thorne, Neil	Whitney, Ray
Thornton, Malcolm	Widdecombe, Miss Ann
Thurnham, Peter	Wilkinson, John
Townend, John (Bridlington)	Winterton, Mrs Ann
Townsend, Cyril D. (B'heath)	Wolfson, Mark
Tracey, Richard	Wood, Timothy
Tredinnick, David	Woodcock, Mike
Trippier, David	Yeo, Tim
Trotter, Neville	Young, Sir George (Acton)
Vaughan, Sir Gerard
Viggers, Peter	Tellers for the Ayes:
Waddington, Rt Hon David	Mr. Alan Howarth and
Waldegrave, Hon William	Mr. David Maclean.
Walden, George
NOES
Abbott, Ms Diane	Cummings, J.
Adams, Allen (Paisley N)	Cunliffe, Lawrence
Allen, Graham	Cunningham, Dr John
Anderson, Donald	Darling, Alastair
Archer, Rt Hon Peter	Davies, Rt Hon Denzil (Llanelli)
Armstrong, Ms Hilary	Davies, Ron (Caerphilly)
Ashdown, Paddy	Davis, Terry (B'ham Hodge H'I)
Ashley, Rt Hon Jack	Dewar, Donald
Ashton, Joe	Dixon, Don
Banks, Tony (Newham NW)	Dobson, Frank
Barnes, Harry (Derbyshire NE)	Doran, Frank
Barron, Kevin	Douglas, Dick
Battle, John	Duffy, A. E. P.
Beckett, Margaret	Dunnachie, James
Beith, A. J.	Eastham, Ken
Benn, Rt Hon Tony	Evans, John (St Helens N)
Bennett, A. F. (D'nt'n & R'dish)	Ewing, Harry (Falkirk E)
Bermingham, Gerald	Farr, Sir John
Blair, Tony	Fatchett, Derek
Boateng, Paul	Fearn, Ronald
Boyes, Roland	Field, Frank (Birkenhead)
Bradley, Keith	Fields, Terry (L'pool B G'n)
Bray, Dr Jeremy	Fisher, Mark
Brown, Gordon (D'mlins E)	Flannery, Martin
Brown, Nicholas (Newcastle E)	Flynn, Paul
Brown, Ron (Edinburgh Leith)	Foster, Derek
Bruce, Malcolm (Gordon)	Foulkes, George
Buchan, Norman	Fraser, John
Buckley, George	Fyfe, Mrs Maria
Caborn, Richard	Galbraith, Samuel
Callaghan, Jim	Galloway, George
Campbell, Ron (Blyth Valley)	Garrett, John (Norwich South)
Campbell-Savours, D. N.	Garrett, Ted (Wallsend)
Carlile, Alex (Mont'g)	George, Bruce
Cartwright, John	Gilbert, Rt Hon Dr John
Clark, Dr David (S Shields)	Godman, Dr Norman A.
Clarke, Tom (Monklands W)	Gould, Bryan
Clay, Bob	Graham, Thomas
Clelland, David	Grant, Bernie (Tottenham)
Clwyd, Mrs Ann	Griffiths, Nigel (Edinburgh S)
Cohen, Harry	Griffiths, Win (Bridgend)
Cook, Frank (Stockton N)	Grocott, Bruce
Cook, Robin (Livingston)	Harman, Ms Harriet
Corbett, Robin	Hattersley, Rt Hon Roy
Corbyn, Jeremy	Healey, Rt Hon Denis
Cousins, Jim	Heffer, Eric S.
Crowther, Stan	Henderson, Douglas
Cryer, Bob	Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)	Mullin, Chris
Holland, Stuart	Murphy, Paul
Home Robertson, John	Nellist, Dave
Hood, James	Oakes, Rt Hon Gordon
Howarth, George (Knowsley N)	O'Brien, William
Howell, Rt Hon D. (S'heath)	O'Neill, Martin
Howells, Geraint	Orme, Rt Hon Stanley
Hoyle, Doug	Pendry, Tom
Hughes, John (Coventry NE)	Pike, Peter
Hughes, Robert (Aberdeen N)	Powell, Ray (Ogmore)
Hughes, Roy (Newport E)	Prescott, John
Hughes, Sean (Knowsley S)	Primarolo, Ms Dawn
Hughes, Simon (Southwark)	Quin, Ms Joyce
Illsley, Eric	Radice, Giles
Janner, Greville	Randall, Stuart
John, Brynmor	Rees, Rt Hon Merlyn
Jones, Barry (Alyn & Deeside)	Reid, John
Jones, Martyn (Clwyd S W)	Richardson, Ms Jo
Kaufman, Rt Hon Gerald	Robertson, George
Kinnock, Rt Hon Neil	Robinson, Geoffrey
Kirkwood, Archy	Rogers, Allan
Lambie, David	Rooker, Jeff
Lamond, James	Ross, Ernie (Dundee W)
Leadbitter, Ted	Rowlands, Ted
Leighton, Ron	Ruddock, Ms Joan
Lestor, Miss Joan (Eccles)	Salmond, Alex
Lewis, Terry	Sheerman, Barry
Litherland, Robert	Sheldon, Rt Hon Robert
Livsey, Richard	Shore, Rt Hon Peter
Lloyd, Tony (Stretford)	Short, Clare
Lofthouse, Geoffrey	Skinner, Dennis
Loyden, Eddie	Smith, Andrew (Oxford E)
McAllion, John	Smith, C. (Isl'ton & F'bury)
McAvoy, Tom	Smith, Rt Hon J. (Monk'ds E)
McCartney, Ian	Snape, Peter
Macdonald, Calum	Soley, Clive
McFall, John	Spearing, Nigel
McKay, Allen (Penistone)	Steel, Rt Hon David
McKelvey, William	Steinberg, Gerald
McLeish, Henry	Stott, Roger
McNamara, Kevin	Strang, Gavin
McTaggart, Bob	Straw, Jack
McWilliam, John	Taylor, Mrs Ann (Dewsbury)
Madden, Max	Taylor, Matthew (Truro)
Mahon, Mrs Alice	Thompson, Jack (Wansbeck)
Mallon, Seamus	Turner, Dennis
Marek, Dr John	Vaz, Keith
Marshall, David (Shettleston)	Wall, Pat
Marshall, Jim (Leicester S)	Wallace, James
Martin, Michael (Springburn)	Wardell, Gareth (Gower)
Martlew, Eric	Wareing, Robert N.
Maxton, John	Welsh, Michael (Doncaster N)
Meacher, Michael	Williams, Rt Hon A. J.
Meale, Alan	Williams, Alan W. (Carm'then)
Michael, Alun	Wilson, Brian
Michie, Bill (Sheffield Heeley)	Winnick, David
Millan, Rt Hon Bruce	Wise, Mrs Audrey
Mitchell, Austin (G't Grimsby)	Worthington, Anthony
Moonie, Dr Lewis	Wray, James
Morgan, Rhodri	Young, David (Bolton SE)
Morley, Elliott
Morris, Rt Hon A (W'shawe)	Tellers for the Noes:
Morris, Rt Hon J (Aberavon)	Mr. Frank Haynes and
Mowlam, Mrs Marjorie	Mrs. Llin Goldine.

Question accordingly agreed to.

Resolved, That the Rate Support Grant Report (England) 1988–89 (House of Commons Paper No. 163), a copy of which was laid before this House on 30th November, be approved.