RESTRICTIONS ON RATING AND PRECEPTING

HC Deb 26 January 1987 vol 109 cc89-143

Mr. Straw

I beg to move amendment No. 106, in page 6, line 15, at end insert— '3(A) Subsection (2) above shall not apply to designated authorities referred to in section 2(6)(g), (h) and (i) of the Rates Act 1984.'. I hope that you will accept, Mr. Armstrong, that it would be for the convenience of the Committee, and will allow a proper debate on the rate-capping procedures in the Bill, to discuss amendment No. 107 and the amendments grouped with it, as well as those grouped with No. 106.

The First Deputy Chairman of Ways and Means (Mr. Ernest Armstrong)

If that is for the convenience of the Committee, we shall discuss at the same time the following amendments: No. 107, in page 6, line 17, leave out from 'determined' to end of line 18, and insert—

1. '(i) The preliminary maximum limit shall be determined in accordance with Schedule 2 to this Act.
2. (ii) As soon as practicable after carrying out his duty under subsection (5) below, notifying in writing and consult each designated authority in respect of the preliminary maximum limit applicable to it under sub-paragraph (i).
3. (iii) If the preliminary maximum limit notified to a designated authority by the Secretary of State is accepted by the authority within seven days, the Secretary of State shall serve a notice upon it specifying that limit as the maximum limit.
4. (iv) If the designated authority and the Secretary of State agree on a different maximum, the Secretary of State shall serve a notice upon it specifying the agreed limit as the maximum limit.
5. (v) In any other case, the Secretary of State shall, as soon as resonably practicable after consultation under sub-paragraph (i) above has concluded, prescribe a maximum limit, by specifying by Order a maximum equal to or greater than the preliminary maximum limit, and shall serve a notice upon the designated authority specifying the maximum limit prescribed for it under such Order.
6. (vi) The power to make an Order under sub-paragraph (v) above shall be exercisable by Statutory Instrument and no such order shall be made until a draft of it has been laid before and approved by a resolution of each House of Parliament.'.

No. 108, in page 6, line 17, leave out 'with Schedule 2 to this Act' and insert 'with the procedures for redetermination set out in Part I of the 1984 Act and in accordance with the decisions of a court.'. No. 112, in page 6, leave out lines 23 and 24.

No. 113, in page 6, line 26, after second 'the', insert 'preliminary'.

Government amendment No. 114.

No. 115, in page 6, line 29, after second 'the', insert 'preliminary'.

No. 117, in page 6, line 30, at end add— '(d) a period of notice, which shall be not less than two weeks, within which the Authority may apply for the application of the formula to be reconsidered; and the results of any such reconsideration may be brought into effect by the Secretary of State by Order in substitution of the relevant formula in Schedule 2 to the extent that it applies to that authority, or any other designated authority as the Secretary of State sees fit.'. No. 118, in schedule 2, page 11, line 33, after 'the', insert 'preliminary'.

No. 120, in schedule 2, page 11, line 35, leave out sub-paragraph (1).

No. 119, in schedule 2, page 11, line 35, after 'of', insert 'the Inner London Education authority and'.

No. 122, in schedule 2, page 11, line 43, leave out from 'is' in line 43 to end of line 44.

No. 129, in schedule 2, page 12, leave out lines 1 to 13.

No. 126, in schedule 2, page 12, line 8, leave out '1.025' and insert '1.05'.

No. 189, in schedule 2, page 12, line 8, leave out '1.025' and insert '1.04'.

No. 127, in schedule 2, page 12, line 12, leave out '1.02' and insert '1.14'.

No. 130, in schedule 2, page 12, line 14, leave out subparagraph (6).

No. 138, in schedule 2, page 13, line 3, at beginning insert— 'In the case of the Inner London Education Authority B is the amount which before 19th December 1986 the Authority submitted under section 65 of the 1980 Act (Information) as the amount the Authority estimates as its total expenditure for the financial year beginning in 1986 (taking, if more than one such amount was submitted before that date, the latest to be so submitted). In the case of other authorities.'. No. 141, in schedule 2, page 13, line 14, after 'the' insert 'preliminary'.

Mr. Straw

I shall be as brief as I can, Mr. Armstrong, and I hope to catch your eye at the end of the debate as well, if it is necessary.

Three years ago, the Rates Bill was just beginning its Committee stage. On the Floor of the House and in Committee, the Labour Opposition objected to the principle of rate capping, to the idea that it was right and sensible for the Government to seek—

Dr. Boyson

I am sorry to interrupt the hon. Gentleman. I want to be clear about the basis of our discussions. Are we on amendment No. 106 and amendment No. 116—

Mr. Straw

No. We are on amendments Nos. 106 and 107 and their groups.

Dr. Boyson

I see. I am now clear what amendments we are on.

Mr. Straw

As I said, we are seeking to use the two groups of amendments as an opportunity to debate the effects on local authorities of rate-capping procedures in the Bill.

We objected to the principle of rate capping because we thought it was wrong and not sensible for the Government to seek to impose and substitute their judgment about the level of expenditure and the rates that should obtain in an individual area for the judgment of councillors and their electors. That objection still stands, which is why the Labour party is committed to the repeal of the Rates Act and, pending that repeal, to refusing to use its powers.

In the House and in Committee the then Secretary of State, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), sought to assuage the concerns not only of Labour Members but of many Conservative Members about the constitutional change that was to be made by rate capping, in the relationship between the Government and local authorities. The then Secretary of State spent many hours, as I clearly recall, spelling out a careful procedure for rate capping, which he claimed would be fair to local authorities. He said that the fairness was encapsulted in two sets of operations—first, in applying so-called principles of rate capping, which would act on all authorities equally so that an individual authority could not be picked out unfairly simply by the whim of the Secretary of State.

Secondly, authorities having been brought into the rate-capped net by an application of general principles, they would be given careful individual consideration, on their merits, with regard to the Secretary of State's decision about their expenditure levels, by way of an appeal procedure known as redetermination. After a hesitant start in the first year, caused by the suspicions of many of the rate-capped authorities about the way in which redetermination would work and the fact that it could trigger powers of the Secretary of State to impose even lower expenditure limits than previously, I will not say that the redetermination procedure worked satisfactorily, but at least it enabled the authorities, when they felt that they were badly done by, to make their case to the Secretary of State, so that he made a decision on the individual merits of the case that they put forward.

Now we find that all the undertakings that the then Secretary of State gave the House and the Committee about the way in which the individual merits of the authorities' expenditure would be taken into account are to be swept aside by the Bill. In place of individual redetermination and individual determination of limits, we find in schedule 2 lengthy algebraic calculations by which authorities' rate limits are to be determined by formula. I know that my hon. Friend the Member for Newham, North-West (Mr. Banks) is one of the House's algebraic experts, and he knows this formula by heart: (EL-(BG + E)) x 100/RV)+T That formula is now to be applied without exception and without individual consideration to a large number of authorities that happened to be rate-capped last year. The same formula is applied to newly rate-capped authorities. They thought that they would get a 1 per cent. increase in their original expenditure limit but they now find, when they read the correction sheet that has been handed around, that they get a 2 per cent. correction. But in every case except one, to which I shall refer, the individual merits of the authority are not considered. The only case in which the individual merits are considered is the Inner London education authority. My hon. Friend the hon. Member for Holborn and St. Pancras (Mr. Dobson) will discuss its plight at greater length.

I declare an interest not only as a former member of ILEA but as a parent of children in ILEA schools. On any examination, the way in which ILEA has been treated by the Bill and the Secretary of State is absolutely outrageous. It is to have an uplift in its expenditure limit of 0.6 per cent. No other consideration will be given to it in respect of the teachers' pay settlement. All the other education authorities will receive what is known as the T factor to pay for the teachers' settlement, over the previously accepted rate of inflation, but ILEA will receive an increase of 0.6 per cent. I am fed up with the ignorant attacks that are made on the ILEA, especially by those who have personal knowledge of the work of that authority.

Mr. Tony Banks

They take advantage.

8 pm

Mr. Straw

I gave the hon. Member for Northampton, North (Mr. Marlow) notice that I intended to say this. On many occasions in the House he has made outrageous attacks on ILEA and its profligacy, yet the hon. Gentleman has close personal knowledge of at least one ILEA primary school, and he has not offered any criticism of the standard of provision in that school, a standard of provision which may be adversely affected if this kind of expenditure limit goes through.

I shall briefly set out how the principal amendments would operate. The Secretary of State is claiming that there is no time to operate the proper redetermination procedure. Our amendments translate the formulae in schedule 2 into preliminary maximum limits rather than final ones, and prescribe a further procedure to be followed by the Secretary of State closely based on the rate-capping model. The purpose of those amendments is to re-establish the redetermination procedure abandoned for 1987–88 in the Bill. The amendments recognise the legal difficulty over past definitions, but demonstrate that there is no necessary reason why the Secretary of State cannot follow a proper procedure which recognises individual needs, rather than a blanket set of formulae in primary legislation.

The main amendment, No. 107, sets out a tight procedure which may be followed by the Secretary of State for the modified redetermination. The formulae in schedule 2 would be preliminary and for discussion purposes. The Secretary of State would then be required to inform authorities and consult them as soon as practicable. An authority could accept the limit within seven days, whereupon a notice would be issued to that effect. Likewise, a notice would be issued in a case where a different maximum was agreed. In the case of a disagreement, the Secretary of State would impose a maximum by order subject to affirmative resolution by both Houses, and after consultation an order could be made as soon as reasonably practicable. I will come back to the importance of the order-making procedure.

The whole procedure could be over in a matter of weeks, and gives the lie to the urgency claimed by the Government. If they will agree these procedures and delete the other contentious and unnecessary areas of the Bill, it will achieve its objectives more quickly than seems possible at present. Designated authorities would, however, as previously, have the opportunity to argue for a redetermined limit.

I shall now deal with amendments Nos. 108 and 117, and I shall say a word about the need for votes on affirmative resolutions. Amendment No. 108 would restore the previous redetermination process intact— that is an alternative to amendment No. 107. Amendment No. 117 would allow a period of two weeks for local authorities to apply for redetermination and for a subsequent order to vary the application of the relevant formulae in respect of one or more authorities. Taken together, those two amendments act as an alternative to No. 107.

I now return to the matter of orders. Not only are the individual authorities being denied proper consideration of their expenditure circumstances under the Bill, but so too is the House. We were told time and again by the Secretary of State that his decisions on expenditure limits and rate limits would be subject to proper legitimation by the House. For the last two years, there have been full-day debates on the rate-capping orders. Those debates were essential, because, since the passing of the abolition Act over 40 authorities—almost all the authorities within inner London, and many of the major joint boards outside inner London—are now subject to rate capping. Under this procedure there will be no opportunity for the House or the other place to discuss the effect of rate-capping orders upon individual authorities, save for this debate. We probably have no more than two hours for the debate, which is wholly unacceptable when we consider the consequences for many authorities and many people within those authorities of these rate-capping decisions.

I hope, even at this late stage, that the Secretary of State and the Minister in his stead will accept the sense of what we are proposing.

Mr. Roy Galley (Halifax)

May I briefly refer to amendment No. 189 standing in the name of my hon. Friend the Member for Batley and Spen (Mrs. Peacock) and myself? It is a point which relates to fire authorities, and more particularly to the west Yorkshire fire and civil defence authority. It is similar to many of the amendments in the section, and it is in the form of special pleading. Our motivation is concern about the financial position of the west Yorkshire fire and civil defence authority in 1987.

There has been considerable progress on a detailed process of redetermination on the expenditure limit for that authority. The initial bid was for a total redetermination of £3.7 million. That was based on a 1985 report about fire cover throughout the whole of west Yorkshire, which attempted to improve arrangements in certain parts of the county and made a number of other desirable additions to the current provision. Such a bid for resources had to be seen in the light of a report by Her Majesty's inspector of fire services in 1986, who expressed the view that The present deployment of men"— in west Yorkshire— is insufficient to maintain appliance manning to the accepted standards. One has to look at the £3.7 million redetermination bid in a wider context. One has to strike a balance between what is essential and what is desirable; what the ratepayer can afford and the appropriateness of efficiency improvements. The more important figure is not so much the total redetermination of £3.7 million as the £1.7 million that will be required in 1987–1988 to maintain current levels of fire cover and general service provision in west Yorkshire. That £1.7 million, over and above the initial expenditure limit given, is the minimum amount required to provide current levels of service. My hon. Friend may say that that is greater than the rate of inflation and therefore we cannot contemplate it. But 85 per cent. of the costs of the west Yorkshire fire authority are manpower; other overheads are only 15 per cent. and there is little that can be done to influence that 15 per cent. Eighty-five per cent. of the figure is manpower costs, and pay is determined, as my hon. Friend knows, on the basis of the national formula, which is automatically agreed. I understand that most firemen this year received an increase of 7.2 per cent., so it is necessary to build that into any calculations of the finances of that fire and civil defence authority.

West Yorkshire fire authority seems to be quite an efficient authority which, over the last couple of years, has sought a considerable number of efficiency improvements. It has reduced the number of special and pumping appliances, taken new initiatives in regard to training arrangements, improved organisation of transport, improved property management and improved the use of non-uniformed staff. The fire authority is competent and bears comparison with that of any other metropolitan area in the country.

The motivation behind the initial bid for redetermination was not simply to improve the provision for the fire authority but to obtain a better deal for west Yorkshire. If one compares that with other metropolitan areas it seems to do quite badly. We are treated unfairly in our part of the world and we seek to be treated more fairly.

Mr. Tony Lloyd (Stretford)

The hon. Gentleman is dealing with an important amendment, which is similar to one that I tabled. I support his case for west Yorkshire. Greater Manchester also feels unfairly treated, but it is generally recognised that west Yorkshire is probably the least advantaged of all fire authorities. As I have a vested interest, I would be delighted if the hon. Gentleman would say whether he intends to put this to a vote.

Mr. Galley

It is rather too early in the proceedings to answer that question. I shall see what my hon. Friend the Minister has to say before I decide, and I shall also have to consult my hon. Friend the Member for Batley and Spen.

Mr. Allen McKay (Barnsley, West and Penistone)

I am a little disappointed in the hon. Gentleman's reply. Labour Members were contacted continually last week by members of the Fire Brigades Union in west Yorkshire, asking us to support the hon. Gentleman's amendment. We have decided full-bloodedly to support the hon. Gentleman's amendment in the Lobby tonight.

Mr. Galley

I find it rather odd that members of the Fire Brigades Union in west Yorkshire should have contacted a Member from south Yorkshire but not me on this matter. I am seeking to put the case for west Yorkshire, and I shall continue to do so as well as I can and to seek to obtain the best deal possible.

Mr. Allen Roberts (Bootle)

Will the hon. Gentleman give way?

Mr. Galley

No, I shall not. Allow me to proceed with my next major point about the fire and civil defence authority for west Yorkshire, which is the matter which I am concerned with. We seem to fare badly compared to other metropolitan areas. The most poignant point that can be made is that west Yorkshire has the highest rate per pound and next to the lowest level of total grant percentage.

It is obviously not possible in the Bill to deal specifically with individual fire authorities and others. Therefore, my amendment seeks a revision of the formula slightly to increase the expenditure level for all fire authorities. The formula in the Bill would reduce the shortfall required for current service levels to be maintained—I emphasise that—to about £800,000. Instead of the previous shortfall of £1.7 million, the 2.5 per cent. uplift formula in the schedule would reduce that shortfall to £800,000. Amendment No. 189 would add £500,000 to the expenditure level. Therefore, it would be somewhat less than the total that we sought for west Yorkshire, but it seemed to be a reasonable compromise and would come near to the £1.7 million figure that we seek. If it were accepted, it would ease the operational problems in the course of the next financial year. It would mean an increase in the precept of 4 per cent., slightly more than the rate of inflation. The total addition to public expenditure would, if my hon. Friend were to accept the amendment, be small across all metropolitan fire authorities.

I assure my hon. Friend that I would not be proposing such an amendment if it did not relate to a vital service, about which the general public in west Yorkshire are rightly concerned, and if the fire authority was not efficient. Therefore, I hope that it will be possible for my hon. Friend to make some moves in my direction to give some sympathetic consideration to this modest amendment. If he is unable to do anything this year, I hope that he will at least say that we shall have a fair redetermination in subsequent years.

Mr. Bill Michie (Sheffield, Heeley)

I want to speak to the amendments relating to rate capping and redetermination as they affect Sheffield, and, in particular, paragraph 22 of schedule 22. The effect of rate capping and the failure to get redetermination on local authorities such as Sheffield has already been described as serious by many of my colleagues. The effect upon education, housing, transport and the south Yorkshire fire service has been explained time and time again with little effect. I am assured that my colleagues from south Yorkshire will be discussing those issues later, particularly that of the fire service, as will my colleagues from west Yorkshire.

8.15 pm

I want to concentrate for a short while on a report that I received at the weekend from the family and community services in Sheffield on the implications of the Department of Health and Social Services inspection of elderly people's homes in Sheffield. Obviously there has always been great concern about the standard of accommodation and services for elderly people. In August 1986, the DHSS inspected those homes and the final results have now been made known to us. Frankly, they are worrying, to say the least.

The recommendations have considerable implications for revenue funding. Bearing in mind that Sheffield is rate capped and has no chance of redetermination, the local authority is in a catch 22 situation. The recommendations talk about the action that should be taken to maintain the fabric of buildings and the necessity for the repair and maintenance of building stock to be carried out quickly. Due to the significant building programme in the early 1970s many residential units now need considerable maintenance and redevelopment, which is obviously costly.

The current levels of revenue expenditure available for repairs and maintenance mean that only essential and emergency repairs can be carried out. Over the years, those have been carried out, but as Sheffield was rate-capped not last year but the year before and again this year, some of those programmes have, slowly but surely, been coming out of "synch", as we call it, because of financial problems. The deterioration of existing services and maintenance will continue unless an additional £145,000 per annum is found. That will be difficult given the financial restrictions of legislation on the council.

Maintenance programmes already identified by the DHSS include £3,000 for the maintenance of hoists in bathrooms in the homes of elderly people. That is a small item but since, as I have said many times in the House, Sheffield is top of the league in its number of old age pensioners, certainly those over 70 and 80 years of age, that is a serious problem that must be resolved. With present financial constraints, that seems almost impossible.

The report states that funding needs to be made available for improving the environment. That includes decoration and carpeting, which may seem something of a luxury these days, but the DHSS believes that we should provide such an environment, and the Sheffield city council agrees. But the cost of that cannot be plucked out of thin air. It must be put into revenue and capital programmes, but that cannot now be carried out.

The report also talks about three particular capital expenditure areas which have revenue consequences— the fabric of the buildings, the improvement of air and water temperatures, the provision of better storage space and toilet facilities, and so on. There is an immediate need to carry out external work to approximately 25 of the adult residential units. That would incur an additional capital expenditure of approximately £1.7 million. These projects have already been identified in the report.

Unfortunately, due to the increasing restrictions on the social services budget over the past two or three years, delays have occurred in the regular maintenance of buildings. Strangely, my next point ties in nicely with the debate about fire service restrictions; fire precaution upgradings have not been carried out, because of the financial restrictions in the past year. It must be frightening for all right hon. and hon. Members to realise that local authorities are so severely restricted financially that they cannot carry out the upgrading of fire precautions in the homes of the elderly.

I will leave my hon. Friends to discuss other items affecting Sheffield and south Yorkshire. However, unless we have additional input of revenue and capital there is no way that we can carry out what I believe to be our moral as well as statutory duties. There is little point in the DHSS inspecting homes and making recommendations if other Departments are severely financially restricted. I hope that the Minister and the Secretary of State will take my points on board and I hope that at least some help will be given to alleviate the suffering and pressure on councils today.

Mr. Allen McKay

I want to refer to a point made by the hon. Member for Halifax (Mr. Galley) when he moved the amendment. The hon. Gentleman wanted to know why the Fire Brigades Union from west Yorkshire should get in touch with me. The answer is obvious. As the amendment was tabled by the Conservatives, the union wanted to ensure that Labour Members would support that good amendment. That is why I was approached. The union wanted me to forget my differences. It considered the amendment to be so important that it wanted me to support it. When and if the amendment is put to the vote, Labour Members will not be found wanting in support of the amendment.

I want to consider the fire brigade's position in south Yorkshire. The position in south Yorkshire is very similar to that in west Yorkshire, although there is a slightly different and difficult problem following Her Majesty's inspector's report and the Secretary of State's imposed reduction in the authorised establishment of existing fire service personnel. The service was inspected by the Home Office inspector. That report determined what the manpower levels in south Yorkshire should be. It authorised an establishment for the Yorkshire county fire service of 1,114 whole-time and 196 part-time posts. Those are the Home Office figures of what is considered to be adequate to cover the south Yorkshire area.

The inspector arrived at the figures by comparing the manpower level in south Yorkshire with that in other areas and by applying a standard formula. The fire service in south Yorkshire is already below the establishment determined by the inspector, the Secretary of State and the Home Office. Rather than reduce the figures, manpower should be increased to the Home Office standard. However, the Bill will further reduce the already inadequate manpower.

On the one hand, the Home Secretary says that we must increase the number of firemen on the books to comply with the statutory requirements. On the other hand, the Secretary of State for the Environment claims that we must reduce the number which the Home Office claims is inadequate for fire cover. That is ridiculous.

As the hon. Member for Halifax said, 80 per cent. of fire service expenditure in any area is accounted for by manpower. The Bill is intended to save money, but there is no way that money can be saved other than by reducing the already inadequate level of manpower. The fire chief is already worried about the service, and he is now even more concerned after seeing the figures. He realises that he will not be able to meet his statutory obligations on fire cover.

As I said in the previous debate, I was a retained fireman for 14 years in the south Yorkshire fire service. We prided ourselves on every turn-out that we could reach a fire within the time stipulated by the Home Office because of the speed and efficiency of the service. We were able to provide a back-up to every station within our locality so that, as in a puzzle or a game of chess, one mobile moved in to cover another mobile when that went out. We maintained that standard of operation, which could be achieved only by having the proper appliances, the right number of men and efficient training. We provided a fire cover on which people could depend, and the people praised us when we turned out.

What will happen now? The Secretary of State has laid down certain objectives for the fire service. He stipulates the level of cover that must be provided. He states that efficient and sufficient machines and efficient and sufficient men must he provided. He specifies a time for the turn-out and the time to reach fires, large and small. The fire chief of south Yorkshire fire service is now worried that fire cover will begin to deteriorate and that the turn-out time will lengthen. In an attempt to meet the requirements laid down by the Secretary of State for the Environment, the fire chief will have to stop training because he needs sufficient men to cover for fires. He will have to use the trainers to man the service.

The south Yorkshire fire service has not had a new fire applicance for the past two years because of the need to make savings. Rather than providing a replacement for a mobile, mobiles will have to be in the garage for longer periods, they will have to be maintained more and the cost of maintenance will rise. That is a queer way to save money.

There is also a strong possibility that redundancies will take place in what is already an inadequate level of manpower. Indeed, the new training establishment will not open. There will be no training establishment to keep up with the Home Office requirements, In addition, the superannuation scheme will have to be curtailed. That will not help the firemen's morale, as they have looked forward to that scheme and accepted it willingly.

All these factors will lead to a loss of confidence within the fire service. Is it right for the Home Office to create a figure which is already below the stated manpower level for adequate fire cover and for the Secretary of State for the Environment to claim that he will not provide the money to supply the number of firemen and appliances which the inspector says is adequate to provide an efficient fire cover in the service? The Secretary of State must answer that question tonight.

Can the Secretary of State explain how the south Yorkshire authority can fulfil its statutory duties when the Bill implies that there will be a reduction in essential training? Can he explain how the fire chief will be responsible for the inadequacy of his service, not because of him, his plans or his men, but simply because the Secretary of State for the Environment will not meet the financial requirements of the Home Office'?

8.30 pm

If the Secretary of State has read the Yorkshire Post recently, he will know why I am seeking his views on the assessment of the fire service. The Yorkshire Post has highlighted the fact that, because of the way in which home furniture is built, the rate of death by fire is increasing dramatically. We must look not only to the fire service but to legislation to prevent that from happening. To prevent such deaths, the fire service must make more inspections, but, if the money is not provided, it will make fewer inspections and the position will become worse. In south Yorkshire, during the past 10 years, the death rate from fire has doubled. We should be asking why and what we can do about it instead of cutting a service that is already not good enough. We should be examining those matters, not ways of saving money. It could—I do not say "would"—result in the loss of human life and property, the saving of which is the prime duty of any fire service. As my old fire chief used to say to me, I would sacrifice a £24,000 appliance to save one life. The Secretary of State should consider that.

I also wish to highlight the way in which expenditure is calculated and relate it to Barnsley. At present, Barnsley has about 22 per cent. unemployment, largely because of the rundown of the main industries in the area. I have always been taught that where manpower is available, where there are good communications and where land and factory space are available, industry would come in. That has not happened in Barnsley.

The authority wondered why it was being treated differently from other authorities in relation to expenditure and grants, so it decided to examine what was happening in Barnsley. It discovered that it was being penalised because the grant was determined on figures based on the 1981 census. Since events have moved so quickly in the area, the 1981 census is giving the Secretary of State an inaccurate picture of Barnsley and district. With the factor in the formula, there is room to take those matters into account.

Since April 1981, the number of people out of work in Barnsley has increased by 72 per cent., compared with 32 per cent. generally in the United Kingdom. Between January 1985 and April 1986, of the travel-to-work areas, Barnsley had by far the highest percentage increase of unemployment—22 per cent. Between April 1984 and April 1986, the number of people who had been out of work for more than a year increased by 29 per cent., compared with an average of 11 per cent.

Recently the Minister of State said that there was a shift towards service employment. But Barnsley has less service employment than any other local authority area. It has the fourth highest percentage of people aged over 75 who are supported by the local authority. It has the twelfth highest percentage in the metropolitan districts of children aged under 18 in local authority care. Between 1979 and 1986, the number of people receiving supplementary benefit doubled. The formula does not take those matters into consideration. It must be reconsidered and altered because its application to the authorities is wrong.

To return to my argument on the fire service and transport, the Secretary of State promised that some of the matters that I have highlighted would be taken into consideration in the redetermination. The Bill has stopped that redetermination, so his promise means nothing, unless he will meet representatives of the fire service and transport and redetermine their expenditure.

Mr. Meadowcroft

I support the general case set out in amendment No. 106 for a fairer and more equitable way of determining rate levels under the Bill. I commend the hon. Members for Halifax (Mr. Galley) and for Batley and Spen (Mrs. Peacock) for tabling amendment No. 189. I am well aware that the Minister is in a difficult position. He is not a Home Office Minister and he must defend the measure, but it seems that something has gone wrong with the Government's calculations. I suspect that there has been a simple arithmetical error which no one is prepared to admit. I cannot believe that the Government would be prepared to continue along the road where the nationally agreed standard of service cannot be met within the budget allowed. It is ludicrous for the Home Office to apply standards and then for the Department of the Environment to say, "You cannot have the cash to meet them." Unfortunately, that is the present position of the west Yorkshire fire service.

The other crucial point, which is demonstrated by the fact that the amendment is in the names of two Conservative Members, is that there has been complete unanimity of approach among members of the west Yorkshire fire authority. They have formed three-party delegations to meet the Minister and other hon. Members, and the recommendation to hon. Members came from all three political groups on the fire authority. Rarely in our debates, or, indeed, in local government, can we secure unanimity on one issue and sustain it for some time. I beg the Minister to take into account the fact that no one in west Yorkshire is endeavouring to make political capital from this. No one has said, "If you do not get this, we shall knock you over the head in the press." There has been genuine anxiety about an emergency service.

I appreciate the way in which the hon. Member for Barnsley, West and Penistone (Mr. McKay) spoke from the heart and with experience—and at some length. If we are to work constructively, as is so often commended to us by Mr. Speaker and others, this is exactly the sort of amendment that the House should support. We are not raising great scares about what might happen, but simply accepting the agreed position of all the parties in west Yorkshire and of the fire service officers that they will be unable to recruit the staff that they need. Indeed, they will have to stop recruitment to the fire service if they cannot secure a change in the legislation. I hope that the Minister of State will not think that this debate merits the good natured banter that we often have across the Chamber, welcome though that is. It is a matter that must be treated seriously. When the Committee divides on the amendment, it will be interesting to see whether we can secure the same unanimity in the House as we have in west Yorkshire.

Mr. Allan Roberts

I rise briefly to mention the direct effect that this clause, if unamended, will have on the Yorkshire fire service, the Merseyside fire service and the police authority.

The hon. Member for Halifax (Mr. Galley) should not be surprised that Yorkshire Labour Members have been contacted by the Fire Brigades Union. The effect of his amendment has been significant in that all hon. Members of all parties have been contacted about it. I was not contacted by anyone from Yorkshire, but by the Merseyside county fire brigade chief officer, Mr. Wilmot, who sent me a telegram that he received from the west Yorkshire fire authority urging me to support the amendment and pointing out that the effect of the limitation is to leave that authority with insufficient resources to maintain existing standards of service which, it says, we should be aware, from previous material supplied, falls below nationally recommended levels.

That telegram was sent to me and other hon. Members who represent Merseyside constituencies partly because Merseyside is in the same predicament with regard to this legislation. When the committee of the Merseyside fire and civil defence authority met on 26 September its members considered a report submitted by the treasurer, who advised that the potential expenditure for 1987–88 would be £2.161 million in excess of the £29.284 million expenditure level determined by the Secretary of State.

A request was made by the elected members of the committee for a redetermination of expenditure to £31.455 million. That was a sensible thing to do, especially as the legislation allowed for an application for redetermination. A meeting took place between members and officers of the authority and Home Office representatives, who are not here to answer. That meeting took place on 19 November 1986. Further information in support of the authority's bid for redetermination was submitted, but this legislation abolishes the right of appeal for redetermination.

The standard formula applied to the Merseyside fire and civil defence authority and to all authorities for determining the maximum precept uses the expenditure limit as originally determined at £29.284 million, plus 2.5 per cent., which still produces a totally inadequate expenditure level of just over £30 million. That is a fait accompli. If the Bill, unamended, becomes an Act all the efforts that they thought were legal to seek redetermination and to get a level of expenditure that would enable them to provide effective and efficient fire and civil defence services on Merseyside will he for nothing.

On 26 September 1986 the treasurer advised that the expenditure to which the authority would be committed in 1987–88 totalled £30.345 million. If one looks at the position as a result of the general blanket redetermination in this clause, one sees a shortfall of £1,745,000. The command, control and vehicle replacement programme cannot go ahead and manpower cannot be increased to fulfil the authority's full obligations for dealing with fire and the other disasters and hazards that the fire brigade has to deal with. As my hon. Friends have already said, this is a matter of life and death. The treasurer's report includes the figure of 1,593 full-time fire officers for which the authority wants money. The additional cost of maintaining that establishment, compared with the present establishment of 1,505 plus recruits, which was approved by the Home Office, is £445,000.

In 1986, the Merseyside authority followed a detailed assessment of potential expenditure for 1987–88 and submitted an application for redetermination of that expenditure limit to the sum of £31.445 million. That application has been effectively rejected, not by a redetermination process, not after representations to a Minister who considered the whole thing in a balanced way, but by this blanket piece of legislation and this clause that is before us now.

It is scandalous that the Merseyside fire services should be so dealt with and given such scant attention by the Minister. I am not surprised that the authority placed on record its grave concern that once again the Government have shown a callous disregard for the safety of the people of Merseyside by taking steps to provide insufficient capital resources to enable the authority to maintain the adequate fire cover in the region.

8.45 pm

The position is even worse for the Merseyside police authority. Since 1979 there has been a 40 per cent. increase in crime on Merseyside. This Bill takes £6 million from the police authority. In the previous rate support grant settlement—one of the first of the three arranged by the Secretary of State—that police authority suffered a £6 million cut.

In my constituency young people are easy prey to the hard drug pushers. Five years ago there was no heroin problem. A phenomenon of the Thatcher years is high youth unemployment and heroin coming in through the port and the airport, partly as a result of the cuts in Inland Revenue and Customs and Excise staff. Those people, who see no hope for the future because they have no job and no prospects, are being led astray by drug pushers in a way that previously did not happen. There has been a massive increase in crime on Merseyside. It is a major problem, yet the party of law and order takes £6 million from the local authority in this redetermination. That is a scandal. I have received many representations, not just from the Merseyside police authority, its officers and elected representatives, but from the community, voluntary groups and policemen who have the difficult job of policing my constituency to ask for the replacement of this £6 million.

If the Conservative Government were serious about law and order, they would not cut £6 million off the budget of a police authority covering an area like Merseyside with its problems and with a crime wave that has been stoked up by the industrial, economic and unemployment policies of the Government.

Mr. Frank Dobson (Holborn and St. Pancras)

I am sorry to have to speak on this matter because, since 1979, on innumerable occasions I have pleaded with the Government to adopt a sensible, sane and reasonably generous policy towards the Inner London education authority. On all occasions my efforts have failed.

I should declare an interest. One of my children went through ILEA schools, came out at the other end and went to university. I am grateful to all the people who taught and encouraged her in all the difficult circumstances they faced—not from her, but from the Government—during the period when she was at school.

Similarly, my eldest son is at that secondary school and our youngest son is at the primary school. They are the nearest primary and mixed comprehensive secondary schools to where we live.

Neither of the Secretaries of State who are involved in this matter would need to declare an interest. The old Etonian Secretary of State for the Environment and the Secretary of State for Education and Science—I do not know which school he attended but it was certainly a public school—would not need to declare an interest about sending their children to Inner London education authority secondary schools. It is fair to say that the present Secretary of State for Education and Science, who has had much influence on deciding what happens on the education aspects of the Bill, has pursued a squalid, vindictive vendetta against ILEA, certainly as long as I have been a Member.

First, he crept on to the Front Bench by launching a squalid and misleading attack on ILEA, thus endearing himself to the Prime Minister and getting himself a junior ministerial office. Since then he has pushed his way on to the Front Bench and continues his vindictive efforts to damage the authority.

Mr. Richard Caborn (Sheffield, Central)

Is my hon. Friend giving the right hon. Gentleman a character reference?

Mr. Dobson

The truth will out.

The propositions which are set out in the Bill would lead to ILEA having to face cuts amounting to £125 million. There would be cuts of £19 million, because the Government are so incompetent that they cannot estimate accurately the existing level of ILEA's costs. There would be cuts of £40 million because no provision has been made for pay and price increases that are taking place and are likely to take place in future. There would then be a further £71 million of cuts, which would affect every institution in ILEA. They would mean substantial cuts in every form of provision that is now being made by the authority.

If there were any Conservative Members in their places who represent inner London constituencies, I have no doubt that they would claim that ILEA spends too much money. I note that there is not one Conservative Member who represents an inner London constituency in his place this evening, yet we are debating cuts amounting to £125 million in the provision that is made for the children of those whom they falsely claim to represent. As I have said, if they were here, some would say that ILEA spends too much money.

It is a fact that ILEA spends an average of £1,265 per annum per pupil in its primary schools. On the same basis, it spends £1,940 per pupil in its secondary schools. That is a lot of money. But how much do Conservative Members spend on their children's education? Those who send their children to Eton pay £4,950 a year. The fees at Harrow are £5,850 and £5,760 at Winchester. If it is argued by Conservative Members that those sums include boarding fees, let us take account of St. Paul's which was attended by the Secretary of State for Education and Science when he was a lad. The fees for a day boy at St. Paul's are £2,925. For a day boy at Westminster school, the fees are £3,075. It is said that ILEA is a spendthrift authority, but it is spending at least £1,000 less on those who attend its secondary schools than the fees that are paid by some Conservative Members who send their children to schools in the private sector. Yet they tell us that ILEA should reduce its spending without any consideration of the problems that are faced by ILEA.

I am not uncritical of ILEA. I recognise that there are wrongs within it and faults in all its schools. There are faults with many of its institutions and arrangements. I agree that improvements should be made, but unfortunately the authority has never had the time to turn its attention to effecting improvements since 1979. From that time onwards it has been able to do virtually nothing, apart from defend itself against squalid attacks, which have usually been led by he who is now the Secretary of State for Education and Science.

I shall illustrate what would have to be done to bring about cuts of £71 million that even the Government have acknowledged they want. It is estimated that there will be slightly more than 1,000 vacancies in ILEA primary schools, and 677 of them would remain unfilled as a contribution to achieving a saving of £71 million. The Minister for Local Government introduced a Bill that addressed itself to special education. If he was serious when he introduced it, he should understand that 102 posts in special education in ILEA would not be filled as a result of the proposed cuts. Massive savings would have to be achieved in the support staff sector. They may be financial savings, but the schools will suffer.

I regard school meals as one of the finest services that is provided. If anyone wants to help poor children, there is not a more clear, direct or cheaper way of doing so than ensuring that grub passes down their throats. Unfortunately, the service has suffered great damage under this Government. ILEA provides a holiday meals service for its children, but that will have to go if the proposed cuts are implemented. That means that for six or seven weeks during the summer some of the poorest children in the land will not get the meals that they have been receiving from the holiday meals service.

There would have to be massive cuts in the catering staff, which would do great damage to the incomes of some of the poorest families. It is usually women who work in the catering section and they perform as useful a task as anyone in the land, and certainly a more useful one than anyone who has occupied the Treasury Bench this evening.

I accept that ILEA spends more money than many other education authorities. For example, it provides clothing vouchers for children aged over 15 years so that they are rather better dressed when they go to school. It provides education maintenance grants to enable children who are aged between 16 and 19 years to stay on at school. I thought that we were trying to encourage children to do that. The proposed cuts would entail a reduction of £189,000 in the provision of education maintenance grants. These are examples of what we are being asked to accept if the Bill is approved this evening.

Mr. Tony Lloyd

It is unfortunate that there are no Conservative Members in their places who can speak about ILEA. I am sure that my hon. Friend will recall the recent reports of the Sub-Committee on Race Relations and Immigration of the Select Committee on Home Affairs, an all-party Sub-Committee, which was complimentary about the role that ILEA has played in the education of Bangladeshi children. That is precisely because of the imaginative approach that ILEA has adopted in an important area of education. No fair parallel could be found in any other education authority.

Mr. Dobson

My hon. Friend has raised an important issue. Before the Secretary of State for Education and Science did a bunk from London and began to represent Mole Valley—one of the most prosperous areas in the country with the lowest level of unemployment of any English constituency—he represented Marylebone. That constituency is now represented predominantly by the hon. Member for Westminster, North (Mr. Wheeler), who chaired the Sub-Committee to which my hon. Friend has referred. It is a pity that he is not in the Chamber this evening to advocate that a greater effort should be made to implement its recommendations. The Sub-Committee drew attention in its report to the many Bangladeshi children in certain parts of London, including the area that I represent, and paid tribute to the efforts that ILEA was making to teach them English and to help them become literate in their mother tongue. Both aspects of that teaching are extremely valuable if these children are to become full and more valuable members of our society.

About half of the intake of the secondary school that my children have attended are children of Bangladeshi parents. They are not a liability. They are our children. It is our duty to look after them, to bring out the best in them and help them to become the enormous asset that they can be to our country. We can only do our duty by them and the people who try to teach, encourage and help them if they have the resources.

In the formulae of this ridiculous measure there is a key provision that would provide more money to help education authorities to pay for the forthcoming teachers' pay increase. Everybody recognises that ILEA has problems—indeed, I have outlined some of the cuts that it faces—but in this measure it is proposed that ILEA will not get a cent towards paying for the teachers' pay increase.

At present, young people in the capital city are facing the lowest and worst job prospects in its history. We face all sorts of villainy and crime outside our schools, as well as record levels of heroin addiction and all the problems that come with that. The people who work in the schools are doing their best to give our children a decent start. They are denied the necessary additional resources, and this measure would further reduce those resources.

If the Government claim to be the Government of law and order and would like London to be a decent, orderly and civilised place in the future, they had better find more money to look after all those children because if they do not they will rue the day.

9 pm

Mr. Roger Stott ' (Wigan)

I am grateful to you, Sir Paul, for allowing me to intervene.

My hon. Friend the Member for Blackburn (Mr. Straw), moved the amendments as they were selected by Mr. Speaker. However, in this group of amendments there are a number which are related to specific issues. Certainly the debate has been wide-ranging and interesting. Unfortunately, it is rather distressing that so few Conservative Members are present for this debate—[Interruption.] Before the hon. Member for Nottingham, South (Mr. Brandon-Bravo) becomes too agitated I shall confirm his presence on the record. I recognise that he has been present throughout the whole of the debate. I see another Member on the Conservative Benches whose constituency I do not know—and I am sure he will enjoy the debate.

When the hon. Member for Halifax (Mr. Galley) spoke to one of the amendments I had hoped that he would be supported by his hon. Friend the Member for Batley and Spen (Mrs. Peacock) but we have not had the pleasure of her company this evening. Perhaps the hon. Lady considers that the amendment she has put her name to is insignificant. That is entirely up to her.

Mr. Meadow croft

rose—

Mr. Stott

I shall give way in a moment.

I have listened to the contributions of my hon. Friends and the one Conservative Member on a number of issues that are concerned not just with local government. My hon. Friends the Members for Blackburn and Bootle (Mr. Roberts) spelt out the consequences of this legislation for local government. My hon. Friends the Members for Barnsley, West and Penistone (Mr. McKay) and Holborn and St. Pancras (Mr. Dobson) spelt out the consequences for education. No doubt my hon. Friend the Member for Stretford (Mr. Lloyd), if he catches your eye, Sir Paul, will elaborate on the difficulties of the fire services.

The legislation impinges upon very important issues in terms of education, the fire services, local government and transport—which I shall speak about in a moment. I believe that it is a disservice to this Committee to see the Minister for Local Government in his place without the presence of a Minister from the Home Office or the Department of Transport. They should be here to listen to what my hon. Friends have had to say about the way in which the legislation will impinge upon those services.

Mr. Meadowcroft

The hon. Gentleman has referred to the absence of the hon. Member for Batley and Spen (Mrs. Peacock). I believe that his comments were unfair because when amendments are tabled—this happens on the Labour Benches—a number of names are put to those amendments but not all Members are necessarily present when they are debated. It is normal practice for names to be put down from particular groups of people in support of those amendments. Surely the crucial thing is whether the hon. Lady, together with her hon. Friends, is in the Division Lobby. That is what matters at the end of the day.

Mr. Stott

I regret that I gave way to the lion. Gentleman for that somewhat pedantic point. Whether one is here or not may not be important to him, but it is to me. The name of the hon. Member for Batley and Spen was on the Amendment Paper in support of the amendment tabled by the hon. Member for Halifax. We shall be interested to see whether the hon. Lady goes into the Lobby with us when the amendments are put to the test.

I wish to talk about amendment No. 127, which concerns transport. It is designed to safeguard the financial interests of the Greater Manchester passenger transport authority by introducing into the formula a factor that will ensure the determination of a maximum precept consistent with the authority's application for redetermination. The debate is about redetermination, whether we are talking about the fire service or the transport service. These services had been endeavouring to redetermine their budgets with the various Secretaries of State, when all of a sudden the Secretary of State for the Environment came along and moved the goalpoits 15 yards further on and left everybody in limbo.

The Secretary of State has said that the standard uplift is designed to take account of the individual circumstances of PTAs and the information presented to Ministers in the now discontinued exercise of redetermination. My authority, and I suspect others, following the advice of counsel whom it employed, wrote to the Department of Transport asking how this could be achieved by a standard uplift. As far as I am aware, no answer to this specific point has been obtained, unless the letter from the Minister responsible for public transport that I received this evening is a letter to that point.

The original pronouncements from the Departments that the formula would reflect the requirement of individual authorities have now been replaced by a statement that Ministers are confident that the formula included in the Bill is appropriate in the light of their policies. This was a statement in a letter to the clerk of the Greater Manchester PTA from the Department, written on 14 January.

Mr. Alfred Morris (Manchester, Wythenshawe)

My hon. Friend is on a very important point. Is he aware that in the recent letter, the Secretary of State for Transport said he expected the Government's proposals—to inflict a shortfall of £11.4 million on the Greater Manchester PTA—to be subjected to close parliamentary scrutiny in these proceedings? What possible opportunity is there for close scrutiny? As my hon. Friend knows, not only bus services but the concessionary support scheme will be very badly damaged. In view of the Secretary of State's letter, are not these proceedings a parliamentary outrage?

Mr. Stott

My right hon. Friend is right. As he and other hon. Members—not just Manchester Members but others such as my hon. Friend the Member for Sheffield, Central (Mr. Caborn), and Members from Yorkshire—know, we have been endeavouring to draw this to the attention of the Secretary of State for Transport who, I suspect, like the Home Secretary on the fire service, has been caught out by the Bill. We were almost there in the redetermination of those budgets. Incidentally, the Secretary of State for the Environment was a former Secretary of State for Transport who was taken to court on more occasions than the Kray brothers, and he has introduced a Bill to make the whole procedure judge-proof.

My right hon. Friend is right. Those negotiations were taking place in a climate of understanding, in which a redetermination was possible. Now, the Secretary of State for the Environment is moving the goalposts and disallowing all that went on before. He is leaving not just the transport services but the fire services far short of the budget requirements that they need to perform their duties. I am just about to come to the figure of £11.4 million to which my right hon. Friend referred.

It is an outrage that we are not able to discuss this matter properly. Here we are, on a guillotined Bill that is being railroaded through, determining the levels of expenditure for PTAs and fire services in a debate lasting an hour and a half. What is more, Ministers from neither the Home Office nor the Department of Transport have come to the Chamber to listen to our recommendations, speeches or amendments.

The total expenditure level notified by the Department last year to Greater Manchester was £74.1 million. The authority requested a redetermination of £84.6 million. Under the arrangements proposed in schedule 2, paragraph 2(5) of the Bill, the authority will receive only £75.16 million. Additional costs recently identified increase this shortfall in resources to £11.4 million, as my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) has already said.

Therefore, three options are open to the Greater Manchester passenger transport authority and I suspect that those options are open to other authorities. Let us look at those options. How can that money be saved, how can the Greater Manchester passenger transport authority ensure that the £11.40 million is forthcoming either from balances or from savings? I am the first to agree that scope always exists to effect relatively small savings in organisational expenditure plans. A reduction of over 13 per cent. in less than a few months leaves only a few options open, and these do not extend to rail support. Rail support in Greater Manchester is £19·2 million, one of the highest levels of rate support in the United Kingdom.

Under section 20 of the Transport Act 1968 the Greater Manchester transport authority has to give at least 12 months' notice before it can withdraw any support from British Rail. Therefore, that is not an option at this time. That leaves two other areas in which savings could be made. One is of £12 million in the subsidised network and the other is in the concessionary fare agreements. The subsidised network tendering process is extremely difficult because of deregulation. The authority has little room to manoeuvre or to make significant savings in that direction. I am a resident of Greater Manchester and represent the people in the area and I do not want to see the authority undermining the current network. It is worse than it was before deregulation.

If any savings are to be made, I submit to the Minister of State that they ought not to come from the subsidised network. The only other option open to my local transport authority, and, I suspect, to other transport authorities, is the subsidised network. That network is the one which provides transport for old-age pensioners. When the deregulation Bill was passing through the House the Minister accused me of frightening old ladies when I told him that the legislation we were discussing and which we finally enacted was bound to have an effect upon the subsidy which passenger transport authorities paid for subsidised fares for schoolchildren and old-age pensioners. I told the Minister at the time that I was not being alarmist, that it was his Government and the legislation that we were dealing with which were causing the problem.

If Greater Manchester is to make the savings required to make up the shortfall of £11 million and if those savings cannot come from the networks subsidised under the current legislation, they can only come from concessionary fares. Are the Government saying that, in order to make up the shortfall which passenger transport authorities have not been able to make up because they cannot have a redetermination of their budgets, they will have to make it up out of the concessionary fare scheme? If that is not the case, the only thing that the Minister of State can do is to accept the amendment that we have tabled. If he does not, we have little or no room to manoeuvre.

If the Minister were to concede the amendment, it would put us back to our redetermination position. If he does not concede—it is a shame that the Minister's colleagues from the Department of Transport are not sitting beside him—where are we going to find the £11.4 million for which there is a genuine, understandable and a recognised shortfall in my authority and in others? Are we to get the money from the subsidised network or from the concessionary fare schemes? Are we to say to the pensioners of Greater Manchester, "You now enjoy a concessionary fare scheme where you can travel throughout the county for 12p. However, because the miserable Government have introduced deregulation and because the crazy Secretary of State for the Environment has introduced a Bill that seeks to undermine the redetermination proposals, we shall have to increase old-age pensioner bus passes because we cannot find the money to run our transport system as we would like"? Those are stark questions and the stark realities we are facing.

9.15 pm

The Minister will no doubt receive advice from his officials as to how the amendment would impinge on the legislation that he is seeking to defend. I hope that his officials will advise him wisely because if he does not accept the amendment, I say in all candour, he must accept the responsibility that flows from not accepting it.

Mr. Tony Banks

Amendment No. 107 translates the formula in schedule 2 into preliminary maximum limits rather than the final ones and prescribes a further procedure to be followed by the Secretary of State based closely on the rate-capping model. The purpose, as my hon. Friend the Member for Blackburn (Mr. Straw) has said, is to re-establish the redetermination procedure that was abandoned for 1987–88.

I remind the House that during the passage of the original Rates Act 1984 Ministers made great play of the redetermination machinery within it and encouraged all rate-capped authorities in the first year to talk to the Secretary of State to apply for redetermination. I do not recollect any of them going to the Secretary of State. I do not think that anybody went, because there was a genuine fear among Labour authorities that if they went, rather than make concessions, the Minister would just make things worse by imposing further penalties. When it was discussed in the subsequent year, the then Secretary of State—I do not remember which one because there have been so many—said that if people talked to him—he was obviously feeling lonely—he would not make things worse. He said that he might make things better. After that, some local authorities did go and speak to him.

Our local authority—my hon. Friend the Member for Newham, South (Mr. Spearing) is in the Chamber—went to see the Secretary of State in order to apply for a limited redetermination as it was notified on 22 July that it was designated for selective rate limitation in 1987–88. Newham was notified that the expenditure level for 1987–88 on which the maximum rate would be set was £154.353 million. The expenditure level was based on the 1985–86 original budget plus 6 per cent. However, the original budget for 1985–86 is an unrealistic basis for any expenditure target or comparison unless it is adjusted for special accounting measures. We have raised that matter before. Newham applied for redetermination of its expenditure level to £175.540 million on the basis that, due to special accounting measures, the economies implied by the expenditure level determined by the Secretary of State were unachievable.

We met the Minister of State on 27 November 1986 and emphasised that Newham was not necessarily seeking an ability to increase rates but rather to have an equitable share of resources, and recognition of the borough's special needs. We have all agreed that the meeting was cordial. I should like to run through the justification for our plea, because I want it to be on the record. I hope that, that when the Bill goes through unamended by the Opposition, perhaps a sympathetic peer will cast an eye over this part of our proceedings.

Newham has the second highest level of urban deprivation in the country, according to the Department of the Environment's statistics. We have serious educational problems and, according to the Department of Education and Science, we have the highest level of social deprivation of the 96 local education authorities in England. We have a deepening housing crisis. We have the highest number of unsatisfactory dwellings which are unfit or lacking basic amenities and in need of substantial repair in the 32 London boroughs. We have acute housing stress and the fastest increasing homelessness in London. It has risen from 972 applicants in 1981 to an expected 1,900 this year. We have asked for extra resources to deal with the enormous homelessness problem, but our pleas have fallen on deaf ears.

Newham has a significant level of population growth—the second highest projected increase in the 32 London boroughs between 1986 and 1991. We have the third highest number of births of the 32 London boroughs and substantial increases in the number of under-fives. We have a projected 21 per cent. increase in the number of people aged over 85 between 1986 and 1991. We have a large and diverse ethnic minorities population and the fourth highest percentage in England and Wales of residents of new Commonwealth origin.

We have the third highest rate of children born to mothers of new Commonwealth origin in London and, like many other parts of the country, high unemployment—17.5 per cent. We have a male unemployment rate of 21.3 per cent.—the sixth highest in London. We have had a major reduction in local employment recently, due to the closure in 1980 of the royal docks and the decline of associated industries. We have the fourth highest number of unemployed 16-to-19-year olds.

According to the map, Newham is an outer-London borough, but it has inner-London characteristics. The severity of its problems, which require local expenditure, is greater than is found in many inner-London boroughs. Newham's expenditure per head is considerably lower than in inner-London boroughs and resources available from the Government are also considerably smaller.

We have often pleaded with Ministers here and in meetings for partnership status for the borough. The case is unanswerable, but we have not been able to convince the Government—in spite of the fact that they accept that we are not exaggerating the problems—that we need more resources rather than less. There can be no doubt about the strength of Newham's case. It appears to have been accepted by Ministers and their departmental officers.

Mr. Nigel Spearing (Newham, South)

My hon. Friend knows that, if time permits, I hope to put forward a formula which would ameliorate the problems to which he has referred.

Will my hon. Friend confirm that, at the meeting when all this information was presented to the Minister, the Minister said that the arguments were put fairly, temperately and properly? As far as we know, none of the facts to which my hon. Friend has referred has been questioned by the Minister or anybody else.

Mr. Banks

I entirely agree with my hon. Friend. That is what makes this so frustrating for all three hon. Members who represent Newham. It is not as if we have been accused of exaggerating or as if Ministers have said that we are telling lies. We have always been told that our case is good. I know that there are other equally deserving cases in other parts of the country. We have never argued that Newham should get something that has been taken away from another deprived area of London. God knows, there are enough deprived areas in the east end of London and other inner cities.

All that we are saying is that the Tories do not seem to understand the depth of the problems in an area such as Newham. I realise, of course, that if one was being totally cynical, one could say that they look at a borough such as Newham, and realise that the Tories do not stand a snowball's chance in hell of winning an election there. Under those circumstances, what has the Tory Government got to gain, in terms of votes, by giving anything to Newham? That is being very cynical, but perhaps we have been refused because the Government realise that in cynical terms there is nothing for them from the ballot box. If that is the case, it is disgraceful.

As the leader of Newham borough council, councillor Jones, a very moderate man in his views and no wild extremist by anybody's definition, has made clear time and again, if we do not get the resources in Newham that we believe our case merits and justifies, the consequences will be appalling, primarily for the people of Newham but in the end for the Government as well.

Mr. Caborn

It is apt that I should follow my hon. Friend the Member for Newham, North-West (Mr. Banks) because the problems that we have in the city of Sheffield and in south Yorkshire are mirrored probably to an even greater extent than my hon. Friend suggested.

Probably one of the most despicable parts of redetermination rested on Sheffield's shoulders when we came down to meet the Minister on 17 December 1986. We sat at the Ministry and put the case for Sheffield because it was proposed to slash £41 million off the budget of Sheffield county council. We put the case to the Minister for redetermination, as did one of his hon. Friends, the Member for Sheffield, Hallam (Sir J. Osborn). We were told that he would take all the points on board that we were making about the serious situation of the inner-city seat, with a decline in its industrial base of steel and engineering. When we came back to the House of Commons the following day, we found that the Bill was going to be presented and put on the statute book and that the exercise that we had run through with the Minister was irrelevant because redetermination was not allowed.

Prior to that, for the first time in its history, the Sheffield chamber of commerce and the hon. Member for Hallam made representations about the state of Sheffield's finances after it had been taken into consultation with the local authority, and clearly stated to central Government that it was impossible to run the city of Sheffield on the expenditure levels that were being proposed by the Department of the Environment. The city council also made representations. That was because the city of Sheffield is suffering one of the worst industrial declines in its history, yet we are penalised by that reduction in expenditure levels.

On top of that, as several of my hon. Friends from south Yorkshire have said, the fire and civil defence budget has been reduced by £1 million and the transport budget has been reduced by about £12 million. The transport authority has also made representations for redetermination. Although my hon. Friend the Member for Wigan (Mr. Stott) has been talking about the problems of Greater Manchester, if one compares them with what has been happening in south Yorkshire, with all due respect to my hon. Friend, they pale into insignificance, because as bad as the cuts in Greater Manchester are, they are 9 per cent., while south Yorkshire's support is being slashed by 21 per cent.

On local radio in Sheffield earlier today, the depth of the problems that some people are experiencing was clearly stated. One of the callers to the phone-in programme this morning on Radio Sheffield explained her plight. Her family has moved out to one of the outer reaches of Sheffield, to a new housing estate. That was partly because there is quite nice housing in the outskirts of Sheffield but also because there was a reasonable, sound, efficient and effective system of transport in operation. Unfortunately, her husband has had both legs removed. The couple have a youngster who is at technical college. It is now very difficult for the wife and the child to get around because of the reduction in the wages going into that household.

9.30 pm

In the past 18 months, we have suffered from increases in fares of over 225 per cent. There have been reductions in the transport infrastructure of about 10 per cent. The number of passengers carried has fallen by about 30 to 35 per cent., and that was before deregulation. Now, in addition, we have a further 6 per cent. increase in fares. We have lost thousands of jobs in transport, and there will be a further 800 redundancies because of the Government's expenditure levels.

Let us look at the Government's credibility. They are giving promises to people who think that they are sincere and honest when they are dealing with them. Again, for the financial year 1987–88, the south Yorkshire PTE will have to meet extra costs totalling £3.68 million arising from the scheme of transfer. That was a major point on redetermination raised by the south Yorkshire PTE and brought about by the Local Government Act 1985. The Secretary of State for Transport said that that would be seriously taken on board. It is £3.68 million out of total expenditure of £46.6 million. Clear indications were given that that would be included in the redetermination level. It was not. Like my hon. Friend the Member for Wigan, south Yorkshire PTE is saying: where does the money come from? Does it come out of the concessionary fares, which have been affected already? Where do we get the money from? It is an impossible task.

The whole of the city of Sheffield, including business, industry, commerce, the trade unions and the local papers, is saying that the Government are now putting constraints upon a fairly deprived area, the industrial base of which has been decimated by the lack of Government industrial policies. All the organisations that have made representations are saying, "You are giving us an impossible task. It cannot be done." Further deprivation and social unrest is inevitable. Then people such as the chairman of the Tory party will come to the Front Bench and castigate Sheffield for at least trying to protect those who can least protect themselves. What the Government have done is dishonourable, in view of the many representations by people in south Yorkshire.

Mr. Tony Lloyd

I should continue in the same vein, and refer to transport in our metropolitan areas. My hon. Friend the Member for Wigan (Mr. Stott) spoke a little about Greater Manchester. I do not intend to go over the the same ground, but I should like to put a couple of points to the Minister.

The Minister has not been directly involved in the negotiations between Greater Manchester and the Department of Transport. It grieves us greatly that, having suffered in some ways more than other authorities—I take the point made by my hon. Friend the Member for Sheffield, Central (Mr. Caborn) about south Yorkshire—Greater Manchester has unique problems because of the restructuring that it had to undertake. That was recognised by the Transport Ministers, who, at one stage, described its proposals as "sensible". It sticks considerably in our throats when we hear those same Transport Ministers telling us that in Greater Manchester it is our own fault that services are being decimated while, even by the Government's own account, we read that Greater Manchester has suffered more loss of mileage and routes than any other metropolitan area in the process of deregulation.

On Friday I visited a scheme funded by the passenger transport authority and the Manpower Services Commission, which is close to the Government's heart, or at least close to the Government's rhetoric. It is a dial-a-ride scheme for the most vulnerable and those who have the greatest transport difficulties.

That is something that the Department of Transport claims that it wants to promote. It parallels the claims made by my hon. Friend the Member for Sheffield, Central about the difficulties experienced by people who have specific physical disabilities and who are unable to use the public transport system. The possibility of an extension of those schemes in Greater Manchester into an area such as my own—which has some of the poorest and most vulnerable people in the whole of the Greater Manchester area—is non-existent.

Far from Greater Manchester passenger transport authority being able to extend that scheme, we are likely to see it cutting back on existing provision, and we are likely to see the concessionary fares go unless the Minister tells us tonight that he intends to accept the amendment or come up with another solution dealing with debt.

In Greater Manchester we went through the whole process of redetermination because we believed that the Government were sincere when they said that they accepted that each local authority would be able to argue its own individual case for redetermination. In terms of the transport and fire authorities, Greater Manchester went through the motions and spent many hours of officers' and authority members' time in beating a path down to London. That is no pleasant day out for people from the north-west; it is something that they do on behalf of the community they represent. However, we found that that process was a farce and that it had been ripped up by the Bill, which takes no account whatever of local circumstances.

The fire authority feels particularly bitter. It had a constructive meeting with Lord Caithness, who is responsible for fire services, and brought down an all-party delegation. It felt that it had managed to explain the peculiar circumstances of Greater Manchester, and left Whitehall feeling that its unique circumstances would be considered. It came as a slap in the face when Greater Manchester's fire authority found that it would be treated in exactly the same way as every other fire authority in the metropolitan areas.

I do not want to fight a case for, and even less against, fire authorities, but it is well recognised that Greater Manchester has done badly in this settlement. I congratulate the hon. Member for Halifax (Mr. Galley) whose authority, West Yorkshire, has been treated worse than any other. He has absented himself now but my hon. Friends will accept that he was the only Conservative Member who took the trouble to speak, not only about fire authorities and transport, but across the whole range of the debate. The rest of the Tory party has been silent on these particular issues.

Mr. Meadowcroft

I wonder whether the hon. Gentleman will contemplate the possibility that the hon. Member for Halifax (Mr. Galley) is outside trying to drum up support for his amendment amongst his colleagues.

Mr. Lloyd

I did not seek to criticise the hon. Member for Halifax, but the rest of his colleagues in the Conservative party, who cannot be bothered to take up the important issues affecting west Yorkshire, Greater Manchester, south Yorkshire, the west midlands and so on.

The fire authority in Greater Manchester faces a cut of £1 million unless the Bill is amended. The Government were certain, when they put forward the expenditure limits last July, that they had got things right, but conceded that they had got things wrong by considering the redetermination process. They conceded how wrong they were by allowing a 2.5 per cent. uplift, yet when representatives of Greater Manchester's fire authority spoke to the civil servants they were told, "We have only given you 2..5 per cent., but there may be £800,000 in additional clawback." Whitehall clearly accepts that Greater Manchester's fire authority needs the money that it requested. Whitehall is saying, in effect, that it will match exactly what Greater Manchester asked for. barring the odd £100,000 because it will be giving—on a nod and a wink—the extra money. Unfortunately, we in Greater Manchester are not gullible. The reality is that we do not know whether we shall get this extra money through additional clawback. But even if we lid, the difficulty is that, while that might fund one year, t would not carry over to future years given the present structure of local government finance. That leaves Greater Manchester vulnerable. We have already had standstills in recruitment. Last year we lost a number of serving fire officers in the training pool. That is bad for those who must carry out essential emergency work in a large metropolitan area. Whatever happens, we shall lose even more money again this year.

Greater Manchester already has a high death rate from fires. There were 124 deaths in 1985. The Home Office recognises that Greater Manchester is probably the most efficient of the metropolitan authorities. That can be proved by statistics. If we reduce financial provision even further we shall effectively be undermining and sabotaging the job done by firemen out on the tenders and by the fire authority in general. Ultimately, we shall be doing that at the expense of the lives and property of the people of Greater Manchester. If that is what the Government intend, so be it. The public will make up their own mind. But if the Government want to wriggle out of that. let the Minister stand up and say how they intend to make up that financial shortfall.

Mr. Walter Harrison (Wakefield)

It has taken me two or three weeks and quite a few days sitting in this Chamber to draw someone's attention to the fact that I wanted to have a little word about my concern over local government finance. I have put on all sorts of little demonstrations. When I look round the Chamber, as a simple rural lad, the first place that I look is the Press Gallery. The Lobby members usually ask where the Members of Parliament are, but where are they? Not a single one is present to take any interest in this business, which concerns one of the biggest problems that we have ever had to face. They check us and now we are checking them. We have two Hansard writers. The public are interested. Seven members of the public are present and here we are fighting a dynamic battle about local government finance.

How many Conservative Back-Benchers are present? There are three in the proper positions, one Cross Bencher, and one lounging. There are more Members on the Opposition Front Bench.

I do not know how long I have got, but I have been trying to speak for a long time. When I started in local government — my father was a local government councillor before me — we had to account for every dustbin lid. We had to account for everything, whether for wooden rafters or rolled steel girders. We had to account for boundary fences. We had to go to the regional committee to see whether we could spend over £15. We were accountable. I am worried about the accountability of the Government, local government and everything else.

I come to the crunch. Hon. Members know that at present I have a little bit of a running battle with one of the Ministers in the Department of the Environment. That is nothing new.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

Who is that?

Mr. Harrison

I reckon that my hon. Friends are looking at him, so I shall not name him.

I started out asking questions about accountability and I approached my hon. Friends on the Front Bench, who will be Ministers at the next election, and asked them which was the best point for me to talk about residuary bodies. They told me that such and such a point would be best. My hon. Friend, who I will not name because I cannot remember his constituency, told me that such and such a place would be best. He told me that when the guillotine fell I would be cut short. Therefore, I thought that it would be advisable for me to speak now. I thought that if I was to be chopped by the guillotine, it would be best, whether I was in order or out of order, to chance my luck now.

9.45 pm

I want to make a point about the accountability of local government finance. I started out as an urban district councillor and became a non-county borough councillor. I became a county councillor and then I came here. What a success! I had more success as an urban district councillor than I have had here. I could receive more answers in those days.

When I asked the town clerk or anyone else a question, he was accountable and he answered me. He did not give me distortions or fancy words, because he knew that I would see him again the next day.

I began to ask questions about what belonged to me as a ratepayer, as a constituent, and what belonged to my father before me. I found out that there was no accountability. When the Tory Government abolished the county councils, we discovered that there was no accountability. The Government did not elect the body to replace the councils; they selected it. I told one bloke, "You have got some real ones there. From the names that I have seen, the members of that residuary body would sell their grandmothers." The Secretary of State said to me, "Why do you think that we selected them?"

I am bothered about my property in Yorkshire. I do not have much property, just a little house with about three quarters of an acre, but I have a lot of vested interests.

Mr. Caborn

Castle Howard.

Mr. Harrison

No, it is not Castle Howard.

I am bothered about county hall and what my predecessors and my father paid into. I am worried about accountability and I am concerned about the residuary bodies which are non-elected and non-accountable. The residuary body was selected for its attitude. I notice that there is one more person in the Press Gallery. Welcome to the fold.

With all my vested interest through being a ratepayer, I wanted to see what accountability was available.

Mr. Allen McKay

Two minutes left.

Mr. Harrison

I have been told that I have only two minutes left. I have not spoken for 12 months. All I have done is to make interventions. I will finish in a few minutes, but I have a bit more to say yet.

I am concerned about the accountability of local government finance. Way back, I could account each year through the local authority. Now, however, no one can account for what is happening because councillors are not in charge. The Secretary of State is in charge, but he is not accountable.

Mr. Tony Banks

My right hon. Friend will be talking about the residuary bodies in some detail. Is he aware that the unelected chairman of the London residuary body receives more than £51,000 for dismantling London while the former leader of the Greater London council, Ken Livingstone, received only council expenses to a grand total of about £6,000?

Mr. Harrison

I asked those questions, but the Government could not tell me. I asked the Government what the chairmen of the residuary bodies receive annually, what emoluments they receive and what other jobs they do. That is a carve-up.

I am worried about west Yorkshire county hall. Look at the stack of questions I have asked—it is beautiful. Now the Government answer my questions in triplicate. They give the same answers to three questions because they are fed up. I asked the Secretary of State, what was the estimated value of the West Yorkshire metropolitan county council…complex in Wood Street, Wakefield, West Yorkshire, at the time of the abolition."—[Official Report, 19 June 1986; Vol. 99, c. 635.] Did the Minister know? No; he told me to ask the residuary body. I also asked the Secretary of State for the Environment, "what were the total capital assets of the West Yorkshire metropolitan county council on 31 March at the time of the abolition of that county council. He replied: Local authorities are not required to maintain a balance sheet."—[Official Report, 23 June 1986; Vol. 100, c. 9.] I asked the Secretary of State for the Environment about the number of vacant properties formerly owned by the county council and their annual rental values.

The Minister replied: I have no information on this matter".— [Official Report, 19 December 1986; Vol. 107, c. 753.] He said that it was a matter for the residuary body.

I asked the Secretary of State for the Environment whether he had given guidance to the residuary body on the disposal of properties, but he had no information. Then comes the triplicate one. I asked the Secretary of State about the individual units of property and land, whether he would make a statement on the percentage increase of rented properties and whether he would make a statement on the total receipts from the disposal and sale of property and land. The Minister replied: I have no information on these matters."—'[Official Report, 18 December 1986; Vol. 107, c. 679.] What marvellous accountability!

The accountability for local government finance has been removed from local councillors. It has gone to the Government, who are not accountable because they refer all matters to the residuary bodies.

That was a short version of what I wanted to say because my hon. Friends were barracking me. But I shall return to the subject and I hope that many of my hon. Friends will take it up. The only response that I get from the Department of the Environment is that the residuary body has the information. Its members are not elected; they were selected because they would sell their grandmothers.

Dr. Boyson

When I came into the House, I received a letter from a noted librarian called Ivy Hill. She said that she had served under seven chairmen of library committees. One of them was my father, who was an alderman in Haslingden. Another was the right hon. Member for Wakefield (Mr. Harrison). She paid tribute to them as the two best chairmen under whom she had served in local government. It gives me pleasure to put that on the record tonight.

It is said that most people deplore the end of consensus in local government. However, one reason for the end of that is excessive spending by certain boroughs. The introduction of rate capping was the Government's response to the huge increase of expenditure—

Mr. Tony Banks

rose —

Dr. Boyson

I shall give way in a minute; I have hardly started my speech. We shall be continuing the debate after the 10 o'clock motion.

We believe that if rates are too high they drive out residents and businesses, with the consequent risk of creating residential and industrial deserts.

Although I shall ask the House to reject the Opposition amendments, I must point out that one amendment being discussed in this group—No. 114—is, in fact, a Government amendment, and I shall be asking the House to accept it.

Under redetermination, authorities were able to request a meeting with the appropriate Minister and a reassessment was then made. Until the necessity for this Bill was shown, there was every intention that redetermination should be available for the 1987–88 rating period from 1 April this year.

Mr. Caborn

rose—

Dr. Boyson

There is a queue, and the hon. Member for Newham, North-West (Mr. Banks) is first in it. I shall give way in a moment.

Half of the authorities that were rate-capped this year asked for redetermination. However, the Government decided not to give individual redetermination, but to draft the Bill in two blocks—those authorities that were rate-capped last year and those that have been rate-capped for the first time this year. With the authorities that applied for redetermination, we did what we could by bringing in the formula alongside what we would have previously given—

Mr. Tony Banks

I do not under-estimate the significance of rates at the margin, but the Minister must accept that rates are one of the least important cost factors facing industry. Of far greater significance are interest rates, and the Government determine those. He cannot continue to attack local authorities and claim that high spending is all their fault — he knows that the Government's contribution to rate support grant has gone down from 61 per cent. in 1979 to 46 per cent. this year. That is a massive switch of taxation from central to local government. The Minister cannot pretend that that has not been a major factor in the spending policies of Labour and other local authorities.

Dr. Boyson

The level of interest rates applies equally throughout the country, so the geographical location of businesses is not affected by them. However, the level of rates varies between authorities. For a business that requires a great deal of space and many buildings, the level of rates in a particular area is a major determinant in whether it stays in that area or moves elsewere, or even in whether it can stay in business at all. I have visited businesses in the Wembley trading estate which within the past two years have moved elsewhere because of the level of rates in Brent. Rates are important. There is no need for Micawberism to accept that success or failure comes on the margin. It is on the margin that we all make our decisions.

10 pm

Mr. Caborn

The Minister has given a short explanation of why the Government introduced rate capping. The South Yorkshire fire and civil defence authority is the subject of minimum standards that should be met for the well-being of the people of south Yorkshire, yet the Department of the Environment is £1 million short of capital to meet the minimum standards that have been spent. If we are spending so much money in south Yorkshire that it is necessary to rate-cap the authority, how is it that the fire service is falling short of the minimum standards that have been set for it and a Government Department is saying that those standards should be achieved?

Dr. Boyson

I shall deal with the hon. Gentleman's question later. I have stopped using my prepared notes so that I can respond to all those who have participated in the debate so far. If I start to respond to interventions. I shall forget to reply to some of those who have spoken in the debate.

Mr. Tony Banks

Answer the question.

Dr. Boyson

This happens to be my speech and I shall proceed with it in my way.

Mr. Allan Rogers (Rhondda)

Will the Minister give way?

Dr. Boyson

Yes, I shall give way to the hon. Gentleman.

Mr. Rogers

When the Minister responded to a question posed by my hon. Friend the Member for Newham, North-West (Mr. Banks) he suggested that rates are an important factor in the location of industry. In the area that I represent, companies have the benefit of a substantial part of their rates bill being mitigated for perhaps the first five years, yet they still do not stay in the area and they do not come into the area in sufficient numbers to relieve unemployment. If the non-levying of rates is a factor, surely my area and others like it should be attracting more companies.

Dr. Boyson

Presumably rates were considered to be an important factor by a sufficient number, or the five-year provision would not have been introduced.

Several Hon. Members

rose—

Dr. Boyson

I must get on, because there are many hon. Members who want to move on to Third Reading. Many amendments remain undiscussed and there are certain ones—

Mr. Straw

It was the Government who imposed a guillotine.

Dr. Boyson

We did so to ensure that local authorities would have their money on 1 April. If they do not have their money on that date because the Bill has not been enacted, no one will thank those who delayed its passage through the House of Commons.

My hon. Friend the Member for Halifax (Mr. Galley) and the hon. Members for Stretford (Mr. Lloyd) and for Barnsley, West and Penistone (Mr. McKay) referred to the south Yorkshire fire service—

Mr. Kevin Barron (Rother Valley)

Halifax is in west Yorkshire.

Dr. Boyson

Questions have been asked especially about south Yorkshire and I shall respond to them.

Effectively, spending this year will amount to an increase of 6.9 per cent. on last year's budget. My right hon. Friend the Secretary of State for the Home Department is satisfied on present information that the expenditure level is adequate to maintain the existing level of service. He is of the view that it will enable the authority to maintain minimum standards of fire cover, but he has asked Her Majesty's Chief Inspector of Fire Services to report urgently on the operational implications of the intended pre-set limit. I can assure the Committee that my right hon. Friend will consider the chief inspector's report extremely carefully. I have heard that my noble Friend the Minister of State, Home Office has agreed to meet the authority to discuss the concerns which it has brought to our notice.

Mr. Tony Lloyd

The Minister has told us that the Minister of State, Home Office, the Earl of Caithness, will meet the fire authority, but what difference will that make when the Bill has passed through the House of Commons? At that stage everything will be cut and dried.

Dr. Boyson

That is obviously a valid point. On the other hand, help can be given to local authorities in many ways. The very fact that the agreement has been made for the Minister to meet that authority shows the concern that is felt by the Government on this matter.

Mr. Straw

The Minister said that help can be given in many ways. Will he spell out those ways? Will he accept, as my hon. Friend the Member for Stretford (Mr. Lloyd) has made clear, that once the Bill becomes an Act, the expenditure limits and rate limits are set in concrete and there is nothing that even the Secretary of State can do about them? He is putting into the Bill great inflexibility and forcing rate limits on authorities, even if he accepts the merits of their case.

Dr. Boyson

I cannot comment on what my hon. Friend the Minister will say when he meets the authority. I have just informed the House that he is prepared to meet the authority and discuss the situation.

The hon. Member for Bootle (Mr. Roberts) mentioned the Merseyside police authority. The increase for that is over 7 per cent. Reference has been made to the transport authorities in two areas. I have the figures here. In 1987–88 there will be a £3 million increase for the Greater Manchester area, so the argument is not over cuts but over the level of increased expenditure. All of us would like more money if we could have it. We are dealing not with cuts but with arguments as to whether the percentages that I have given are enough.

Mr. Stott

rose—

Dr. Boyson

I shall not give way because we must move on. I know that some hon. Members have been here all the time, while others have only just come in.

The hon. Member for Holborn and St. Pancras (Mr. Dobson) mentioned inner London and made a strong case on the need for further money for ILEA. However, I bring to the attention of the Committee the huge expenditure of ILEA. It is spending twice as much per pupil in its schools as the average for the whole country. The rest of the country can manage on that average with good results, while those of ILEA are not the best. I do not have the results with me, but I have seen reports. ILEA is the highest spending authority relative to GRE. It has budgeted to spend 78 per cent. more than GRE on education this year, and the next highest, Haringey, will spend only 31 per cent. more.

Similarly, ILEA employs twice as many non-teaching staff in schools relative to pupil numbers than the average authority. Its costs of administration per pupil are more than twice the average, even allowing for London weighting. Its refusal to manage its teacher force properly has led to overstaffing and very generous pupil teacher ratios. Last year, there were 500 supernumerary teachers without proper jobs in its schools, while there were shortages in many other authorities, even those in London. Even allowing for London weighting, ILEA spends 30 per cent. more per pupil than the inner city authorities of Manchester, Liverpool and Newcastle, and almost 60 per cent. more than Birmingham. ILEA educates 4 per cent. of the children in the country but spends 8 per cent. of the money available. How anybody can ask for more money for ILEA with such a background, I do not know.

Mr. Dobson

Does the Minister recall that I pointed out that in secondary schools, ILEA spends about £1,900 per pupil, but Conservative Members, who say that ILEA should spend less, spend £3,000, £4,000 or £5,000 a year sending their children to public school? They do not represent London seats, but they come here to set aside the decisions of the democratically elected ILEA to spend what it thinks is needed to provide a decent education for the children of inner London.

Dr. Boyson

I would like the hon. Member for Holborn and St. Pancras (Mr. Dobson) to listen most carefully. With regard to school spending in London a conclusion was reached by ILEA last week—presumably because of financial pressure this year—regarding its boarding school, Wolverstone Hall, which costs £8,350 per pupil, or 50 per cent. more than Eton. If the hon. Gentleman is talking about saving money, he should recall that the most expensive boarding school is run by ILEA. Thank goodness that ILEA only runs one boarding school, or it would be spending six times as much per head of the population. If that is the hon. Gentleman's best case for ILEA, I do not see anything wrong in sharing out the money across the length and breadth of the country.

I should also like to make reference to the existing rate-capped boroughs. The hon. Member for Sheffield" Heeley (Mr. Michie) mentioned Sheffield, but the fact is that that council spent 20 per cent. more over allocated GRE. In April 1986, 953 properties owned by Sheffield council have been vacant for over a year. Let us consider the money that could have been brought in had they been let.

The hon. Member for Newham, North-West (Mr. Banks) spoke with his usual fire and enthusiasm—he enlivens the House with his speeches. Newham is spending 80 per cent. over GRE and the local rate is 66 per cent. above the class average. Rates have risen by 50 per cent. since 1982–83. Since 1983, rents have been down by 8p per house, which means that Newham has forgone an annual income of £3 million because of that reduction. The rates in Newham for 1986–87 were the highest in London. Some have objected to the fact that that borough will be rate-capped; one wonders whether rates would have to reach the height of Snowdonia or the Himalayas before someone would not object to the rate-capping of that borough.

I shall not say any more, because I do not wish to disturb Opposition Members. I know that they are keen to vote upon that issue. I would be astonished if there was a vote, considering the figures I have given. However, one cannot account for human nature.

The Government have sought to rate-cap to ensure that people are not driven out of boroughs and businesses do not go bankrupt. To protect those people we need the clauses in their entirety and on behalf of the Government I ask my right hon. and hon. Friends to oppose all the amendments, bar amendment No. 114—it is an amendment produced on the home side and I recommend it—and to go into the Lobby to vote for the retention of the clauses.

Question put, That the amendment be made:—

The House divided: Ayes 177, Noes 252.

Division No. 72]	[10.15 pm
AYES
Abse, Leo	Davis, Terry (B'ham, H'ge H'l)
Adams, Allen (Paisley N)	Deakins, Eric
Alton, David	Dewar, Donald
Anderson, Donald	Dixon, Donald
Archer, Rt Hon Peter	Dobson, Frank
Ashley, Rt Hon Jack	Dormand, Jack
Atkinson, N. (Tottenham)	Dubs, Alfred
Bagier, Gordon A. T.	Dunwoody, Hon Mrs G.
Banks, Tony (Newham NW)	Eadie, Alex
Barron, Kevin	Eastham, Ken
Beckett, Mrs Margaret	Evans, John (St. Helens N)
Bell, Stuart	Fatchett, Derek
Bennett, A. (Dent'n & Red'sh)	Faulds, Andrew
Bermingham, Gerald	Field, Frank (Birkenhead)
Bidwell, Sydney	Fields, T. (L'pool Broad Gn)
Blair, Anthony	Fisher, Mark
Boyes, Roland	Flannery, Martin
Bray, Dr Jeremy	Foot, Rt Hon Michael
Brown, Gordon (D'f'mline E)	Forrester, John
Brown, Hugh D. (Provan)	Foster, Derek
Brown, N. (N'c'tle-u-Tyne E)	Foulkes, George
Brown, Ron (E'burgh, Leith)	Fraser, J. (Norwood)
Buchan, Norman	Freud, Clement
Caborn, Richard	George, Bruce
Callaghan, Rt Hon J.	Gilbert, Rt Hon Dr John
Callaghan, Jim (Heyw'd & M)	Golding, Mrs Llin
Campbell-Savours, Dale	Gould, Bryan
Canavan, Dennis	Gourlay, Harry
Carter-Jones, Lewis	Hamilton, James (M'well N)
Clark, Dr David (S Shields)	Hamilton, W. W. (Fife Central)
Clay, Robert	Hancock, Michael
Clelland, David Gordon	Harrison, Rt Hon Walter
Clwyd, Mrs Ann	Haynes, Frank
Cocks, Rt Hon M. (Bristol S)	Heffer, Eric S.
Cohen, Harry	Hogg, N. (C'nauld & Kilsyth)
Conlan, Bernard	Holland, Stuart (Vauxhall)
Cook, Frank (Stockton North)	Home Robertson, John
Cook, Robin F. (Livingston)	Howarth, George (Knowsley, N)
Corbett, Robin	Hoyle, Douglas
Corbyn, Jeremy	Hughes, Robert (Aberdeen N)
Craigen, J. M.	Hughes, Roy (Newport East)
Crowther, Stan	Hughes, Sean (Knowsley S)
Cunliffe, Lawrence	Hughes, Simon (Southwark)
Cunningham, Dr John	Janner, Hon Greville

Jenkins, Rt Hon Roy (Hillh'd)	Redmond, Martin
John, Brynmor	Rees, Rt Hon M. (Leeds S)
Jones, Barry (Alyn & Deeside)	Richardson, Ms Jo
Kaufman, Rt Hon Gerald	Roberts, Allan (Bootle)
Lambie, David	Roberts, Ernest (Hackney N)
Lamond, James	Rogers, Allan
Leadbitter, Ted	Rooker, J. W.
Leighton, Ronald	Ross, Ernest (Dundee W)
Lewis, Terence (Worsley)	Rowlands, Ted
Litherland, Robert	Sedgemore, Brian
Lloyd, Tony (Stretford)	Sheerman, Barry
Lofthouse, Geoffrey	Sheldon, Rt Hon R.
Loyden, Edward	Shore, Rt Hon Peter
McCartney, Hugh	Short, Ms Clare (Ladywood)
McDonald, Dr Oonagh	Short, Mrs R.(W'hampt'n NE)
McKay, Allen (Penistone)	Silkin, Rt Hon J.
Maclennan, Robert	Skinner, Dennis
McNamara, Kevin	Smith, C.(lsl'ton S & F'bury)
McTaggart, Robert	Smith, Rt Hon J. (M'ds E)
Madden, Max	Snape, Peter
Marshall, David (Shettleston)	Soley, Clive
Martin, Michael	Spearing, Nigel
Mason, Rt Hon Roy	Stewart, Rt Hon D. (W Isles)
Maxton, John	Stott, Roger
Maynard, Miss Joan	Straw, Jack
Meacher, Michael	Thomas, Dafydd (Merioneth)
Meadowcroft, Michael	Thomas, Dr R. (Carmarthen)
Michie, William	Thompson, J. (Wansbeck)
Millan, Rt Hon Bruce	Thorne, Stan (Preston)
Mitchell, Austin (G't Grimsby)	Tinn, James
Morris, Rt Hon A. (W'shawe)	Torney, Tom
Morris, Rt Hon J. (Aberavon)	Wainwright, R.
Nellist, David	Warden, Gareth (Gower)
Oakes, Rt Hon Gordon	Wareing, Robert
O'Brien, William	Weetch, Ken
O'Neill, Martin	Welsh, Michael
Owen, Rt Hon Dr David	White, James
Park, George	Williams, Rt Hon A.
Patchett, Terry	Wilson, Gordon
Pavitt, Laurie	Winnick, David
Pendry, Tom	Wrigglesworth, Ian
Pike, Peter	Young, David (Bolton SE)
Powell, Raymond (Ogmore)
Prescott, John	Tellers for the Ayes:
Radice, Giles	Mr. Ron Davies and
Randall, Stuart	Mr. John McWilliam.
Raynsford, Nick

NOES
Aitken, Jonathan	Brown, M. (Brigg & Cl'thpes)
Alexander, Richard	Browne, John
Alison, Rt Hon Michael	Bruinvels, Peter
Amess, David	Buchanan-Smith, Rt Hon A.
Ancram, Michael	Buck, Sir Antony
Arnold, Tom	Budgen, Nick
Ashby, David	Bulmer, Esmond
Atkinson, David (B'm'th E)	Burt, Alistair
Baker, Nicholas (Dorset N)	Butcher, John
Batiste, Spencer	Butterfill, John
Bellingham, Henry	Carlisle, John (Luton N)
Bendall, Vivian	Carttiss, Michael
Benyon, William	Cash, William
Best, Keith	Chapman, Sydney
Biffen, Rt Hon John	Chope, Christopher
Biggs-Davison, Sir John	Churchill, W. S.
Blackburn, John	Clark, Dr Michael (Rochford)
Body, Sir Richard	Clark, Sir W. (Croydon S)
Bonsor, Sir Nicholas	Clarke, Rt Hon K. (Rushcliffe)
Boscawen, Hon Robert	Cockeram, Eric
Bottom ley, Peter	Colvin, Michael
Bottomley, Mrs Virginia	Conway, Derek
Bowden, A. (Brighton K'to'n)	Coombs, Simon
Bowden, Gerald (Dulwich)	Cope, John
Boyson, Dr Rhodes	Couchman, James
Braine, Rt Hon Sir Bernard	Cranborne, Viscount
Brandon-Bravo, Martin	Critchley, Julian
Bright, Graham	Crouch, David
Brinton, Tim	Currie, Mrs Edwina
Brittan, Rt Hon Leon	Dickens, Geoffrey
Brooke, Hon Peter	Dicks, Terry

Dorrell, Stephen	Lilley, Peter
Dover, Den	Lloyd, Sir Ian (Havant)
du Cann, Rt Hon Sir Edward	Lord, Michael
Dunn, Robert	Luce, Rt Hon Richard
Durant, Tony	Lyell, Nicholas
Dykes, Hugh	McCrindle, Robert
Eggar, Tim	McCurley, Mrs Anna
Evennett, David	Macfarlane, Neil
Eyre, Sir Reginald	MacKay, Andrew (Berkshire)
Favell, Anthony	MacKay, John (Argyll & Bute)
Forman, Nigel	Maclean, David John
Forsyth, Michael (Stirling)	McLoughlin, Patrick
Forth, Eric	McNair-Wilson, P. (New F'st)
Fox, Sir Marcus	McQuarrie, Albert
Gale, Roger	Madel, David
Galley, Roy	Major, John
Gardiner, George (Reigate)	Malins, Humfrey
Garel-Jones, Tristan	Malone, Gerald
Glyn, Dr Alan	Maples, John
Goodhart, Sir Philip	Marland, Paul
Gow, Ian	Marlow, Antony
Gower, Sir Raymond	Marshall, Michael (Arundel)
Greenway, Harry	Mates, Michael
Griffiths, Sir Eldon	Mather, Sir Carol
Gummer, Rt Hon John S	Maude, Hon Francis
Hamilton, Neil (Tatton)	Maxwell-Hyslop, Robin
Hannam, John	Mayhew, Sir Patrick
Harris, David	Merchant, Piers
Hayes, J.	Meyer, Sir Anthony
Heathcoat-Amory, David	Miller, Hal (B'grove)
Hicks, Robert	Mills, lain (Meriden)
Higgins, Rt Hon Terence L.	Mills, Sir Peter (West Devon)
Holland, Sir Philip (Gedling)	Miscampbell, Norman
Howarth, Alan (Stratf'd-on-A)	Mitchell, David (Hants NW)
Howarth, Gerald (Cannock)	Moate, Roger
Howell, Ralph (Norfolk, N)	Monro, Sir Hector
Jackson, Robert	Montgomery, Sir Fergus
Jopling, Rt Hon Michael	Morrison, Hon C. (Devizes)
Joseph, Rt Hon Sir Keith	Moynihan, Hon C.
King, Roger (B'ham N'field)	Mudd, David
Knowles, Michael	Neale, Gerrard
Knox, David	Nelson, Anthony
Lamont, Rt Hon Norman	Neubert, Michael
Latham, Michael	Newton, Tony
Lawler, Geoffrey	Nicholls, Patrick
Lawrence, Ivan	Onslow, Cranley
Leigh, Edward (Gainsbor'gh)	Oppenheim, Phillip
Lennox-Boyd, Hon Mark	Ottaway, Richard
Lester, Jim	Page, Richard (Herts SW)
Lewis, Sir Kenneth (Stamf'd)	Patten, Christopher (Bath)

Patten, J. (Oxf W & Abgdn)	Stevens, Lewis (Nuneaton)
Pawsey, James	Stewart, Allan (Eastwood)
Peacock, Mrs Elizabeth	Stewart, Andrew (Sherwood)
Percival, Rt Hon Sir Ian	Stewart, Ian (Hertf'dshire N)
Pollock, Alexander	Tapsell, Sir Peter
Portillo, Michael	Taylor, John (Solihull)
Powell, William (Corby)	Taylor, Teddy (S'end E)
Powley, John	Temple-Morris, Peter
Price, Sir David	Terlezki, Stefan
Proctor, K. Harvey	Thatcher, Rt Hon Mrs M.
Rattan, Keith	Thomas, Rt Hon Peter
Raison, Rt Hon Timothy	Thompson, Donald (Calder V)
Rathbone, Tim	Thornton, Malcolm
Rhodes James, Robert	Thurnham, Peter
Rhys Williams, Sir Brandon	Townend, John (Bridlington)
Ridley, Rt Hon Nicholas	Trippier, David
Ridsdale, Sir Julian	Trotter, Neville
Roberts, Wyn (Conwy)	Twinn, Dr Ian
Robinson, Mark (N'port W)	van Straubenzee, Sir W.
Roe, Mrs Marion	Vaughan, Sir Gerard
Rost, Peter	Viggers, Peter
Rowe, Andrew	Wakeham, Rt Hon John
Rumbold, Mrs Angela	Waldegrave, Hon William
Ryder, Richard	Walden, George
Sackville, Hon Thomas	Walker, Bill (Tside N)
Sainsbury, Hon Timothy	Waller, Gary
Sayeed, Jonathan	Ward, John
Shaw, Giles (Pudsey)	Wardle, C. (Bexhill)
Shaw, Sir Michael (Scarb)	Warren, Kenneth
Shelton, William (Streatham)	Watson, John
Shepherd, Colin (Hereford)	Watts, John
Shepherd, Richard (Aldridge)	Wells, Bowen (Hertford)
Shersby, Michael	Wells, Sir John (Maidstone)
Silvester, Fred	Wheeler, John
Sims, Roger	Whitfield, John
Skeet, Sir Trevor	Whitney, Raymond
Smith, Tim (Beaconsfield)	Wiggin, Jerry
Speed, Keith	Wolfson, Mark
Speller, Tony	Wood, Timothy
Spencer, Derek	Woodcock, Michael
Spicer, Jim (Dorset W)	Yeo, Tim
Spicer, Michael (S Worcs)	Young, Sir George (Acton)
Squire, Robin	Younger, Rt Hon George
Stanbrook, Ivor
Stanley, Rt Hon John	Tellers for the Noes:
Steen, Anthony	Mr. Peter Lloyd and
Stern, Michael	Mr. David Lightbown.

Question accordingly negatived.

Mr. David Clelland (Tyne Bridge)

I beg to move amendment No. 193, in page 6, line 16, leave out subsection (4) and insert— '(4) For the purposes of section 8 below the maximum limit in relation to a designated authority shall be such amount in the pound, expressed in pence, the effect of which shall be that the authority's relevant expenditure (as defined in section 3(1) of this Act) for the financial year beginning in 1987 shall not be less than the authority's relevant expenditure (as so defined) for the financial year beginning in 1986 as adjusted to take account of any increase in the Index of Retail Prices which may have occurred since the beginning of that financial year.'.

The Second Deputy Chairman of Ways and Means (Sir Paul Dean)

With this it will be convenient to take the following amendments: No. 190, in page 6, line 17, leave out `determined in accordance with Schedule 2 to this Act' an insert—

1. '(a) the limit determined in accordance with Schedule 2 to this Act, or
2. (b) an amount in the pound equal to the actual rate made (exclusive of any excluded part) or precept issued by the authority for the financial year beginning in 1986 whichever shall be the higher.'.

No. 191, in clause 8, page 7, line 18, after 'section', insert 'and of section 7 above.'.

I gather that it is also for the convenience of the Committee to consider amendment No. 192, in clause 8, page 6, line 40, at end insert— '(2A) If a designated authority makes a rate, or issues a precept, whether before or after the passing of this Act but before a notice has been served on it and the amount in the pound of the rate (exclusive of any excluded part) or of the precept is lower than the maximum limit, the authority may, if it thinks fit, make a substituted rate or issue a substituted precept before the expiry of the permitted period.'.

Mr. Clelland

The Government want to control the national and the local contribution to local government finance. That has been their declared policy since they were elected, although I do not recall it being talked about too much before they were elected, and the Bill reaffirms that policy.

Whereas previously the concept of rate capping was assumed by most people to be a method of limiting rate rises, we find that in some cases it also means that the Secretary of State can force a rate reduction without also assuming responsibility for deciding whether and how services can be maintained at the same level on a lower income or, if not, which should suffer.

It is predictable that there are some people who welcome rate capping as a relief to ratepayers. They pay scant regard to the possible consequences of such remote control of local government affairs. I propose to use one local authority as an example, but there are many others which face similar problems to differing degrees.

The council which I intend to highlight is Gateshead metropolitan borough council, for which the Bill would mean a massive 9 per cent. reduction in rates, which translates into a £12.5 million reduction on what is needed to maintain services at current levels. I ask those people who welcome the prospect—local newspapers and the local business community in particular—to consider what their reaction would be if some politician or civil servant devised a formula which dictated that they must reduce their charges by 9 per cent., that they had three months' notice in which to do it, yet the reduction should have little or no effect on their services. I doubt very much whether they would be glad to hear such news, especially from people who are not directly affected by the consequences of such a reduction and who have little or no knowledge of the circumstances of the business concerned.

That, however, is what is being done to Gateshead. For what offence? Is Gateshead a high spending authority, whatever that means? The definition of high or overspending is at the discretion of the Secretary of State. On any method of comparison with relevant authorities, Gateshead cannot be described as a high spender.

Do the people of Gateshead suffer disproportionately high rate payments? If we compare average rate payments in Gateshead with those in other authorities, we find that that is not the case either. Of 107 comparable authorities—the metropolitan districts, shire counties and London boroughs—Gateshead comes 64th in the league table for rate payments; it comes 27th out of the 36 metropolitan districts; and it has the lowest average weekly rates among rate-capped authorities.

Gateshead has lower average weekly rates than every Conservative-controlled metropolitan district council, none of which, of course, is rate capped. The average rates in Gateshead are also lower than those in Buckinghamshire, Surrey, Berkshire, Westminster, Barnet, Kensington and Chelsea, Harrow, Hillingdon, Enfield, Sutton, Kingston-upon-Thames, Havering, Croydon, Merton, Bromley and Redbridge, all of which are Conservative-controlled and none of which is rate capped. There is no reason, based on any definition of justice, why Gateshead should be so badly treated.

10.30 pm

The treatment meted out under the Bill and by the Secretary of State is in sharp contrast to the other measures that recognise the council as having special needs and requiring special grant assistance, such as inner area partnership. The nonsense is that the £12.5 million reduction in the council's budget implied in the Bill is double the total annual Government grant through inner area partnership. How can the Secretary of State explain the ludicrous situation in which £6 million is given with one hand and £12 million is taken away with the other?

It is not as though any of that comes as a surprise to the Minister. On 24 November 1986, he met my hon. Friends the Members for Gateshead, East (Mr. Conlan) and for Blaydon (Mr. McWilliam), and myself, along with the leader, deputy leader, chief executive and director of finance from Gateshead. We pointed out to the Secretary of State that Gateshead had been rate-capped not because of any sudden lurch in spending on the part of the council, but purely because he had chosen, for no explained reason, to reduce the excess of expenditure over GRE from 20 per cent. to 12.5 per cent.

We explained that 81 per cent. of the current year's GRE was related to population and that, in contrast with an increase in population of 0.6 per cent. in England and Wales between 1976 and 1984, Gateshead's population fell by 6 per cent. Therefore, the distribution of resources on a pounds per head basis, implying that an authority can shed its costs in direct proportion to the fall in population, is grossly disadvantageous to Gateshead and is further aggravated by the comparatively rural nature of much of the borough. Hence, the council has lost about £8 million on GRE at current prices between 1981 and 1986, and it is estimated that that will increase to £11 million by 1990.

Like many authorities, the council has endeavoured to minimise the effects of grant penalties on the ratepayers by the use of special accounting arrangements and funds to the best advantage. However, it is likely that such funds will be exhausted in the current year, further aggravating the comparison of expenditure to GRE.

Again, it was a change in practice by the Secretary of State, not by the authority, that put the council in a so-called overspending position. While, for instance, expenditure over GRE on the council's 1984–85 outturn amounted to to 9 per cent., expenditure over target, which was also set by Ministers and was used as a measurement of expenditure until 1985–86, was only 1 per cent. Surely, it is grossly unfair that the council should now be accused of being a high spender under one set of criteria, while under the other criteria, it would not have been.

All of that comes at a time when the Government are encouraging the council to spend money in certain directions. The Government initiated an enterprise zone, for example, the initial success of which has been in no small part due to the co-operation and participation of the council. There is also the inner area partnership that I mentioned earlier, which not only costs the council over £2 million per year, but adds to the strain on its finances as the projects reach the end of their period of Government support and have to be fully funded by the authority. The 1990 national garden festival, which will be held in the borough and which the Government approved will add further financial burdens, as the Secretary of State is well aware. There is also inflation at 6 per cent., which was allowed on 1985–86 budgets, not current budgets, so the adjusted figure represents a mere 3 per cent.

The considerable improvements in services, environment and status in the borough have been widely acknowledged. Various Audit Commission reports have demonstrated that Gateshead is an efficient authority. Indeed, at this very time, the council's plans for a review of the provision of secondary education in the light of falling school rolls is in the hands of the Secretary of State for Education and Science. Unfortunately, that is being delayed because of a judicial review of the council's consultation process by a group of parents pursuing what I believe to be a misguided and parochial motive. However, in the meantime, the council is subject to considerable grant penalty, as a result of the effects on GRE of falling school rolls, and the prospect of a much improved education system for Gateshead's young people is, of course, postponed.

As the council said to the Secretary of State for the Environment, the current regime of local government finance militates against effective long-term planning and takes no account of the many complexities inherent in local government service provision. That statement is true of the current system and will remain true if the Bill is passed.

At our meeting with the Secretary of State, we explained that the proposed expenditure level of £96 million implied cuts in the council's 1987–88 budget of £15 million, which would have had a horrendous effect on the budget. However, because of the criteria involved in the redetermination applications, the council applied for an increase in the proposed expenditure level of £10.5 million. We explained that the proposed expenditure limit had been underestimated by over £9 million because proper account had not been taken of the special accounting arrangements adopted by the late Tyne and Wear county council in its 1985–86 budget. All that, and more, was submitted in evidence of the council's just and proper case for a redetermined expenditure level.

Mr. Bernard Conlan (Gateshead, East)

At that meeting with the Secretary of State, there was a great deal of hypocrisy. Although we put the council's case, it had already been decided that there was no validity in it because the introduction of the Bill had been predetermined.

Mr. Clelland

I could not agree more with my hon. Friend. The representations that we made to the Secretary of State on 24 November fell on deaf ears, because the right hon. Gentleman was aware when he spoke to us that the Bill was being prepared, and our representations came to naught.

Now that the Bill is before us, we find that all the newly rate-capped authorities—regardless of whether they applied for redetermination, the arguments and explanations, the individual circumstances, needs, demands and developments of the different areas—have been subjected to the same formula and given the same treatment. As a result, Gateshead's expenditure level, as proposed in the Bill, will be £98 million, leaving the council still £12.5 million short of its budget and £8 million short of its redetermination application.

Gateshead's position has now been compromised, not on the merits of its case, but because the Secretary of State had to avoid his Bill becoming hybrid. The only way that he could do that was to treat all the rate-capped authorities in the same way, regardless of their merits. That means that Gateshead, with the lowest average weekly rates of rate-capped authorities, excluding the non-metropolitan districts, has to reduce its rates while other authorities with far higher average rates are allowed to increase rates. What nonsense that is.

Let me take an example, in which there is by no means any implied criticism of the authority concerned. Indeed, I am well aware that the Bill has serious implications for that council also. Just to show how barmy the system proposed is, let me compare North Tyneside metropolitan borough council with Gateshead metropolitan borough council. At the moment North Tyneside's rates are within about 5p in the pound of Gateshead's. Gateshead's current rates are 251.25p in the pound and North Tyneside's are about 247p. Yet, under the Bill, North Tyneside will be allowed to increase its rates to around 266p in the pound and Gateshead will have to reduce its rates to about 228p in the pound. Thus, instead of Gateshead being 5p more than North Tyneside, the latter's rates will be 28p ahead of Gatehead's. Where is the sense or reason in a Bill that creates such a situation?

The purpose of amendment No. 193 is in some measure to retrieve the situation, but by no means to the total of the £12.5 million that Gateshead is set to lose. I recognise that the Secretary of State would be unlikely to accede to that. If the prime intention of the rate-capping legislation is to prevent large increases in rates, that is one thing. The amendment takes account of that and recognises that the Government will not be moved from that position. But what it does is to prevent the nonsensical forcing of reductions in rates on councils that are by no means profligate and it at least protects their rate income in real terms. I hope that the Secretary of State will concede the arguments that I have advanced on Gateshead's behalf and accept the amendment.

Dr. Boyson

As I have said on previous amendments, rate capping applies to the authorities that have the highest GRE in order to bring them under control. The fact that we have had to do it in the Bill this year has meant that they have had to be put into two groups—those that have been rate-capped before and those that are rate-capped for the first time.

We cannot accept the amendments. Gateshead is spending 14 per cent. over GRE, and total expenditure has increased by 11 per cent. since 1985–86. The local rates in Gateshead are now 27 per cent. higher than they were in 1985–86, and no attempt has been made, by competitive tendering or in any other way, to reduce the cost of those services.

Mr. Clelland

Is the Minister saying that every authority in Britain whose expenditure has increased by 11 per cent. over that period has been rate-capped?

Dr. Boyson

No. My right hon. Friend was not saying that; he was illustrating the increase in expenditure. The hon. Gentleman put forward an articulate argument as to what consideration should be given to Gateshead; I was quoting the figures as they exist. The question related to the level of expenditure over GRE, on which the decision was made. If expenditure is 14 per cent. over GRE and local rates are up by 27 per cent. since 1985, I do not think that the country will bleed in sympathy when the borough of Gateshead is rate-capped.

The Government cannot accept the amendment. I suggest to my right hon. and hon. Friends that we should vote against the amendment if it is pressed to a Division.

Amendment negatived.

Amendment made: No. 114, in page 6, line 28, after lists', insert ', and the other information relating to hereditaments and rateable values.'.—[Dr. Boyson.]

Mr. Roland Boyes (Houghton and Washington)

I beg to move amendment No. 116, in page 6, line 30, at end add— '(d) the amount of the variable X for that authority (another component of the maximum limit)'.

The Second Deputy Chairman

With this it will be convenient to take the following amendments: No. 121, in schedule 2, page 11, line 39, at end insert—' + X'.

No. 123, in schedule 2, page 11, line 45, at end insert—'+ X'

No. 124, in schedule 2, page 12, line 3, at end insert '+ X'

No. 125, in schedule 2, page 12, line 7, at end insert—'+ X'

No. 128, in schedule 2, page 12, line 12, at end insert—'+ X'

No. 131, in schedule 2, page 12, line 16, at end insert—'+ X'

No. 136, in schedule 2, page 12, line 45, at end insert— '(6A) "X" is the variable amount for each authority (which shall be not less than zero) which the Secretary of State shall determine for that authority having regard to its individual circumstances. (6B) A determination under this sub-paragraph shall have regard to any factor relating to the expenditure of a local authority or its financing which is drawn to the attention of the Secretary of State by the local authority or its statutory consultees. (6C) A determination under this sub-paragraph may be revised upwards not downwards.

Mr. Boyes

With permission, I should also like to discuss amendment No. 132, in schedule 2, page 12, leave out lines 19 to 21 and insert— '(1) EL is:— (a) In the case of an authority whose maximum limit is determined by reference to paragraph 2(2) above, the higher of

1. (i) The level for the authority's total expenditure in the relevant financial year which before the passing of this Act was determined and notified to the authority under section 3(1) and (3) of the 1984 Act.
2. or
3. (ii) its GRE for the financial year 1987–88 plus 10 per cent.

Where GRE is the amount shown as the grant related expenditure in relation to the authority in the Rate Support Grant Report for England for the financial year beginning in 1987. (b) In the case of all other designated authorities the level for the authority's total expenditure in the relevant financial year which before the passing of this Act was determined and notified to the authority under Section 3(1) and (3) of the 1984 Act,

Due to my mathematical and statistical background I shall be happier discussing the algebraic formulae in schedule 2 than some of the highly technical legal implications of the Bill. I shall make a few remarks on the formulae.

Anyone who has worked regularly with mathematical formulae will have recognised the flaw, or perhaps the deliberate omission of an important variable in the formulae in schedule 2. As the formulae stand, with the variable X which we propose, any reader would assume that the environments to which the formulae were being applied were all the same. Clearly they are not, and therefore variable X must be added. The addition of this variable does not make the situation satisfactory, but it is a big advance on the present formulae. One wishes to keep the algebra to a minimum. However, to take the many differences between the authorities into consideration, a much more advanced model is needed.

10.45 pm

We define the variable X in amendment No. 136. Basically, it is the amount, which is different for each authority, which has to be added to their formulae in schedule 2. The additional figure shall be determined by the Secretary of State either by agreement with local authorities or in an order subject to the approval of both Houses, but shall only be so determined after consideration of any relevant matter brought to his attention by the authority concerned.

The formulae in the Bill would, therefore, serve as a working basis for discussion and further consideration, The amendments would operate within the overall framework of the Bill but have the following features. First, they would prevent the blanket application of formulae regardless of local need. Secondly, they would substitute a proper opportunity for Parliament to reach a decision on the limits to be applied after the full details of a particular case are known, not before. Thirdly, they would give a proper right to be heard to statutory consultees, such as local ratepayers and businesses. Fourthly, they would allow authorities to make proper representations on the effects of the formulae on balances and proper financing arrangements. There is no reason why that procedure should be a lengthy one.

The amendments provide in particular that regard should be had by the Secretary of State to any representations from statutory consultees and to representations on, first, the practicality of meeting his proposed spending restrictions within the very short time scale before the beginning of the new financial year, and, secondly, the need for proper and prudent local authority financing in the maintenance of balances, contingencies, and so on.

The point on restricted time scale is of particular relevance to those boroughs and districts which are education authorities, such as the one of which my constituency is a part, Sunderland borough, and to the ILEA. The September-July basis of a school year means that the opportunity to change spending levels is not available for a full financial year. I have discussed that matter with the treasurer of the Sunderland borough council and that matter concerns him greatly.

Decisions relating to the period 1987–88 up to September have in many cases already been taken. Only two thirds of the year is available to such authorities to match their plans to spending restrictions, and those authorities may wish to make representations in that regard.

I want to illustrate the consequences of applying the formulae in schedule 2 to the Tyne and Wear passenger transport authority without the addition of the variable X. The members of the passenger transport authority are extremely concerned about the Bill's implications and the formulae in particular. In a letter to Members of Parliament, Mr. G. N. Cook, the clerk to the passenger transport authority, argues that the use of the standard formulae for the assessment of maximum precepts for classes of authorities means that the particular merits of any individual authority's redetermination bid has been given little consideration.

For example, the 2 per cent. standard uplift for the expenditure limits of passenger transport authorities is significantly lower than the redetermination bids of the five passenger transport authorities that made the redetermination bids. Those vary between 10 per cent. and 22 per cent.

The Tyne and Wear passenger transport authority expresses particular concern about the expected loss of its right of appeal against the maximum precept set of 1987–88 which currently exists under the terms of the Rates Act 1984. Further, the Government's use of rateable value in the formulae rather than the penny rate product for calculating the maximum precept for 1987–88 means that the Tyne and Wear passenger transport authority will be faced with a significant shortfall of some £389,000 between the uplifted expenditure limit and the resources of block grant and income based on the maximum precept.

It is for all those reasons that Opposition Members, and, in general, those who have to administer its consequences, are against the Bill.

Mr. Spearing

I am grateful to you, Sir Paul, for calling me, because amendment No. 132 applies in particular to the needs of the London borough of Newham. I use the word "needs" specifically because, under the previous formula—"means and needs"—there was more equity in respect of formulae. The formula in schedule 2 particularly hits the London borough of Newham.

The needs of Newham are very great. On a national level, Newham is the second most deprived urban borough in the country. Among 96 education authorities, it is the top of the list of the most deprived according to the Government's figures. As everyone knows, education accounts for half of local authority expenditure. Newham is fourth in respect of the proportion of population with a new Commonwealth background. There is 17.5 per cent. unemployment and 21 per cent. male unemployment in Newham and that is the sixth highest level in London.

The borough applied for partnership status and was recognised as being statistically well inside the required margin, but for a number of years it has been refused that status. Although the borough has been given programme status, I understand from the council that that has meant that we have received less support than we would have received had we not been a programmed borough.

In respect of housing, no fewer than 46,000 houses in Newham are in an unsatisfactory state of repair. Newham has the highest number of statutory unfit houses among the London boroughs. Homeless cases increased from 1,000 in 1981 to an estimated 1,900 in 1987, and that figure is rising. There are 1,000 empty dwellings in tower blocks, including the now dismantled Ronan Point, which have caused the housing lists applications and the number of homeless cases to rise. The results of the scientific tests on the eight blocks that remain will not be known for some time.

Newham has one third of its area under the domain of the London Docklands Development Corporation although 94 per cent. of the population live outside that area. However, the criterion for regeneration adopted by the LDDC is not that of regenerating the borough as a whole. It is a process of regeneration along the lines of the LDDC and we therefore do not get any succour in that direction. Indeed, there is more expenditure in the borough on the services to cater for the number of people coming into that new area.

There is a legitimate argument therefore over how much is to be spent. There were exchanges earlier between the Minister and my hon. Friend the Member for Newham, North-West (Mr. Banks) about what would be an appropriate figure to spend. The Minister takes exception to the £167 million in the current Newham revenue account. The Government said that Newham should only spend £149 million in relation to its needs. We were therefore short of £18 million. However, as the Minister knows, but as many people in London do not, that meant that in order to get the £18 million Newham would have to raise about £36 million because of the clawback.

When the Minister says that the rates are too high, he must acknowledge that part of the reason is that to get that money in, the borough is, in effect, paying a tax on rates. By my calculations and those of the borough, the tax on rates in the current year is no less than £18 million. Ratepayers are paying £18 million more than they need because of the clawback provision. That amounts to about 20 per cent. of the rate itself. When the Minister says that Newham is spending too much on the rates, part of the reason for that lies in the clawback provision—the taxation on rates—which is part of the Government's present proposals.

I do not wish to be too controversial about what is coming next. Although I detest what the Minister did until that point, I wish to discuss the position after the publication of the Bill. We came to see him on 27 November and put forward a clear, cool and compelling case. I hope that the rest of my speech will be in a similar vein. We did the same with the Under-Secretary of State when he saw him the day after the Bill was published. We did not talk about the Bill on that occasion; we talked about Newham's needs and how the Government would meet them.

Mr. Tony Banks

It did not get us anywhere.

Mr. Spearing

The problem with the schedule 2 formula is that it is unfair. Like all formalae, it has a fixed base. This formula is based upon expenditure in 1985–86, which we claim was not typical. It is unfair to use it because it distorts the calculations. Full details have been supplied by the officers of Newham to the Department of the Environment, and it is generally accepted—it was in the conversations that I mentioned—that the formula distorts the result.

Mr. Ron Leighton (Newham, North-East)

Does my hon. Friend agree that the common formula which was cobbled together in haste to rescue the Government from a legal fiasco is freakishly harsh on Newham and has led to grotesque consequences? Normally, we would have the right of appeal and the right to redetermination, which we attempted to exercise with the Minister of State. But because of the Government's haste, we shall not be allowed to appeal or have a redetermination. Indeed, we cannot even have a proper debate tonight. It will be truncated by the guillotine, and Newham's needs will not be properly considered. Does my hon. Friend agree that this is another reason for their Lordships giving careful consideration to the borough of Newham?

Mr. Spearing

I am grateful to my hon. Friend. I hope that what the Minister says in reply will give us some inkling that there might be further discussion on the facts that I shall put before him. My hon. Friend mentioned the importance of judicial retrospective action. As I understand it, the Bill locks everything up in the words "taking into account". We must accept that the Minister has taken something into account if he says so, and no court can challenge it. In contrast with redetermination, once the Minister says that he has taken something into account, that is that. Once he sends a letter to the court saying that, the court can do nothing. Until now, there has been at least some flexibility.

Another thing that is agreed is the table that was produced by the London borough of Newham and presented to the Minister during the Second Reading debate, on which he kindly replied in a letter to me on 19 January. In the table, we showed in order, from the most advantageous position in Basildon to the most disadvantageous in Newham, the limits of expenditure over GRE. Taking into account the plus 2 per cent., but not the teachers' uplift, which we are all discounting, we showed that Newham's expenditure limit was only 3.6 per cent. above GRE. That was pretty ludicrous considering that our expenditure in the current year is 18 per cent. above GRE. Yet Basildon, which is not far away from Newham, has an expenditure limit of 70 per cent. over GRE. Tower Hamlets stands at 19.3 per cent. and Haringey stands at 17 per cent.

The Minister in his letter, for which I thank him for his courtesy, said: You asked whether the table of figures given to Nicholas Ridley on Monday showing expenditure levels in relation to grant related expenditure for each of the 20 rate limited authorities is broadly correct. It is, but the extent to which the expenditure level for 1987–88 exceeds GRE is related to the starting position in 1986–87. Of course it is correct, because that is part of the formula. When people use the word "but" it sounds as if it is a restricting or qualifying phrase but, in this case, the skill of the Sir Humphreys in the Department have added something which is an uncontrovertible fact, so it is not as heady as it sounds.

11 pm

The formula has hit Newham hard for reasons that the Minister knows and I suggest that, in justice and even to fulfil his own objectives, there should be some adjustment in the formula to enable hard cases like ours to increase our GRE to somewhere around—I put this in the amendment—10 per cent. That would only bring us up to about 14th in this pecking order of one to 20. It would not fulfil Newham's concerns because, on our calculation, we will need about another £33 million in the coming year to make up the gap.

I said in a letter to the Minister that, on the borough's calculations, we would have a deficit or an unfillable gap of £33 million in the financial year 1987–88 or 15 per cent. of the borough's current expenditure. The Minister says that is not the case. He says that it will not be as big a gap as that. He says that it will be only a 5.8 per cent. reduction of the current 1986–87 expenditure.

I put it to the Minister that a 5.8 per cent. reduction next year on this year's expenditure—bearing in mind first of all inflation and secondly greater needs, not least in respect of the homeless and other difficulties—means that there will be a considerable gap next year.

We may argue whether it is £33 million, as I and the borough think, or whether it is rather less, as the Minister thinks, but I put it to him that, in terms of actual cash expenditure, it cannot be much less than £20 million. If that is the case—I am coming down a long way from £33 million to £20 million—that means that the pro rata reduction in expenditure on each service within the borough will be great indeed. Education, as I said, takes up half the revenue, so there will be a cut of roughly £6 million from somewhere in that—£2.5 million for housing, perhaps £2 million for social services. These are not hard figures; they are pro rata to existing expenditure. Of course that is only illustrative, but it is illustrative of the almost sheer impossibility of achieving these figures. The Minister knows only too well, especially in respect of education, that one cannot do that if one tries it mathematically with redundancy payments and all i he rest of it.

What about the voluntary services which Conservative Members praise and laud? We do a lot for voluntary services in Newham. It is not much in terms of expenditure in proportion to the total; nor indeed are the activities to which Conservative Members may take some exception. They are minor in terms of the global total, but if one must cut money and there is no way out, then of course it is those very important things, the oil in the social structure, which can be cut and which come first and cause the sort of social damage that the Minister knows will occur in our multiracial community.

Mr. Tony Banks

My hon. Friend well knows that the figure that Newham spends in terms of the voluntary sector is about £5 million. The impact of the services and the community of Newham of wiping out the voluntary sector in one go, which will have to be done because that is the only obvious area to go to immediately, would be absolutely dire. Would my hon. Friend care to comment on that?

Mr. Spearing

I am grateful to my hon. Friend for that figure, because it illustrates the problem of boroughs like Newham. If there is a legal straitjacket, a procrustean formula into which the borough is forced without any legal redress or any redress in justice whatsoever, and we go to the court, the court may say that there is no contractual relationship for those culpable things. There may be no liability for redundancy: there may be no redundancy agreements or whatever because the voluntary organisations are the last sort of organisations to be able to carry those. Where do they get the money anyway? There must be some flexibility in the formula in schedule 2.

I and my hon. Friends have tabled a flexible formula in the form of amendment No. 132. It stands almost in its own right—I am glad to see the Minister nodding—although it may not be a perfect legal formula. Some consequential adjustment may be required to the definition of block grant. As block grant is related to expenditure limits, if we change those limits in the formula, some adjustment must be made to block grant.

The amendment had to be tabled some time ago, which is an example of the difficulties being caused by the time scale of the Bill. Therefore, we are not saying that this, holus bolus, is the formula that we want. We have drafted an alternative formula that would, at least, give a GREA for the financial year 1987–88 plus 10 per cent.

The table that the Minister kindly said was broadly correct would move Newham from GREA plus 3.7 per cent. to GREA plus 10 per cent. That is a modest request, although the Minister might not think so and may wish to substitute another figure. However, in principle there is an unassailable case for amendment No. 132. It does not move away from the formula; all it does—to use a phrase common in ministerial circles—is to state "whichever is the greater". One can follow one formula or another, but whichever is the greater and the more just is the one that is accepted. That is the basis of the structure of this rather complex amendment.

The Minister may want to think about that suggestion. He has not had a great deal of time to consider the amendments, because of all the other things that have happened. I ask you, Mr. Armstrong, to give us the opportunity to agree or negative the amendment should that be necessary. However, I hope that the Minister will agree to consider the matter and, at a later stage in another place, give his thoughts to others who will take up this theme. If he agreed to that, we might not then need to press the amendment.

Mr. Bowen Wells (Hertford and Stortford)

I congratulate the hon. Member for Newham, South (Mr. Spearing) on the way in which he so eloquently put his case for an increase in GREA. No one in my constituency denies the very real needs they perceive in Newham. However, I suggest that they are not related to the GREA. If they are, it means that Hertfordshire has to pay to Newham the additional money that Newham believes it needs. The rate support grant system is a total grant that is distributed according to GREA, or however it is distorted by whatever means Ministers find convenient to hand -when they are considering it.

Mr. Stuart Holland (Vauxhall)

Surely there is a limited premise here—the assumption that increased expenditure in one borough must come from another borough. Why does not the hon. Gentleman press the Government Front Bench to do something about effective corporation tax and actually get some tax into the Exchequer from companies that are making thousands of millions pounds, or put a tax on the speculative profits made in the City of London? Then we would get that recycled into housing, health, education and social services, which the country desperately needs. The hon. Gentleman should be attacking the Government Front Bench and not seeking to restrain expenditure in other boroughs.

Mr. Wells

The hon. Gentleman is advancing arguments that I shall not take up, if he will excuse me. I want to make a limited contribution on GREA and the unfairness that the system inflicts on Newham, Vauxhall and Hertfordshire.

Hertfordshire has had a continuous reduction in its rate support grant settlement. That is because the system equates rateable value with low needs or high needs, whatever the case may be. Hertfordshire has seen a series of new towns and other developments, and these have come mainly since 1945. Thus it has a high rateable value and is assumed to have low needs. The system is so distorted that, although Hertfordshire is considered to have low needs—its income over the national average is only 13 per cent. —the way in which the RSG system and GREA work mean that it is considered to have an income that is 45 per cent. over the national needs calculation.

In this year's settlement my right hon. Friend the Secretary of State and my hon. Friend the Minister of State inserted certain safeguards such as rate caps and safety nets. My right hon. Friend and my hon. Friend did not want to do that, but they did so because they recognised the unfairness that was being inflicted upon Hertfordshire, which was reflected in the services given to Hertfordshire people.

Like my hon. Friend the Member for Hertfordshire, South-West (Mr. Page), who made his plea on Second Reading, as I did, I have urged that an end should be brought to the current argument, which if not interrupted will continue indefinitely, as the hon. Member for Newham, South has illustrated. Let us freeze the present system so that it is not changed next year or the year after that, until we inyroduce a new system that will not have the serious implications that the GREA formula has for Newham, South and the new town of Basildon, for example. The hon. Member for Newham, South will know that the new towns have a particular problem when it comes to GREA because they are more expensive to run than other towns. For example, Stevenage has no rate support grant because of the way in which it impacts upon that town and Hertfordshire generally. Basildon is a similar example.

The GREA and the entire system of calculating RSG is thoroughly unfair to Newham, South and Hertfordshire. Having arrived at a settlement this year, my hon. Friend the Minister of State has striven over this issue and I am deeply grateful to him for taking into account my complaints and those of others, courteously, if not productively, including those of the hon. Member for Newham, South. I ask him for an assurance that he will leave the system alone. Let us freeze it with the rate caps and the safety nets that have been introduced this year. That means that it will be equally unfair next year as this to Newham, South and Hertfordshire, but at least we shall not have the appalling arguments and tensions that we have had this year and for the past 15 years. We have argued picayune points about the way in which the system impacts upon various factors in the RSG formula.

I earnestly ask my hon. Friend the Minister to give serious consideration to my plea. Let us leave the grant in Hertfordshire as it is so that people can predict what will happen. We may have a system that is unfair, but let us make it clear that that system will not change and that people must live with it until we introduce something better. If things continue to change Hertfordshire will probably not receive any RSG assistance, especially if the Minister listens to the arguments advanced by the hon. Member for Newham, South.

11.15 pm

Mr. Stuart Holland

I support this group of amendments and 1 draw particular attention to amendment No. 136 in schedule 2, page 12, line 45, at end insert— '(6A) "X" is the variable amount for each authority (which shall be not less than zero) which the Secretary of State shall determine for that authority having regard to its individual circumstances'. I also wish to echo the views of my hon. Friends and to draw attention to the problems and deprivations in Lambeth. In a key range of indicators only one other authority in the country, Hackney, has a higher incidence of deprivation than Lambeth. In five of the eight indicators used by the Department of Environment Lambeth comes in the top dozen authorities. With regard to the indicators that directly relate to housing deprivation, Lambeth ranks ninth in the indicator on overcrowded households and eleventh in the indicator of households that lack the exclusive use of amenities. It ranks second highest for the proportion of one-parent families and is sixth in the indicator relating to the proportion of the ethnic population in local authorities.

The widespread nature of urban deprivation in Lambeth causes great concern. The council needs to adopt a wider base of programmes and policies even to begin to alleviate its problems. The ending of the strategic housing role of the Greater London council has meant slamming the door on inner boroughs such as Lambeth. Families cannot now be moved out of the borough. Thus it is increasingly difficult for the council to deal with the housing crisis.

There has been much criticism about housing benefit from the Conservative Benches. The hon. Member for Streatham (Mr. Shelton) made certain allegations about the difficulties that Lambeth has in collecting rents, earlier in the debate but has now decided to quit the Chamber.

It is extremely difficult for a borough such as Lambeth to collect rents from certain categories of people who are on the margins of survival. For example a recent survey carried out in Lambeth in 1986 showed that over 40 per cent. of the residents have an income of less than £5,200 a year and two thirds of those people were in council housing. When such families face delays in payments in security benefits—there is a backlog of some 13,000 unrelated claims in at last two social security offices in my constituency—they are literally faced with having to decide whether to feed their children or pay their rent.

The Government have failed to put resources into social services and they have also cut the housing investment programme for Lambeth in the manner that I illustrated earlier today. When 40 per cent. of council tenants are in receipt of housing benefit and therefore supplementary benefit it represents a major problem for the borough. It is compounded by the fact—I do not believe that it has been stressed in the debate so far—that 36 statutory instruments have been introduced by the Government that affect the payment of housing benefit. There were nine in 1982, eight in 1983, 10 in 1984, six in 1985 and three in 1986.

It is virtually impossible for any local authority to undertake computerisation or other programmes to ensure an effective payment of housing benefit when there are so many changes in regulations introduced by the Government. Housing benefit has been thrown on to councils. Previously rent rebates were paid by the social security offices. But with the soaring rate of unemployment, now averaging 25 per cent. In my constituency, the Government have shifted the responsibility for those payments from the DHSS to the local boroughs. They cannot cope with the complexities.

I have one further reservation. The X formula is excellent in principle, but I am not sure how it will be applied in practice under the Government. I suspect that they will think of a number, divide it by two, subtract X and still impose cuts on Labour boroughs. But we could make X an effective calculation I therefore support the amendments.

Mr. John Fraser

I represent a Lambeth seat, and Lambeth is a rate-capped borough. The one small measure of mercy for us is the ability to have our expenditure limit redetermined, and rightly so. In December 1985, as a result of the borough taking legal proceedings against the Department of the Environment, an approach was made by the Department to Lambeth, and eventually there was an agreed redetermination, to avoid a court case. which came to almost exactly the same figure as the expenditure limits suggested by the borough for that financial year. In the current financial year, the Department threw out some pretty broad hints that if Lambeth applied for a limited redetermination, it would be given a redefined expenditure limit. The consequence of the Bill is that the opportunity for the Department to admit that it was wrong in setting the limit will be thrown away.

Redetermination means an admission that the limit was set too low. I wish that we could find a more simple vocabulary for local government expressions. I used to sit in on the finance consultative council and listen to it talk about things such as regression annalysis, which I translated as repeating in the future the mistakes that had been made in the past. There was exemplification, which was a method of showing how a national disaster was translated into a local disaster. Now there is redetermination, which is a method of admitting that the initial calculation was wrong.

There must be the opportunity to go back, which the Bill denies, and take into account local and special factors. One or two of these factors need to be accounted for. The first is the growth in equalising. A recent survey carried out by an independent body, the Centre for Environmental Studies, shows that between 1979 and 1984, the average income of families in Lambeth decreased by 5 per cent., whereas in the country as a whole incomes rose by 4 per cent. before tax and about 1 per cent. after tax.

However, the survey also shows something that is at the root of social tensions—that the average is not shared by all people. It found that since 1979, the poorest 25 per cent. of households experienced a 10 per cent. decline in their income before tax. The group with the largest drop in income—single parent family households—experienced a drop in income both before and after tax of between 17 and 18 per cent. One cannot make judgments about the extent of need in such communities on the basis of a desiccated calculating machine in Marsham street. I know that Visa used to advertise that it took the waiting out of wanting. The Department of the Environment, with its computer and formulae and algebra in schedule 2, is taking the caring out of calculating. We want the X factor, which puts it back in again.

A second example of what needs to be taken into account is the level of unemployment. Today, Lambeth has provided me with figures that show that on the official statistics there is almost 26 per cent male unemployment, and over 13 per cent. female unemployment. Those are the statistics from the Department of Employment. However, the unofficial, and probably more reliable, statistics provided by Lambeth show male unemployment at 30 per cent. and female unemployment at 17 per cent. In the riot epicentre of Brixton unemployment is 32 per cent. The formulae fail to take into account the social strains that result from that degree of deprivation.

My hon. Friend the Member for Vauxhall (Mr. Holland) and I are lucky enough to be so close to our constituencies that we can visit them during the course of debates. I was able to attend the opening of a social centre by Lord Scarman. That centre was opened partly as a result of Lord Scarman's 1981 inquiry report. The Scarman report was about what happens when a Government ignore the needs of ordinary people. On two occasions in Brixton we have seen the consequences of ignoring the needs and demands of ordinary working people. I hope that the Government will accept factor X, because it can put caring back into calculating.

Mr. George Park (Coventry, North-East)

The introduction of an X factor into the formula would allow the different situations of the various transport authorities to be taken into account. Put briefly, in the west midlands there is a shortfall of £4.5 million. That poses for the public transport authorities some unpalatable choices. One of them is to reconsider the concessionary fare scheme, and that would be highly unpopular as well as unjust.

Section 93 of the Transport Act 1985 allows district councils to fund a concessionary travel scheme. Responsibility could be shifted from the public transport authority to the district councils. Unfortunately, every district in the west midlands will be in a penalty situation in 1987–88 with a negative marginal rate for grant ranging from minus 54p in Coventry to minus 96p in Birmingham for spending below threshold. Therefore, unless there is a degree of flexibility, which the application of an X factor would allow, some of our forebodings about schemes, such as concessionary fares, are likely to come true. For that reason, the amendment should be supported by all hon. Members.

Mr. Lofthouse

I shall be brief. The formula laid down for the rate support grant will have devastating effects on many local authorities. Looking at the amount allowed for assistance to local government to cover claims under the Housing Defects Act 1984—the miserly sum of £50 million this financial year and £14 million next financial year—we see that the formula is tight. Many local authorities will not attract grant. Many authorities like the Wakefield metropolitan council in my area, will find themselves unable to meet their statutory obligations. On the one hand, the Governent produce an Act to cover people in defective houses and, on the other hand, do not provide the money to enable local authorities to meet their statutory obligations.

Tenants on the Townville estate in Castleford, owned by British Coal, are in defective houses. An improvement scheme has been accepted by the Secretary of State, but the local authority cannot find the money to meet that obligation. The owners cannot purchase the houses in accordance with the Act, nor can they get them improved. The houses are completely blighted and unsaleable. What will the Minister do to assist local authorities in situations like that? The Government have produced the Act, but they cannot possibly expect local government to fulfil its statutory obligations if they do not assist with grants. The only course open to the owners is to go the courts and take on the local authorities, but the local authorities are not guilty.

11.30 pm

Mr. Tony Banks

I should like to speak in support of amendment No. 132 in the name of the three Newham Members.

In an earlier debate the Minister talked about the level of rates in Newham. As a Newham ratepayer, I can assure the Minster that I do not like paying such heavy rates. However, I know why I have to pay those rates even though I do not particularly welcome them.

The Minster mentioned the problems attached to rent arrears and the fact that rents have not gone up as fast as he felt they should in the borough of Newham. I should remind the Minister of a recent survey of residents in the borough which showed that in 1985 only 13 per cent. of Newham's residents had gross household incomes in excess of £13,000. In terms of our council housing 63 per cent. of all households receive housing benefit. In the private sector, 29 per cent. of all households receive housing benefit. That is the scale of the poverty in the London borough of Newham. It is not surprising that people get themselves into problems with rent arrears. That is why it is ludicrous for us to continue pushing up the rents in Newham when we know that the people in the borough will not be able to afford them. The problems will shift to another area because more and more will be claiming housing benefit.

Newham is being told that in 1987–88 it can spend £157.4 million. That is £37 million less than we need and £10 million less than the borough is spending during the current year. It is impossible for the London borough of Newham to make cuts of the order of £10 million. I cannot believe that the Government seriously expect the borough to make such cuts knowing the problems and poverty there. If they are expecting us to do that, they have no heart, no compassion and no decency. That is a telling indictment of the Government.

The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope)

Before I answer the points that have been made on this group of amendments I should say something in response to a matter raised earlier by the right hon. Member for Wakefield (Mr. Harrison) about the residuary bodies and on the point he raised at an earlier stage in the proceedings of the Committee when I suggested that the Opposition were reluctant to divide on their amendments for fear that they did not have all their troops in place. The Division that followed that suggestion proved that is always wise not to underestimate the ability of the Opposition Whips to rally their forces in such circumstances. Although we have had the better of the Opposition in the Divisions, and I have no doubt that we have won the arguments, if I did cast a slur on the determination of the Opposition and their Whips I did not intend to do so and I am happy to confirm that I withdraw any slur that the right hon. Member for Wakefield thought that I had cast.

Mr. Harrison

I thank the Minister for giving way. I have had to wait a long time, five days, and four hours, but it has been worth it. I was dismayed at the time because, as an ex-Chief Whip—I was given that acknowledgement by the Minister—I knew that our troops were around. I knew that our amendments were worthy of consideration and I knew that we were doing what we have always done, which is follow a code of conduct that exists in this place because of this type of Bill, with all its problems. Our Front Bench spokesmen were marvellous as were our Whips. I did not like it, but they consulted the Government Whips and the Bill was proceeding beautiful. The Minister gummed it up. I am pleased that he has had the guts to come to the Dispatch Box and, although they are belated, I accept his apologies.

Shall I tell the Committee something about the Whips? am the guy who can. I shall not be long, Mr. Armstrong. Just a little indulgence. You know that I do not do it much. Our Whips whipped against me better than they whipped against the Government. Quite unsolicited, I had 171 who supported me. That was without consulting anyone. It was great; I had done the right thing. When the Wapping picket took place on our Lobby, however, only 10 came through. 1 was told that it was better than Wapping. Our Whips whipped better for the Government than they whipped for me. I had only 10.

I appreciate the Minister coming to the Dispatch Box. It is a little lesson that we can all learn. I am very pleased that the Minister has had the guts to do it, although it has taken a little time. I thank him very much.

Mr. Chope

I am grateful to the right hon. Gentleman. I have a lot to learn about the whipping system, compared with the right hon. Gentleman.

The residuary bodies have an administrative task. If the right hon. Gentleman wants to write to the chairman of a residuary body, I am sure that he can expect a speedy answer.

Mr. Harrison

I have done all that.

Mr. Chope

The hon. Members for Newham, South (Mr. Spearing) and for Newham, North-West (Mr. Banks), who are strong advocates of their borough, argued in favour of amendment No. 132. I have listened to the arguments, but I am not persuaded that we should accept the amendment. I shall not explain again the process by which the formulae were derived as it is now well known. Representations that the hon. Gentlemen and local representatives made when they met my hon. Friend the Minister for Local Government were not ignored. They may not like the result of our consideration, but we considered all that they had to say.

It is true that Newham gets less grant than if it spends at a lower level, but it is wrong to see that as a tax on rates. It is the direct consequence of the council's decision to spend up. We have constructed the settlements in this way to keep pressure on high spending authorities. My hon. Friend the Member for Hertford and Stortford (Mr. Wells) put his finger on the point. We could make further concessions to high-spending authorities only at the expense, under the present grant distribution system, of authorities such as Hertfordshire. Newham is spending 18 per cent. above its GRE while Hertfordshire is spending only 2.2 per cent. above its GRE this year.

Mr. Spearing

I am grateful to the Minister for giving way. Will he say now, or later if he does not have time now, which of the facts that I presented are incorrect or, if they are correct, where he departs from their logic so as to enable him not to accept the amendment? He said that we are spending 18 per cent. above GRE, but does he think that that justifies a cut to 3.7 per cent above GRE, especially when his penalising clauses of clawback operate only when we get to 10 per cent.?

Mr. Chope

I do not think that I have time to go into all of the facts about Newham. I am far from satisfied, however, that it is doing all that it can to help itself. A £1.5 million Manpower Services Commission scheme for the borough's long-term unemployed was turned down as cheap labour, according to the Newham Recorder in October 1986, although it would have provided 300 places. We hear from Labour Members about Newham, but it shows that the people and the council in Newham are not doing all that they can to help themselves. When one hears of a firm in Newham with a turnover of £3 million that is paying £500,000 a year in rates, one realises that there is a strong case for some system of rate capping.

I should like to refer briefly to the comments made by the hon. Members representing seats in Lambeth—the hon. Members for Vauxhall (Mr. Holland) and for Norwood (Mr. Fraser). Lambeth is a vastly overspending authority. I am amazed that those hon. Members come to the Committee and pronounce an apologia for what has been happening in Lambeth. Later this week I hope that they will be among the first to go out and purchase copies of the Audit Commission report on what has been happening in our inner boroughs. Perhaps they will be able to get them free. I hope that they will read and inwardly digest what is said in those documents, because then they might be able to make more constructive comments about the problems of Lambeth and how the borough could do something to help itself.

The hon. Member for Vauxhall made considerable play about the housing benefit arrangements. However, I remind him of what the researcher from the Shelter Housing Aid Centre stated in June last year. Lambeth has an enormous housing benefits backlog of 64,000 unprocessed claims, 932 of which are three years old. The researcher stated: it's not the scheme which is at fault. Three years into the scheme you can't say that. The problem is much more to do with managerial and administrative methods". The problem in Lambeth is a wilfulness to try to become as irresponsible and badly managed as possible.

I know that time is running short so, in the limited time available, I should like to mention the point made by the hon. Member for Coventry, North-East (Mr. Park), who spoke about the very real problems of defective housing. I am well aware of those problems because there are large numbers of defective houses in my constituency. However, I am bound to say that the Government have been extremely generous in bringing forward schemes for housing repairs. If a local authority can make a case for additional funds, it only has to put that case to my hon. Friend the Minister for Housing, Urban Affairs and Construction, and that will be considered. However, one of the tests will again be to what extent that local authority has done everything to help itself, from its own resources. That is one of the issues between the two sides of the Committee. I hope that it will reject the amendment.

Amendment negatived.

Clause 7, as amended, ordered to stand part of the Bill.