Commons Sitting of 25 March 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  TRADE AND INDUSTRY

    Westland plc
    Mr. McWilliamasked the Secretary of State for Trade and Industry when he intends to respond to the Trade and Industry Committee's report on Westland plc.
    Mr. Lofthouseasked the Secretary of State for Trade and Industry when he expects to reply to the report of the Trade and Industry Committee on Westland plc.
    The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): Yesterday I wrote to the Chairman of the Committee with the Government's response to the report.
    Mr. McWilliam: Will the Secretary of State tell the House whether that response contained an acceptance that an illegal concert party was in operation? Does he recommend that the Select Committee's view on transparency in share dealings should be taken so that such illegal activity is not possible in the future?
    Mr. Channon: It is for the Select Committee rather than for me to reveal the exact reply that I gave, but I can tell the hon. Gentleman—I do not think that the Committee will mind if I do—that it made two recommendations, one of which related to the disclosure of material interests. I said that those were being examined under the review of the operation of the takeover panel that I announced to the House on 28 January.
    Mr. Lofthouse: Is the Secretary of State aware that Government policy has led to the loss of 1,800 jobs at Westland? Does he think that Government aid will be required?
    Mr. Channon: I have no reason to assume that the company will require Government aid. The company had an extremely good year last year, and I hope that it has a prosperous future ahead of it.
    Mr. Warren: I was very pleased yesterday to receive my right hon. Friend's reply, which has been placed before the Committee. We shall be considering his response, and I hope that the Government will not hesitate to make the kind of progress that the Committee has called for, especially in relation to business ethics, with which the Committee is particularly concerned.
    Mr. Channon: I hope that the review will be completed by the end of April. I shall inform the House of the Government's conclusions at a very early date.
    Sir Peter Emery: Does my right hon. Friend agree that if we are to be able to obtain information about the ultimate beneficial owners of shares hiding behind nominees and other banks, we shall need legislation to bring that about?
    Mr. Channon: That may well be so. I would not rule that out. However, I should like to wait for the review before making recommendations to the House.
    Mr. Crowther: In view of the undertaking that the Secretary of State has already given about limiting the ownership of Rolls-Royce shares to 15 per cent., is it not essential that legislation on the lines just referred to should be introduced before he proceeds with the privatisation of Rolls-Royce?
    Mr. Speaker: Order. There is another question about Rolls-Royce. This question is about Westland.
    Mr. Crowther: With respect, Mr. Speaker, the recommendation concerns not only Westland, but companies in general. I submit that my question is in order.
    Mr. Speaker: I think that the hon. Gentleman should reserve his fire until we reach the question on Rolls-Royce.
    Dr. Hampson: Does my right hon. Friend agree that the prospects of the helicopter division of Westland are linked closely with European collaboration? Will he confirm rumours in Europe that the British Government are not to proceed with collaboration on the NH 90?
    Mr. Channon: With respect, I feel that that is a matter for my right hon. Friend the Secretary of State for Defence. I know that my right hon. Friend intends to make a statement to the House about helicopters soon.
    Mr. Robin Cook: Does the Secretary of State recall assuring the Select Committee a year ago this month that he was watching the stock exchange inquiry "like a hawk"? Now that the stock exchange inquiry and the Select Committee have both concluded that the absence of a concert party strains their credulity, would it not he appropriate for him to try swooping "like a hawk"? Is it not now abundantly clear to those who want to see that the Sikorsky deal was secured by Rupert Murdoch and Lord Hanson being prepared to pay over the odds for enough shares to secure the result that the Prime Minister wanted? Is not the real reason why there was no DTI inquiry into those share dealings that they both had more influence at Downing street than the Secretary of State for Trade and Industry?
    Mr. Channon: If the hon. Gentleman believes that, he will believe anything.

    Budget Proposals
    Mr. Thurnhamasked the Secretary of State for Trade and Industry what effect he estimates the Budget proposals will have on the level of United Kingdom trade and commercial activity during 1987.
    The Minister for Trade (Mr. Alan Clark): I expect the Budget proposals to contribute to a seventh successive year of growth in the economy.
    Mr. Thurnham: Does my hon. Friend agree that the latest CBI survey bears out the Chancellor's statement that the prospects for output and exports are now better than

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    they have been for many years? Should not the Bank of England follow the lead of my right hon. Friend the Chancellor of the Exchequer and reduce interest rates further, which would be of particular help to manufacturing industry in the north?
    Mr. Clark: My hon. Friend is right about the survey, which was carried out before the Budget. The responses on order books and the expectation of future output were higher than at any point in the history of the survey. I have little doubt that next month's figures, which will be based on a survey after the Budget, will show an even higher level of confidence. Nor is that confidence confined to the United Kingdom. My meetings abroad, with such hardheaded judges as the Swiss and the Germans, show that they also believe that permanent and beneficial changes have taken place in the United Kingdom economy.
    Mr. James Lamond: What does the Minister say about the value of the pound against foreign currencies? Is he satisfied with its current rise? Does he have any view on how far it should rise before it becomes counter-productive?
    Mr. Clark: Hello! I thought it was only a few months ago that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) was predicting a sterling crisis because the value of the pound might fall. Perhaps he and the hon. Gentleman should have a quiet word about the appropriate angle of approach on this subject.
    Mr. Beaumont-Dark: Does my hon. Friend agree that he might he being unfair to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who predicted a stirling crisis, because the excellent policies that we are now following means that the pound is bound to be strong? Does he also agree that in this excellent Budget the Chancellor of the Exchequer did not want interest rates and the pound to go too high? Would not our best hope be for the Bank of England to follow the Chancellor's excellent lead?
    Mr. Clark: We have many expectations and hopes, and whether that is the best my hon. Friend may be able to judge better than me. What is certain is that matters relating to the exchange rate and the value of our currency are entirely for my right hon. Friend the Chancellor of the Exchequer.
    Mr. John Smith: I hope that it will not have escaped the Minister's attention that the Chancellor predicted that at the end of 1987 our deficit on the balance of trade in manufactured goods will be £8 billion. What does the hon. Gentleman say about that? Does he agree with the Chancellor, who said, from a sedentary position, that that was neither here nor there? Does the Department of Trade and Industry share that thoroughly irresponsible view of the handling of Britain's economy?
    Mr. Clark: Certainly, if there is one element in our trading affairs that is less satisfactory than others, it is that relating to manufactured exports and the balance of trade for manufactured goods. We do not deny that. However, that the Opposition should make such a meal of it, singling out the one element in our trading picture where they can find a deficit, is entirely unjustified. Our trade position has to be looked at in its entirety. Our manufacturing output continues to increase. It will increase by 4 per cent. Next
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    year. As my right hon. Friend the Chancellor said in the Budget debate on Monday, the prospects for an improvement in that sector are increasing.

    National Quality Campaign
    Mr. Cashasked the Secretary of State for Trade and Industry if he will make a statement on his Department's national quality campaign.
    The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): The campaign was launched in 1983 to raise British industry's awareness of the importance of quality for economic success, to help firms to raise the level of their quality performance and to enable firms to demonstrate their achievements. To date, over 50,000 firms have been contacted through the campaign, and there is no doubt that Britain's quality performance has improved as a result. Nevertheless, much remains to be done, and the commitment of all sections of industry and commerce to quality remains vital.
    Mr. Cash: Does my hon. Friend agree that all the advantages that we have with regard to increased competitiveness, lower interest rates, and lower inflation, and the advantages in price and the other things that go with it, could be set at naught if we do not achieve the highest quality possible in our goods and services, so that we can beat off the foreign imports on our own terms and show, as we used to in the past, that "Great Britain" means "great" in manufacture and services?
    Mr. Butcher: I am sure that my hon. Friend will celebrate with me the recent figures, which show that the rate of growth of manufactured exports is slightly higher than the rate of growth of imports. I am sure we all hope that that trend will continue for the foreseeable future. My right hon. Friend is also right in linking non-price factors, such as improved quality and design, as part of the cause of that healthy trend. The national quality campaign has been the key in changing attitudes in British industry.
    Mr. Peter Bruinvels: May I congratulate my hon. Friend on an excellent quality campaign? May I reassure him that "Best made in Britain" is a good policy? Our companies are competitive. Provided we deliver our goods on time, even in Leicester, we have much to celebrate. The campaign should be supported by the Opposition, because it ensures that British goods are the best made and the best for our country's future.
    Mr. Butcher: My objective is to double the number of companies that take part in the national quality campaign, by implementing quality programmes within companies. This year we shall also take a more targeted approach, concentrating on and helping major companies and their suppliers, concentrating on individual sectors and also involving regional campaigns in the approach.

    Rolls-Royce plc
    Mr. Nellistasked the Secretary of State for Trade and Industry what arrangements he has made to discuss with the trades unions of Rolls-Royce plc the consequences of privatisation.
    The Minister for Information Technology (Mr. Geoffrey Pattie): None. Relations with the Rolls-Royce trades unions are a matter for the company.
    Mr. Nellist: Why will the Minister not meet the Rolls-Royce trade unions if, as other Ministers have stated, they believe that most workers in the company are in favour of privatisation? Why will he not meet them to explain that the Government are writing off £645 million of company debt effectively to give away Rolls-Royce, and that the management is planning to close the East Kilbride works, threatening 2,500 jobs, and generally to run down the business's dependence on aero engines, threatening thousands of jobs? Why will he not meet the unions to explain those real consequences of privatisation?
    Mr. Pattie: At the press conference last week the chairman of Rolls-Royce specifically denied the East Kilbride allegations as having no foundation in fact. The answer that I gave to the hon. Gentleman still stands—relations between the trade unions and Rolls-Royce are a matter for the company. The Rolls-Royce employees are well aware that their order book is now standing at higher levels than ever before. The prospects are better than they have ever been.
    Mr. John Mark Taylor: Does my hon. Friend agree that it would be more useful if the trade unionists from Rolls-Royce met their brothers from Jaguar and had a word with them about the privatisation experience?
    Mr. Pattie: That is a sensible suggestion by my hon. Friend.
    Mr. Wrigglesworth: Does the Minister accept that there is a national interest here which must be protected and which led to Rolls-Royce being brought into public ownership in the first place? Will he therefore reconsider his plans and retain at least 50 per cent. of the shares in public ownership, thereby enabling the employees to have a share of their own company and enabling private capital to be brought in as well?
    Mr. Pattie: No, there is no case for that. I notice that the hon. Gentleman is sitting on the 50 per cent. fence in this case. Rolls-Royce needs to be free of public sector control to be able to make its way successfully in the private sector, and we have every confidence that it will do well.
    Mr. Warren: My right hon. Friend is well aware of the excellent relationships that generally exist between the trade unions and management of Rolls-Royce. Referring to the order book that he mentioned, will he assure me that, as privatisation approaches, there will be a clear declaration by the Government, heard by the employees, managers and shareholders — the public — that the contracts into which Rolls-Royce has entered, such as those for the V2500 and the Superfan engine, will be indemnified by the Government against any consequential problems?
    Mr. Pattie: The V2500, as my hon. Friend well knows, is the subject of launch-aid already; and that should effectively dispose of his question on that matter.
    The Superfan is the subject of a later question on the Order Paper.
    Mr. Park: As the employees of any company determine its success or failure in the final analysis, has the Minister no concern for the fact that Rolls-Royce has made no attempt to explain the possible implications of privatisation?
    Mr. Pattie: That is not the in Formation that I have. The management of Rolls-Royce has assured me that it has carried out an extensive programme in all its plants of explaining exactly what the implications of the policy are, by means of fortnightly employee meetings and printed material. I shall be happy to obtain some of that material and send it to the hon. Gentleman if he wishes.
    Mr. Robert B. Jones: Will my right hon. Friend draw a distinction between the official position of the unions on this matter and the steady stream of employees from Rolls-Royce who have come to my surgery and to the surgeries of hon. Members representing neighbouring constituencies wanting to know when they will get the opportunity to buy shares in their own company?
    Mr. Pattie: I am sure that my hon. Friend is giving only the latest example of what has happened in other privatisations. The work force will seize the opportunity to participate in an undertaking, which is, after all, something in which it is involved.
    Mr. Crowther: Before proceeding with the privatisation of Rolls-Royce, is it not essential for the Government to introduce legislation requiring the disclosure of voting rights in shares? Such legislation should be on the lines suggested in an earlier report, which I shall not mention. If the Government do not, how can they guarantee the undertaking that they have already given — that not more than 15 per cent. of the shares in Rolls-Royce will be allowed to pass into foreign ownership—if foreign companies acquire shares through British nominees?
    Mr. Pattie: We shall he taking steps in the privatisation to ensure that there is a 15 per cent. limit on any single shareholding, be it foreign or domestic.
    Mr. Phillip Oppenheim: Does my right hon. Friend agree that the history of privatisations has been one of great benefit to the companies that have been privatised, to their work forces, to the economy and to the taxpayer, who gains twice: once when the shares are sold and secondly when the increased profits of privatised companies are taxed?
    Is it not true that privatised companies do not have the monopoly of job losses? After all, under previous Labour Governments, nationalised industries, such as steel and coal, took more than their fair share of job losses.
    Mr. Pattie: My hon. Friend is right. The list of successful privatisations in which productivity, performance and employee participation have increased to a remarkable extent bears eloquent testimony to the success of the policy.
    Mr. Terry Davis: Will the Minister confirm that although Rolls-Royce has denied that it is actively considering the closure of its East Kilbride plant, it has been revealed that the document referring to that has been superseded by another, which refers to rationalisation at several places in the United Kingdom? Will he confirm that there is a widespread fear that such rationalisation will inevitably lead to redundancies?
    If the Minister is to commend the suggestion by the hon. Member for Solihull (Mr. Taylor), that the trade unionists of Rolls-Royce should talk to their brothers at Jaguar about privatisation, should not the same trade unionists also speak to their brothers at Coventry Climax about their experience of privatisation?
    Mr. Pattie: The hon. Gentleman will be aware of the press reports which I also saw last week referring to East Kilbride. As I said in my original answer, the chairman of the company went to great lengths to deny these allegations and to say that the document was no more than a management exercise by someone at a rather junior level in the company.

    Nationalised Industries
    Mr. Forthasked the Secretary of State for Trade and Industry how much his Department will be spending on support for nationalised industries in 1986–87, as compared with 1978–79.
    Mr. Channon: The total external financing requirement for the Department's nationalised industries is expected to be £177 million in 1986–87, compared with £845 million in 1978–79. This is a reduction of nearly 90 per cent. in real terms.
    Mr. Forth: Does my right hon. Friend agree that these excellent figures are the result of determined Government policies and effective management of these industries over the years? Does he also agree that these reductions have enabled resources to be released which are much better and more effectively used in other parts of the economy?
    Mr. Channon: I entirely agree with my hon. Friend that the management of the nationalised industries and also the privatisation programme have been of immense benefit to the British people.
    Mr. Eastham: If these industries are such a liability, as has just been mentioned by the hon. Member for Mid-Worcestershire (Mr. Forth), why is it that we saw such indecent scandals going on in the stock exchange when people were eagerly wanting to buy up the shares in these very industries?
    Mr. Channon: The question that I have been asked is what the financing requirements are of the nationalised industries that I have in my Department. As to the question of privatisation, the whole House knows that the Government have transformed the prospects of the majority of the nationalised industries in this country. They have been placed in a situation in which they can be privatised, to the immense benefit of all concerned.
    Mr. Sackville: Does my right hon. Friend agree that the huge sums of money that have been expended on supporting the nationalised industries over the years have held back the British economy for too long, and that the sooner the rest are brought back to profitability and the private sector the better it will be?
    Mr. Channon: I am sure that we should have an increasing programme of privatisation. I agree with my hon. Friend that the sums that had to be spent in the past were a great drain on the economy, and nothing illustrates that better than the example of British Steel.
    Mr. Hoyle: Will support include non-financial matters, such as not forcing Austin Rover to give commercial information, which the right hon. Gentleman's predecessor and his Department did, although this was resisted by senior management and was extremely damaging to Austin Rover, particularly to sales of the Metro? Will the right hon. Gentleman explain why this was done, and will he assure the House that it will not be done again in the future?
    Mr. Channon: I do not accept what the hon. Gentleman says, nor does this question refer to Austin Rover.
    Mr. Gerald Howarth: In congratulating my right hon. Friend on these excellent figures, may I invite him to suggest to the House that the fact that other countries are following precisely the policy followed by this Government is in itself a major tribute to their success?
    Mr. Channon: I think that that is right. All over the world people are following the privatisation policy. It is only the out-of-date dinosaurs on the Opposition Benches who will not do so.
    Mr. Williams: Does the Minister not realise that the benefits that he talks about are somewhat illusory? Does he not recognise, for example, that it is very hard to convince the consumer, in relation to British Telecom, that he or she has benefited from the privatisation? Does he not realise that £2,000 million private monopoly profit is not difficult to achieve, exercising monopoly power, but does he recognise that that means that the Government have imposed £2 million of Tory doctrine tax on consumers linked to the British Telecom system?
    Mr. Channon: I do not agree with that at all. The privatisation of British Telecom has led to an upsurge in new industries and in new suppliers and to a very considerable increase in activity in the economy. The duopoly policy is also extremely successful. When one looks at the other nationalised industries, one sees that the Post Office has made very considerable strides, and I notice that the right hon. Gentleman did not mention British Steel.

    Export Credit Insurance
    Mr. Greg Knightasked the Secretary of State for Trade and Industry what information he has on the extent to which the private sector is providing cover for export credit insurance; and if he will make it his policy to encourage this development.
    Mr. Alan Clark: There are no published figures. Our impression from a variety of sources is that private sector credit insurers cover a very small, though growing, proportion of United Kingdom exports. I welcome any cost-effective developments which benefit our export trade.
    Mr. Knight: Is it not a sign of the Department's inefficiency that in 1985–86 it employed 1,769 people to write just over £15 billion worth of business, whereas over the same period the private sector dealt with a greater volume of work and employed fewer than 400 people in connection therewith? When will the Department be instructed to allow United Kingdom exporters to have the choice of placing all their business in the private market? Is not the present monopoly on some work indefensible?
    Mr. Clark: There are absolutely no constraints whatever on United Kingdom exporters placing their insurance wherever they wish.
    Mr. Tony Lloyd: I am pleased to hear the Minister's response. Will he confirm that the Government intend to maintain the present system, recognising its importance to many United Kingdom manufacturers, such as GEC, which simply could not compete in world markets without the existing Government-sponsored insurance scheme?
    Mr. Clark: The Export Credits Guarantee Department has an obligation to break even, and that exercises a discipline on its judgments. However, there are, of course, certain sectors of the insurance market and certain policies which the private sector—to which my hon. Friend the Member for Derby, North (Mr. Knight) referred — simply will not touch. In those sectors, if British exporters are to have a reasonable level of assurance, the ECGD is the only recourse available to them.
    Mr. Cockeram: Is my hon. Friend aware that he is not quite correct to say that there are absolutely no restrictions? The ECGD operates restrictions in that it deals with the basket of an exporter's insurance needs, whereas in the private sector the exporter can choose to insure with different companies for different markets. The ECGD will not permit that.
    Mr. Clark: I think that the difference between my hon. Friend and me is only one of semantics. The ECGD has to exercise the comprehensive principle, but if an exporter does not like the basket approach, to which my hon. Friend referred, he has the clear option to withdraw his custom and place what insurance he can where he can.
    Mr. Robin Cook: Has the Minister seen the illuminating document, "Export Goods Not Jobs" published today by the Society of Civil and Public Servants on behalf of its members in his Department? Will he confirm that, under this Government, the Export Credits Guarantee Department has been obliged to double its premiums and that, as a result, it has lost one third of its share of the market? Will he confirm that, in the same period, the number of export support staff in his Department has fallen by two fifths, and that the number of overseas commercial officers in the Foreign Office has fallen by one seventh? Is it any wonder that exports are rising at one third the rate of imports, when the Government have been so busy pulling the rug from under the feet of British exporters?
    Mr. Clark: I doubt very much whether the comparative import and export rates — to which I have already referred and which we would all like to be in better balance — have anything to do with difficulties in getting insurance cover. They certainly have very little to do with it. I am afraid that I have not seen the document to which the hon. Gentleman referred—he said that it was only published this morning — and comment on it will therefore have to wait until I can communicate with him personally.
    Mr. Watts: Does my hon. Friend share my concern that the ECGD lost nearly £55 million last year on covering commercial risk, whereas the private sector manages to provide cover on commercial risk at a profit? Does that not suggest that we need to examine closely the manning levels and cost structures of ECGD, to stem the haemorrhage of taxpayers' money?
    Mr. Clark: The losses to which my hon. Friend refers may relate to some extent to the internal arrangements of the ECGD, and when I went to Cardiff a few weeks ago I was very impressed by the changes that were taking place in that regard. Nevertheless, as I said earlier, we have to make available a service to British exporters to cover the sectors which, for one reason or another, the private sector flinches from entering. There are restraints, there are some
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    sectors in which even the ECGD will not provide cover, although they are marginal. It is perfectly justifiable that some public money should be at risk in this area.

    Regional Development Grants
    Mr. Cunliffeasked the Secretary of State for Trade and Industry what has been spent on regional development grants in England so far in 1986–87; what he expects to spend in 1987–88; and if he will provide figures for the north-west.
    The Minister of State, Department of Trade and Industry (Mr. Giles Shaw): Provisional figures for payments of regional development grants in 1986–87 to the end of February are £226·8 million in England and £91·3 million in the north-west region. The 1987–88 provision for regional development granta for England, as incorporated' in the Supply Estimates, is £105 million. Future provision for expenditure on regional development grants is not allocated at the regional level. The actual distribution will depend on the pattern of demand.
    Mr. Cunliffe: I acknowledge those figures — one is always grateful for small mercies under this Government—but is the Minister aware that the north-west region still has the second highest number of unemployed in Britain outside the south-east and London, and that far more money is necessary to get greater financial investment moving in that area and to create safer and more secure jobs? Is he further aware that the 1981–84, census taken by the Department of Employment reveals that 158,000 jobs were lost during that period in the northwest region? Is that not the result of the Government's complete neglect of a once great industrial region and the fact that they continue with their senseless and futile economic policies?
    Mr. Shaw: The hon. Gentleman will, on reflection, realise that the massive contribution of inflation to the health of the north-western economy is something for which he and other supporters of the Labour Government should take at least some responsibility. The north-west region will be a beneficiary of the improved economic climate and the £230 million of selective assistance that is being distributed, of which the north-west has £67 million, to create 17,000 jobs in recent years, is at least a start in the right direction.
    Mr. Burt: Does my hon. Friend agree that large parts of the south-east are over-priced, over-congested, overrated and thoroughly disagreeable, and that that will become far worse in the next 20 years or so? Should not northern Members of Parliament be emphasising the positive advantages of their area, which is ideally built for future business expansion, with its marvellous infrastructure, marvellously cheap places to build businesses and homes, good schools, roads, and commercial infrastructure? If business men came to our region, particularly to the metropolitan borough of Bury, regardless of regional aid grants, they would find a wonderful place for their businesses for the future.
    Mr. Shaw: I think that I must wish my hon. Friend a merry Christmas.
    Mr. Alton: Notwithstanding the reply that the Minister has just given, does he not recognise that in the north-west there are large areas of dereliction, factories which have

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    closed and many people out of work, and that the Government's hands-off approach has only been compounded by the giveaway Budget, which did nothing to provide additional resources for less prosperous regions? Will not the absence of a regional policy to provide new work, new hope and new prosperity, simply suck away yet more of our people and resources to the south-east?
    Mr. Shaw: I am astonished at the rashness of the hon. Gentleman, coming as he does from an area of Merseyside where more public money has been spent over more years than in any other part of the United Kingdom. Has he forgotten the creation of the urban development corporation, the enormous effort made to reclaim large parts of Liverpool's city centre and the substantial number of jobs created in many urban developments within the Liverpool area to try to deal with the problem of neglect?
    Mr. Nicholas Winterton: Will my hon. Friend accept from me, representing a north-west constituency as I do, that the Budget was warmly welcomed by industry from every sector? Will he also accept that, far from the whingeing that we have heard from the Opposition, if we had responsible councils seeking to reduce rather than increase rates to and planning departments that were prepared to be flexible in accordance with the Government's requirement, the opportunities for industry, which in my area are immense, could be repeated throughout the north-west region?
    Mr. Shaw: My hon. Friend is right and I am sure that he, like others who live in that part of the north-west, will welcome the creation of the urban development corporation in Trafford Park, which I am sure will have a major influence on the centre of Manchester.
    Mr. Gordon Brown: Can the Minister confirm from his figures that the cuts in regional development grant in England will be £121 million in the coming year, and that, on top of cuts in Scotland of £70 million and in Wales of £40 million, that makes a total cut in regional development grant of £230 million, the biggest single percentage cut in any one year since regional policy was established, and at a time of growing and deepening regional divisions? Given the catastrophic fall in manufacturing investment value, manufacturing employment and in manufacturing output since 1979, what possible sense does £230 million worth of cuts make? How many jobs will be lost as a result?
    Mr. Shaw: The hon. Gentleman should know perfectly well that the national expenditure on regional assistance is now £419 million, which represents a £36 million, or 9 per cent., increase on the previous year. The hon. Gentleman should also know perfectly well that there has been a change in the pattern of assisted areas, which has now includes 70 per cent., or thereabouts, of all those in the working population. That is the benefit of redrawing the map to ensure that all assistance reaches the parts that need it most. As the hon. Gentleman wants to discuss manufacturing investment I trust that he will take heart from the fact that, although manufacturing investment in the north has indeed declined substantially, and in the north-west it declined between 1979 and 1984 by 31 per cent., there has now been a substantial growth in manufacturing investment in the north-west. In the northern region as a whole there has been a growth of 26 per cent. in one year, and in the north-west that growth has been 10 per cent. in one year.

    Company Law
    Mr. Sedgemoreasked the Secretary of State for Trade and Industry what plans he has to seek to reform company law on nominee shareholdings.
    Mr. Channon: The possibility of changing company law on nominee shareholdings and other matters is already under consideration as part of the review of the operations of the takeover panel which I announced in the House on 28 January.
    Mr. Sedgemore: Why has the Secretary of State embarked on a programme of determined inertia and felicitous procrastination as regards the breaking up of offshore syndicates run by eminent and distinguished merchant bankers, accountants and solicitors who deal in nominee shareholdings? Can the Secretary of State tell us what progress has been made in the discussions between his Department and the Channel Islands and the Isle of Man, which act as havens for fraudsters in this sphere?
    Mr. Channon: We have had discussions with a number of regulatory authorities, and these are proceeding extremely satisfactorily. As for determined inertia, that is hardly a fair accusation when I have already told the House that I hope to make an announcement about the review of the operations of the takeover panel next month.
    Sir Brandon Rhys Williams: Would it not be a simple matter immediately to implement the recommendations of the stock exchange, which are that nominee shareholdings should be unable to exercise voting rights or to nominate proxies?
    Mr. Channon: Yes, that is certainly one of the matters presently under consideration.
    Mr. Campbell-Savours: Is it not possible that Marketing and Acquisition Consultants, a firm in Jersey, is a receptacle for large amounts of money belonging to Guinness, which is being fed into the island illegally? Why do the Government not find out who owns that company? Why do they not make extraordinary efforts, as against using the mechanisms that are currently available to them? The Government can find out who is behind that company if they wish to know. It is in the public interest to find out. Why do the Government not make a greater effort?
    Mr. Channon: The hon. Gentleman knows perfectly well that a number of investigations are taking place. I really do not believe that it is proper for me to go further than that in the House at this time.

    Research and Development
    Mr. Wrigglesworthasked the Secretary of State for Trade and Industry what has been the change in real terms in Government support for civil research and development since May 1979.
    Mr. Pattie: My Department's support for civil research and development in this financial year is forecast to be £372 million. This is some 60 per cent. higher in real terms than in 1979–80.
    Mr. Wrigglesworth: Does the Minister accept that the expenditure on civil research and development in this country lags far behind that of our major competitors in other parts of the world? Will the Minister tell the House why the Government have not done more to increase that

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    expenditure and to encourage companies to increase their research and development expenditure? Does the Minister not hang his head in shame at the way in which he and his colleagues have, in the past 24 hours, torpedoed the European Commission's proposals for increasing expenditure on research and development?
    Mr. Pattie: If I can take the last point first, having just returned from the particular research council, we have not torpedoed anything. What we are insisting upon is that, before we agree an expenditure of more than £5 billion, the Commission should have a sensible series of programmes with which it can convince us about what it is trying to achieve. We must also know whether the proper methods of evaluation have been put in place and whether it is possible to turn off some of those programmes if they are not achieving their targets.
    As regards the hon. Gentleman's other points, he will be interested to know, from a press release from my Department on 26 February 1987, that civil expenditure on research and development in 1985 was £4·8 billion at current prices. That represents an increase of 16 per cent. on the £4·2 billion figure in 1983—two years before.
    Mr. Richard Page: Despite the increase in 1979, does my right hon. Friend agree that scientists become somewhat blinkered about the value of projects? Is it not necessary that projects are correctly evaluated for their commercial potential? Is my right hon. Friend satisfied that the evaluation process that is carried out by the Government is sufficient, bearing in mind the vast sums of taxpayers' money involved?
    Mr. Pattie: Quite frankly, I do not think that one can ever be satisfied. The evaluation and monitoring procedures have improved a great deal in recent years. My hon. Friend is right. I do not see why, in the public sector, one should accept lower standards than one would in private business or, indeed, in one's personal life. If public money is involved, lower standards of monitoring and evaluation seem to obtain.
    Mr. Pike: Will the Minister accept that the money that is made available for civil research and development is not fairly distributed throughout the regions of the country, because there is a tendency to go where the head offices of industries are located—in the south-east? Will he take some positive steps to ensure that regions such as the north-west get a fairer distribution of this important work?
    Mr. Pattie: It is not actually the head offices that do research, as the hon. Gentleman knows. It is where the laboratories are situated. I visited several excellent research establishments in the hon. Gentleman's part of the country, which shows that some good research is going on in the north-west as well.
    Mr. Latham: Although I welcome the increase of 60 per cent. in real terms that my right hon. Friend announced, does he agree that a great deal more could be done by private industry, particularly when its profitability is sharply increasing?
    Mr. Pattie: I agree with my hon. Friend. The House will he interested to know that, although British industry expenditure on research and development has gone up 20 per cent. in the past 20 years, during the same period industry expenditure in Germany and France has doubled, and in Japan it has trebled.
    Mr. Williams: What does the Minister intend to do about the figures that he has just given? Is he not worried that we have an escalating brain drain of our top scientists? What does he intend to do about that? Does he realise that that is an absolutely essential area for Government activity? What proposals does he have to offer?
    Mr. Pattie: The right hon. Gentleman may have forgotten the Link programme that was announced in November, which is a £420 million programme designed specifically to attack the exploitation problem that we have in this country of the extra time that it takes to develop an innovation or an idea into a marketable product. It is a large programme, working with the academic sector, Government and industry, and is designed to bring everyone together and to pull new products through.

    Purchasing Initiatives
    Mr. Greenwayasked the Secretary of State for Trade and Industry if he will make a further statement on the implementation of his Department's public purchasing initiatives.
    Mr. Butcher: The public sector spends about £40 billion each year on assets, goods and services. My Department is enhancing its programme to promote, with public bodies and their suppliers, the advantages of positive purchasing with the aim of achieving value for money in this spending and, at the same time, improved competitiveness in firms.
    Mr. Greenway: Does my hon. Friend agree that a more efficient expenditure of that enormous sum of money could have a dramatic impact upon our economy? Will he do all that he can to achieve, say, at least a 5 per cent. improvement in the efficiency of the spending of that cash this year? Will he do the same in future years, if he can?
    Mr. Butcher: There are two objectives of my Department's public purchasing initiative. The first is to support the central unit on purchasing on value for money. Secondly, through the application of the principle of positive purchasing, we seek to ensure that, when the money is spent, a number of British companies become more competitive as a result of enlightened purchasing procedures and, therefore, supply more products into these contracts.
    Mr. Tony Lloyd: Does the Minister accept the fact that given the size of the public sector and its purchases there is a real opportunity to use it to encourage regional industry, such as in the northern region and the north-west of Scotland, and so on? There should be a specific and clear criterion. The Minister did not mention that, but said that he would take this regional distribution of purchasing into account to support the industries.
    Mr. Butcher: I am grateful to the hon. Gentleman for his observation. He is anticipating a certain part of our thinking on the public purchasing initiative. We have now agreed guidelines for the PPI principles, and we shall be pleased to present them either on a sectoral basis or on a regional basis. However, I accept the hon. Gentleman's point.

    Japan
    Mr. Hirstasked the Secretary of State for Trade and Industry if he will make a statement about the current balance of trade with Japan.
    Mr. Alan Clark: From the provisional figures for the 12 months ended December 1986, United Kingdom trade with Japan showed a balance of trade deficit of £3·7 billion.
    Mr. Hirst: I thank my hon. Friend for his reply, although it brings me no comfort. What evidence is there that the various undertakings that are contained in the Japanese action programme to facilitate the access of British imports to Japanese markets have been honoured by the Japanese?
    Mr. Clark: None.
    Mr. MacKenzie: Does the Minister accept that in the constituencies of various hon. Members there are electrical appliance industry and other interests which are very concerned that the Japanese people and their Government, while making encouraging noises about their desire to import, nevertheless impose such stringent and sometimes ludicrous conditions regarding the safety of various appliances that they seldom, if ever, get into Japan? If we in this country were to impose such stringent conditions as theirs, there would hardly be a Japanese product that could enter the United Kingdom.
    Mr. Clark: The right hon. Gentleman is entirely right. He cites one example of, I am sorry to say, a large number of British goods that would otherwise be competitive but that are excluded by Government or quasi-governmental devices.
    Mr. Michael Marshall: Will my hon. Friend take this opportunity to condemn the Japanese Ministry of Posts and Telecommunications action in blocking Cable and Wireless investment and United States investment, as allowed by Japanese law? Will he also take this opportunity to say what he hopes Her Majesty's Government can do, in the face of this acid test, to persuade Japan to allow British investment in that country?
    Mr. Clark: This is certainly an exemplary situation, which completely encapsulates the Japanese attitude and the difficulty of breaking into a most important sector. The British Government have been active. My right hon. Friend the Secretary of State—[Interruption.] I do not understand why the Opposition are reacting in this way. This is practically the most serious single topic with which we are dealing. [HON. MEMBERS: "What is the hon. Gentleman going to do about it?"] I am telling hon. Members what we have done. My right hon. Friend the Secretary of State wrote to Mr. Karasawa on 13 February. He received no reply. My right hon. Friend the Prime Minister wrote to Mr. Nakasone on 4 March and has had no reply. I know that a number of senior members of the American Administration have also written about it. [Interruption.]
    Mr. Speaker: Order. We all want to hear the answer.
    Mr. Clark: I assume that the Opposition's attitude is good-natured, but I detect in it a strong undertone of indignation, which I know is shared on this side of the House. In the course of time this level of indignation,
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    which is widely held in this country, in the Community and in the United States, will finally find expression —[Interruption.] Hon. Members know very well that in GATT, in the Treaty of Rome and in all our treaty obligations there are very powerful restraints on retaliatory action, but the House is demonstrating this afternoon a level of indignation that ultimately will make such action inevitable.
    Mr. Haynes: Is the Minister aware that if I were standing in his shoes at the Dispatch Box answering questions in that way I would be thoroughly ashamed of myself? I thought that the Government were asking people to buy British. How can they when they look in the warehouses, the retail outlets and the shops and all the goods are made in Japan? Why does the Minister not take the short walk to No. 10 and tell the Prime Minister that he has failed in his duty and resign?
    Mr. Clarke: I notice that neither the hon. Gentleman nor his hon. Friends actually come out and recommend import controls—or do they?
    Sir Bernard Braine: May I say how refreshing I find the candour of my hon. Friend the Minister? May I also say that expressions from the Opposition Benches about this unsatisfactory situation are not just widely, but are wholly, shared by Conservative Members? The Japanese Government must be given to understand that their behaviour in this regard militates against a healthy and natural expansion of the world economy. They are not serving their own interests in the long run and we hope that the day will come quickly when Her Majesty's Government, in company with our partners in the Community, will be able to get some effective action against these pirates.
    Mr. Clark: I am grateful to my hon. Friend for his support. For some reason, Opposition Members refuse to acknowledge that there is a comprehensive system of international trade treaties which regulate world trade. These treaties have been built up over a long period to restrain and deter trade wars. Where one country deliberately flouts, ignores or circumvents that system, it has only itself to blame for the consequences. To put those consequences in order—[Interruption.]
    Mr. Speaker: Order. Give the Minister a chance.
    Mr. Clark: I do not object to what Opposition Members are doing; I welcome it. This indignation, which has not been shown in the House before, is timely and is a great help. But hon. Members and the House must realise that to take action involves a consensus of agreement with our trading partners. It involves getting the United States and the Community on side, and it may ultimately involve action outside GATT.
    Mr. Hickmet: Miti and Japan are planning world domination through trade. Their respect for international conventions, as the Minister will know, as a historian, is hardly honourable. There are the examples of non-tariff trade barriers, the dumping of credit and the capturing of international markets. We have Nomura moving into the City of London and the financial institutions from Japan are moving to take over the City. If my hon. Friend wants a weapon, he has it there. Tell the Japanese to take their financial operations out of the City, remove their trading markets and let them go home.
    Mr. Clark: My hon. Friend is quite right. Indeed, the principle of reciprocation is embodied in the Financial Services Act. This is the one sector where we have the possibility of immediate retaliation where appropriate. My hon. Friend the Under-Secretary is going to Japan in a few weeks' time and he will make that perfectly clear.
    Mr. John Smith: Does the Minister understand that, having invited the House to be indignant, he has now heard its indignation expressed clearly and forcefully? Does he appreciate that, for a Government who have been in office for eight years, it is not good enough for them to come to the Dispatch Box and wring their hands about the difficulties in dealing with the Japanese? Let me tell him what he might consider doing—do to the Japanese what they do to us.
    Mr. Clark: I wish that I could. As the right hon. Gentleman well knows, we do not have at our disposal the same kind of administrative machine as the Japanese, and that at present we are constrained by a whole range of international treaties, to deviate from which would require the consent and approval of our partners.

    Superfan
    Mr. Sternasked the Secretary of State for Trade and Industry when he expects to announce his decision on launch-aid for Superfan.
    Mr. Pattie: Rolls-Royce has not yet submitted a full application for launch-aid. Any application will be considered in the usual way.
    Mr. Stern: Does my hon. Friend agree that perhaps the best way in which he could advance any future application for launch aid for Superfan would be an early and favourable decision on British participation in the A340 Airbus, particularly in the time scale within which he indicated to me earlier this year it would be taken, that is by the end of March?
    Mr. Pattie: I do not expect Rolls-Royce to put in its launch-aid application quite as soon as my hon. Friend has said. Perhaps it will do so in the next two to three months. My hon. Friend and the House will be pleased to know that Rolls-Royce today announced that it has signed a business agreement with Boeing to install the 211 engine—the 524D4D in the 767 family of Boeing aeroplanes. That is very good news.
    Mr. Millan: Could the Minister be a little more precise about the business of the launch-aid for the Superfan, because it is very much bound up with the success of the A340? It would help the House and those of us who are interested in the A340 Rolls-Royce engine to know exactly when all this will be resolved.
    Mr. Pattie: As I said in my original answer, we have not yet received a launch-aid application from Rolls-Royce for the Superfan. The situation about the Superfan in relation to the A340 is that the arrival of the Superfan engine will certainly improve the selling and marketing prospects of the A340. It is not essential but it makes the aeroplane still better. I understand that the International Aeroengines consortium, of which Rolls-Royce is a member, will take a decision fairly soon about whether to proceed with the Superfan. All these decisions have to be taken in sequence.

Elimination of Poverty in Retirement
3.33 pm
Mr. Jeremy Corbyn: I beg to move,
That leave be given to bring in a Bill to provide for old age pensions of a sufficient level to eliminate poverty in retirement; and to ensure that these are regularly increased in line with the average earnings of those in work.
The existing levels of old-age pension of £38.70 for a single person and £61.90 for a couple are a disgrace in a civilised society. Even with the increase in pensions proposed in April, they will still only be £39.50 for a single person and £63.25 for a couple. Those rates compare extremely unfavourably with any western European rates. The French pay £78 a week and Luxembourg pays £69 a week.
I propose this Bill to draw attention to the miserable life of many elderly people and ask the House to understand the increased costs faced by pensioners compared with the rest of the population. For example, every winter this House debates the problems of fuel poverty among elderly people. We wring our hands for a couple of months while the cold weather is here and then forget all about the pensioners. We fail to realise that, because of the low level of the pension and the need for pensioners to keep their homes warmer in winter than the homes of the rest of the population, they spend on average 10 per cent. of their income on heating, compared with rather less than 6 per cent. spent by the rest of the population.
The same applies when purchasing goods, because younger, wealthier people are able to buy in greater bulk than pensioners. Any comparison of the normal retail prices index with the retail prices index for pensioners would show that the so-called drop in the consumer prices index that the Government keep telling us about is irrelevant when talking about small consumers such as old-age pensioners. Pensions should at least have some regard to the retail prices index as it affects pensioners.
My Bill also seeks to draw attention to the problems of bad health that elderly people suffer. We have discussed, particularly during the cold weather spell, the serious problem of deaths from hypothermia. It is not a disease in the sense of cancer, pneumonia, bronchitis or anything like that: it is a disease that is solely the fault of badly designed and badly built houses, too low an old-age pension and too many pensioners living in too much cold throughout the miseries of winter.
There were 166 recorded deaths from hypothermia in the first quarter of 1983 in England and Wales. In 1984, there were 205; in 1985, 363; and in 1986, 355. In the case of Scotland, the figure is proportionately higher, from 116 in the first quarter of 1983 rising to 135 in the first quarter of 1986. That does not include the figure of deaths from hypothermia through the miseries of last winter, when even the increases in heating allowances that the Government promised have been eaten up by standing charges and high fuel bills.
We have observed, when looking at the condition of pensioners, that they often wait a long time for hospital treatment. Because of the lack of sufficient old people's accommodation provided by local government, geriatric patients often spill over to general wards, thus exacerbating the problem of hospital waiting lists. While the Government will tell us that they have a target figure
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for many services that should be provided for the elderly, in the case of the Health Service or in local government, very infrequently are these targets met.
I have before me an excellent report produced by my union, the National Union of Public Employees, entitled, "Time for Justice". It is a report on care for the elderly and it is produced by people who work day in day out caring for the elderly, and who have analysed the problems of Health Service provision and local government provision. It gives as an example the provision of home helps per thousand of population aged over 65. Of the 108 local authorities, only 18 are above the target figure recommended by the Government. Worst is the council of the Isle of Wight, which provides only 2·67 home helps per thousand of population. The highest, other than the City of London, which is an exception in itself, is Newcastle, with a provision of 16. Most authorities are unable to meet the target, and it is not always the fault of the local autorities either, because central Government rate capping and expenditure policies mean that these services have often been badly cut.
In every area, the provision of services for the elderly is inadequate and insufficient. Demand, as reported in the recent edition of "Social Trends", has increased considerably, for example in the number of people treated by home nurses and chiropody services. In no way does the increase in the services meet the increased needs of the elderly population. My Bill seeks to draw attention to some of these problems.
The first thing we propose is that the pension level should be dramatically increased. In 1980, the Government broke the relationship of the old-age pension to earnings, and that means that pensioners are worse off. A single pensioner is worse off by £7·20 and a married couple by £11·40 a week, compared with when the Government came into office eight years ago. My Bill proposes that in future the level of pensions should be linked, as a minimum, to that of the average industrial earnings. That was the proposal of the National Pensioners Convention which lobbied the House on 5 March. I wonder how many hon. Members, particularly Conservative Members, met people who came on that lobby and said, "What a good idea. How well we understand you and we go along with your proposal." At the same time, they support the Government that have done nothing about that but have increased and exacerbated poverty among the elderly.
If the Bill passes into law, as I hope it will, under the National Pensioners Convention demand, the married couple pension would increase to £86·57 and the single pension to £57 a week. That is still comparable only to the level provided by other western European countries, so is not an awful lot to look at. The Government have recently altered the tax thresholds. If the single person's pension was merely increased to the level of the single person's tax allowance, the single person would be better off by £371 per year. That is an indication of the poverty in which many elderly people live.
The other simple but important proposals in the Bill are that each local authority should be asked to report once a year the condition of the elderly people within its area, the effectiveness of the provisions of its services and how near it is to meeting Government targets. The report should include the provision of home helps, occupational therapists, chiropody services where appropriate for local

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government, and, above all, the provision of housing accommodation and what research has been done into the design of housing for the elderly.
The Bill also requires local health authorities to do exactly the same. As in the case of local government, health authorities have guidelines on the provision of geriatric beds but very seldom are those guidelines adhered to or the targets met. Again, it is not always the fault of the health authority. If one lives in an area such as mine, where the health authority is having, in real terms, a cut of 15 per cent. in expenditure this decade, it is hardly surprising that the provision of health care for the elderly suffers as a result.
The final proposal is that, instead of wringing their hands and saying that the problem of the elderly is somebody else's problem, the Government should appoint one Minister responsible for co-ordinating all aspects of policy in respect of the care of the elderly, including transport, housing and health. That Minister should present an annual report to the House which would show the deprivation and poverty in which many people in this country are forced to live.
When the Government introduced their so-called social security reforms last year, they announced that in future they would have to encourage private pension arrangements because this country could no longer afford a high level of basic old age pension. It is a scandal that they should say that, and it is nonsense.
What I am arguing in the Bill, and what other hon. Members who support the Bill are arguing, is that the country must afford to look after its elderly in a decent manner. It must afford to ensure that they are properly cared for throughout their retirement and that proper services are provided. It is no good merely encouraging City spivs to make a killing out of private pension plans, while in real terms reducing the level of the old age pension. This Bill provides an opportunity to give some decency in retirement to the elderly people of Britain who are forgotten for most of the year.
Question put and agreed to.
Bill ordered to be brought in by Mr. Jeremy Corbyn, Mr. Don Dixon, Ms. Jo Richardson, Mr. Harry Cohen, Miss Joan Maynard, Mr. Bob Clay, Mr. Dennis Canavan, Mr. Dennis Skinner, Mr. Tony Banks, Mr. Bill Michie, Mr. Chris Smith and Mr. Tony Benn.

Elimination of Poverty in Retirement
  ELIMINATION OF POVERTY IN RETIREMENT
  Mr. Jeremy Corbyn accordingly presented a Bill to provide for old age pensions of a sufficient level to eliminate poverty in retirement; and to ensure that these are regularly increased in line with the average earnings of those in work. And the same was read the First time; and ordered to be read a Second time upon Friday 1 May and to be printed. [Bill 125.]
Orders of the Day

  Rate Support Grant (England)
  3.43 pm
  The Secretary of State for the Environment (Mr. Nicholas Ridley): I beg to move,
  That the Rate Support Grant Report (England) 1987–88 (House of Commons Paper No. 253), which was laid before this House on 20th March, be approved.
  Perhaps it will be for the convenience of the House if we also consider the other two motions relating to English reports:
  That the Rate Support Grant Supplementary Report (England) (No. 3) 1985–86 (House of Commons Paper No. 259). which was laid before this House on 20th March, be approved.
  That the Rate Support Grant Supplementary Report (England) 1986–87 (House of Commons Paper No. 258)., which was laid before this House on 20th March, be approved.
  Mr. Speaker: If the House agrees to debate all three reports. so be it.
  Mr. Ridley: The House is aware that I was unable to lay those reports until the Local Government Finance Act 1987 had received the Royal Assent. In my statement of 13 January I announced my intentions for the 1987–88 rate support grant settlement. Those remain largely unchanged, apart from the modifications required as a result of the High Court judgment in the Greenwich case, which I announced to the House on 5 March, and which in the main affects authorities in London. I do not therefore propose to describe that report in detail. Despite all the difficulties that have arisen this year, I am glad that we have been able to lay the report, particularly the main report, before the new financial year starts, so that grant can be paid. I am extremely grateful to Opposition Members for their help and support in achieving this great success.
  I must remind the House that we have provided a generous settlement for local authorities. The aggregate Exchequer grant of £12,842 million is an increase of over £1 billion—9 per cent. more than in the settlement for 1986–87. Provision for local authority current expenditure at £25,251 million is 13 per cent. more than last year. Those figures exclude the additional provision of £460 million, and the grant of £183 million which we have said will be made available for the teachers' pay settlement for 1987–88.
  The settlement allows for non-rate-capped authorities to increase their current expenditure by 5·25 per cent. When teachers' pay is taken into account, that will allow education authorities to increase expenditure by 7·75 per cent. Those increases are more than the rate of inflation that we expect next year, which my right hon. Friend the Chancellor of the Exchequer forecast in the financial statement and Budget report last week to be 4·5 per cent. on the GDP deflator. Therefore, there is no reason why prudent and responsible authorities could not have chosen to set reasonable budgets and rates.
  This year, we are in a position to know how much local authorities have, in practice, chosen to spend, and the consequent effect on their rates. In most years we do not know that when we debate the settlement, but most of

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  them have now declared their budgets and rates. That makes this debate a little more interesting than normal, because we can read the book, instead of having to gaze into the crystal ball.
  If authorities had budgeted to spend at the settlement assumption, plus the allowance for teachers' pay, the average increase in rates would have been about 2·9 per cent. In practice, we find that, in aggregate, authorities are budgeting for an increase in total expenditure of around 2 per cent. more than has been provided for. That higher spending means that rates will increase by around 6 per cent. on average. Although 6 per cent. is much lower than last year, it is still too high and higher than is necessary.
  The figures—I stress that they are averages—disguise the wide variations between individual authorities. Many authorities have clearly sought to restrain expenditure and limit rate rises. Others have chosen to pursue profligate spending policies at the expense of the ratepayers.
  Let me give the precept increase figures for the shire counties, for which we now have all the reports. In Conservative-controlled counties, precepts will increase, on average, by 6·5 per cent. In Labour-controlled counties, they will increase by an average of 8·7 per cent. In Lib-Lab pact counties, they will rise by 9·1 per cent., and in the one Liberal-controlled county—the hon. Member for Isle of Wight (Mr. Ross) is not in his place, but that is the one jewel in the Liberal crown—that figure is 10 per cent. It seems that one pays a 2 per cent. premium for living in a Socialist county, and an extra 0·5 per cent. on top of that for the price of alliance support.
  Mr. Michael Meadowcroft: I am grateful to the Secretary of State for his mathematics lesson. If what he has said is right, why does the Conservative leader of the Dorset county council, Councillor David Fox, when relating the Secretary of State's figures to his own county, say that the Government are not living in the real world'? If that is what a Conservative county council leader says, the figures are nonsense.
  Mr. Ridley: The hon. Gentleman is not living in the real world, and there is a message in this for the electorate. We all know that Tory councils keep rates down and that Labour councils are high spenders and do not care about ratepayers. The new factor is that Lib-Lab-controlled, hung councils are equally high spenders. It must be depressing for those who thought that voting alliance was an anti-Labour vote to see alliance councillors supporting the same old Socialist policies of high spending and giving the Labour tail a chance to wag the Liberal dog.
  In the metropolitan areas, the average increase in the local rate of non-rate-capped Labour authorities is about 11 per cent. Compare that with Solihull—the only Tory-controlled metropolitan council—which has managed to reduce its rate by 1 per cent. [Laughter.] That is the difference. If all the others were controlled by the Tories, they might have done equally well.
  Dr. John Cunningham: I am grateful to the Secretary of State for giving way, especially since he has just given the "average" of the single Tory authority in the metropolitan districts under Conservative control. Is not the real message of what he has said that overwhelmingly in the metropolitan districts in England the Tories have been kicked from office because people do not like their policies?
  Mr. Ridley: If the hon. Gentleman wishes to make a point of the fact that there is only one Conservative-controlled metropolitan council, let me, too, point out that there is only one Liberal county council. The hon. Gentleman was happy to accept my figure of a 10 per cent. rise in the rate of the Isle of Wight council as being the highest of all the party averages. Similarly, I am happy to accept that the sample is small for the metropolitan counties.
  But it is when we look at London that we see the biggest differences in rate increases. In inner London, as a result of our successful rate-limiting policies, rates bills will be lower than last year for many ratepayers. Also, prudent authorities have budgeted sensibly, so have no rate increases—for example Westminster and Kensington and Chelsea. However, the ratepayers of Hammersmith and Fulham are not so fortunate because their council has increased its local rate by a staggering 127 per cent. Happily, our precept limits, particularly on the Inner London education authority, mean that rate bills in the borough will increase by rather less—by 50 per cent., which is still too high. Ratepayers in Wandsworth will still enjoy the lowest rate bills in London. Wandsworth's general rate will rise by 2 per cent. and it has just announced a record capital programme.
  In outer London, Ealing has increased its local rate by 72 per cent. and Waltham Forest has increased the local rate by 67 per cent. Hon. Members are already aware of some of the ridiculous ways in which Ealing proposes to spend all that money. Council workers have celebrated the council's largesse by going on strike. One local resident, the right hon. Member for Islwyn (Mr. Kinnock), the Leader of the Opposition, is reported to be happy to pay more in rates. But ratepayers in Ealing have a double bonus: they will apparently have to pay an extra 72 per cent. more for no services because the service workers are all on strike.
  Ratepayers in the alliance-Labour controlled borough of Kingston fare no better than their counterparts in the counties. In Kingston, the alliance councillors wanted to put up the domestic rates by 20·6 per cent. and Tory councillors by 5·9 per cent. The four Labour councillors got the alliance to compromise at their figure of 16 per cent. So much for the middle way.
  Mr. Harry Greenway: Is my right hon. Friend aware that services in Ealing are at a complete standstill, that people cannot be admitted to hospital for essential operations because nobody can be discharged as there are no home services and that people in sheltered accommodation are having horrendous difficulties in getting hold of their milk, laundry and mail? Those are merely a few of the terrible effects of the horrendous rate increase and the strike.
  In addition, 30 or 40 schools, including special schools, are closed and children are being sent home. That is what Socialism is about in practice. Will my right hon. Friend compare that with the 4 per cent. rate reduction last year in Ealing under the Conservatives?
  Mr. Ridley: The tragedy is that, until this year, Ealing managed to hold its real spending almost level for the eight years from 1979. For all that time, it managed to provide better services at the same real cost to its ratepayers. All that achievement has been thrown away in one year. I have every sympathy for my hon. Friend's ratepayers.

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  Next year there will be no grant recycling. The House has passed legislation to bring that to an end. Opposition Members have tried in the past to scare us with stories about the consequences. The hon. Member for Norwood (Mr. Fraser), for example, told the House on 4 February:
  "On one low estimate, the loss will he £⅔ billion. On a higher estimate it will mean a loss…of £1,000 million." —[Official Report, 4 February 1987; Vol. 109, c. 1315.]
  That would be lost through the abolition of recycling.
  The local authorities maintained that at least £400 million would he lost. I can now tell the House and Opposition Members that on the basis of the current information on spending plans available to my Department—a high proportion of all returns are now in—the grant underclaim will be around £200 million, after taking account of the changes for teachers' pay. It need not even be that high. Local authorities have only themselves to blame if they forgo grant.
  Authorities have plenty of scope for improving their efficiency and reaping the benefits in reduced costs. The benefits to be gained by putting services out to competitive tendering have been well established. The Audit Commission has done much valuable work on the scope for savings from improved efficiency. In particular, the commission's report on eight deprived London boroughs pointed out that there were specific opportunities in those boroughs for improvements of about £100 million a year —£100 million currently wasted on gross inefficiency. Its recent report into competitiveness and contracting out generally suggested that nationally some £500 million could be saved.
  I am glad to see that at last I have the support of the Labour party and that of the hon. Member for Copeland (Dr. Cunningham) in demanding more efficiency from local government. I have a copy of the new Labour party publication entitled "Best Practice News" and I am sure that Opposition Members will be very familiar with that. Its aims are
  "To show how Labour control not only means better levels of service but also better management of services".
  and to
  "Give value for people as well as value for money."
  It is that aim for value for money that I also welcome from the Opposition.
  However, when we look inside that document, it is not quite so rosy. The report of the Leeds conference contained in the document on improving services gives the game away a little:
  "Planning improvements to services and opposing compulsory competitive tendering legislation go hand in hand."
  I am not sure that they do go hand in hand in my book.
  The deputy general secretary of the National Union of Public Employees also gave the game away when he said:
  "There will be times when the interests of the consumer won't match exactly what suits the work force."
  There is no mention of value for money when we get down to the fine print.
  The truth is:
  "The services which local councils provide make all the difference to the quality of life for working people…But Labour councils are generally bad at providing them. The trouble is that municipal Socialists—most Socialists really—aren't that interested in how to run things. Lately, too, Labour councils have given too much power to the local trade unions and they have been able to stop or slow down important changes…the result is a welfare state at a local level which is generally wasteful and oppressive to work for and unresponsive, unaccountable and unpopular".
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  Would any Opposition Member care to disagree with that?
  Mr. Max Madden: Does the Secretary of State understand that report after report from every independent voice of which one can think, ranging from the Church to health authorities reporting today, show enormous inequalities of wealth and advantage between the haves and the have-nots? Will he for once show some awareness of those problems and act like a Secretary of State responsible for the inequalities that face our people and not give a speech reminiscent of a third-rate local leader of the Conservative party, blind with prejudice and ignorance?
  Mr. Ridley: The last six sentences which I quoted were not from a third-rate, blinded-with-prejudice leader of a Conservative council. They were a direct quotation from an article by a certain Mr. Hoggett from Bristol university in this month's edition of the official Labour party publication New Socialist. That is what the hon. Gentleman's friends think about Socialism in municipalities in action. I would never dare use words like that. [Interruption.] Now that my cover is blown, we shall not get the hon. Gentleman on his feet so quickly again.
  Since pay accounts for 70 per cent. of local authority costs, they should seek to reduce the impact of pay increases by seeking savings. In particular, local authorities should look to their manpower requirements. The Civil Service has reduced its total manpower by 18 per cent. since 1979. Compare this with a 3·25 per cent. reduction in local authority manpower. I was most concerned to learn that figures issued by the Joint Manpower Watch yesterday show that, for the sixth successive quarter, local authority manpower is increasing, despite the savings from abolition.
  I stress again that we have provided a generous settlement for authorities which should seek to take full advantage of it. One would hardly believe, with all the complaints that we hear, including those by the hon. Member for Copeland, about the need for Labour authorities to spend more, that local authorities as a whole are already spending 13 per cent. more this year in real terms than they were in 1978–79 and have budgeted to spend even more next year. One wonders how local government survived in the austere days of the Labour Government.
  I remind the House of the two supplementary reports for which I am also seeking approval. The third supplementary report for 1985–86 will provide a further £385 million grant previously withheld, as authorities have brought their spending closer to target. It will also adjust grant to take account of provisional outturn expenditure and certain changes in education pool contributions.
  I have been obliged to make certain changes to the supplementary report for 1986–87 as a result of the judgment in the Greenwich court case, as I explained on 5 March. That report will, however, still distribute the block grant underclaim of some £618 million consequent on estimates of total expenditure received from authorities on or before 19 December. My predecessor guaranteed that £500 million of grant would be recycled in the first supplementary report for 1986–87. This report will honour that guarantee.
  Dr. Michael Clark: Will my right hon. Friend please help those of us in Essex who have noticed

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  that Essex and Hampshire have almost identical grant-related expenditure and almost identical populations but that Essex has a rateable value only 10 per cent. more than Hampshire, yet Hampshire has a 40 per cent. greater grant for 1987–88? There seem to be some inconsistencies between the two counties.
  Mr. Ridley: It is very difficult to give specific answers to problems raised in interventions. Since 1979, Essex has increased its real terms spending by 8·5 per cent. whereas Hampshire has increased it by only 1·1 per cent. That might well be the territory in which my hon. Friend's question lies, but I should like to supplement it by giving him a more detailed response when I have had time to look more carefully at the figures.
  The House will wish to know that, when I laid the reports on 20 March, the Department notified the 20 high-spending authorities of their rate limit, which flows from the formula in the Local Government Finance Act 1987. The responsible Departments have also notified the 20 joint authorities automatically selected for precept limitation of their precept limits produced by the formulae in the Bill. I ask the House to approve these three reports.
  4.5 pm
  Dr. John Cunningham: We have just heard a speech of the most sickening irrelevance to the problems of our people and the country, a speech devoid of any scintilla of understanding of the nature of the problems that people face or of the urgent need to change direction to bring new policy initiatives to our inner cities, to education, to housing and to the creation of jobs. It was at least mercifully brief by the right hon. Gentleman's standards. It was difficult to discern from what he was saying that we are debating very important issues which contain many decisions of considerable social and economic importance, and the very language of the report, the speech and the title of the debate do not convey any sense of the wide-ranging implications for essential local services, education, housing, social services and environmental health of what the Secretary of State had to say and what the Government are doing. The technical jargon often employed seems calculated to obscure those real issues, perhaps for the satisfaction of the Government, who take every opportunity to disguise the real intentions of Conservative policies.
  The debate is about why the Conservative Government refuse properly to finance services which are essential to the social and economic well being of people, young and old, employed and unemployed alike. The debate is about the Conservative Government's refusal to accept the validity of local democracy.
  Mr. Ridley: I am surprised that the hon. Gentleman is persisting with his prepared text. Did he not hear me say that since 1979 the total spending of local authorities has gone up by 13 per cent. in real terms? How can he claim that authorities are deprived now, whereas presumably they were not deprived when he left office in 1978–79, although they are spending 13 per cent. more in real terms? I cannot understand the logic of that.
  Dr. Cunningham: We are well aware that the Secretary of State does not understand the issues, nor does he seem to care about them. He does not need to tell us what we
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  know only too well. The Government have done everything to stop local authorities from investing in services. That is what the Rates Act 1984 is all about. That is what the total of £18 billion-worth of accumulated cuts in rate support grant has been all about. That is what the right hon. Gentleman was referring to in his speech when he accused authorities that spend more than he deems necessary of being "profligate". All those Government attempts have been to reduce local government's facility to support decent levels of service and provision. After all, that has been the hallmark of eight years of this Government. Is the right hon. Gentleman suddenly denying that?
  Mr. Ridley: The hon. Gentleman cannot get away with that argument. It is true that the percentage of rate support grant has been cut and that authoriries have been involved in creative accounting, but the point that I am trying to get home to him is that the net result of everything that has happened in the eight years is that local authorities are spending 13 per cent. more. The point that he cannot substantiate is that they are short of resources. If they are short of resources now, how short of resources were they in 1978?
  Dr. Cunningham: We are beginning to see the Jekyll and Hyde nature of the right hon. Gentleman's political character. Now he is apparently, on behalf of the Government taking credit for the increase in expenditure which for eight years they have been denouncing. He had better make up his mind on which side of the argument he really is. We know which side we are on. We are in favour of more investment in people, and in the services that are so essential to their economic and social well-being.
  The Secretary of State mentioned Ealing. I am sorry that his hon. Friend the Member for Ealing, North (Mr. Greenway) has disappeared. Does the right hon. Gentleman support the expenditure decisions of the now Labour-controlled Ealing council, which he was denigrating a few moments ago—the reintroduction of places for rising-fives in primary schools, the deals to acquire 600 new homes in the face of the housing crisis and the employment of extra home helps and extra staff to deal with the under-fives? The council is taking on much-needed local housing repair teams and recruiting 150 extra teachers. Does the right hon. Gentleman support those decisions? Does he support the extra expenditure about which he has been boasting in that context? What is the answer? It is that the right hon. Gentleman has not the guts to say that he does not support it. That is the reality of the Government's pathetic position.
  The proximity of this debate to the Budget reminds us of the Government's continuing policy of switching the burdens of such services from the taxpayer to the ratepayer—a policy pursued relentlessly for eight years and accompanied all the time by the crocodile tears of Tory Members about the inevitable rates increases that have resulted. Today's debate is about the Government's determination to enforce more and more central control—more powers for Ministers who abuse them all too frequently, using them to prevent and to crush sensible and sensitive public investment in people, their families and community services wherever they can.
  Yesterday's announcement about the widening health gap in our country should shame Conservative Members, especially those Ministers who have deliberately and

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  massively reduced investment in housing and employment. It should especially shame those Ministers who have planned and organised a systematic withdrawal of cash from the inner cities, where some of the worst problems in Europe persist. The reality is that the cuts in rate support grant are more than 10 times the additional support under special measures given to the inner-city authorities that are most in need. That is the damage that the Government have done to the most deprived communities in our country.
  Yesterday's attempt to suppress the report of the Health Education Council is typical of this shameless Government, who also tried to suppress the earlier report of Sir Douglas Black. The latest attempt to stifle debate contrasts embarrassingly with the weekend leaks of the Prime Minister's alleged concern for the plight of neglected inner-city areas, which is so much a legacy of eight years of Thatcherism. Those very conditions of bad housing, poor environment, inadequate social services and health care, poverty and unemployment, which has trebled under this Government, led to the widening health gap that is so damaging to individuals, families and the national wellbeing. It is the Government's failure adequately and responsibly to deal with those problems that we are debating today.
  Even worse, those Conservative failures result from the deliberate intention of policy. They are no accident. In addition, we have seen how the volume of complicated, contradictory and inconsistent local government law—the force-feeding of the Tory right with statute after statute—has reduced any attempt at sensible planning of local government finance to a shambles. We are told that the Secretary of State has been reduced to impotent rage by the stupidities of the system which his colleagues have created and which he has inherited and supported consistently over the past eight years.
  The journal Public Finance and Accountancy states:
  "Local government is suffering from a surfeit of new legislation. Each successive piece of legislation seems to increase rather than reduce uncertainty".
  But still the Government plough on into the mire. Today, Parliament is asked to accept a report first announced by the right hon. Gentleman in 1986, when he published a consultation paper and wrote to all the Conservative councillors in the country recommending his proposals.
  The Secretary of State published his first set of detailed proposals on block grant distribution on 3 October 1986. A further set of detailed proposals were published on 3 December, and another set on 13 January 1987. Following the decision on the Greenwich borough case, yet another set was published on 5 March. We understand that if the Secretary of State is successful in his appeal against the Greenwich decision a further set of proposals may be put forward for the coming financial year.
  What, we wonder, is the purpose of the right hon. Gentleman's appeal? What is he hoping to achieve by trying to obtain a decision that will yet again cause confusion and uncertainty in local government finance, when budgets will already be fixed and rates will already have been set?
  The changes in provisional block grant entitlements for some authorities alter substantially from one consultation paper to another. As the hon. Member for Ravensbourne (Mr. Hunt) and his colleagues in Bromley know only too well to their cost, and as is known in the city of Birmingham and in other towns and cities up and down
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  the country, fluctuations running into millions of pounds occur almost weekly—certainly monthly—as a result of the incompetence of the right hon. Gentleman and his policies.
  Despite the uncertainty about block grant entitlements, county councils and other precepting authorities are required by law to make their precepts for 1987–88 not later than 10 March, before the report has even been approved by the House, and rating authorities are required to make their rates not later than 1 April. Local authorities no longer have any right to make a supplementary rate or precept if their income from grant or other sources falls short of that taken into account when those rates or precepts were set. That, ' again, is the fault of the Government. The combination of lateness and uncertainty about grant entitlements for the coming financial year makes it harder for local authorities to plan sensibly, and inadequate planning leads almost inevitably to poor financial administration.
  Since July, the right hon. Gentleman has made five announcements affecting grants to councils, and during that time there have been four Acts affecting local government finance. And Ministers have the gall to criticise councils for inefficiency! The Government have demonstrated an unprecedented level of bungling incompetence, and they cannot escape responsibility for the mess.
  In a damning editorial, Local Government Chronicle, under the heading
  "Ridley in a Central Mess",
  says the position
  "typifies the woeful mess the Environment Secretary has allowed and encouraged his senior civil servants to get him into".
  In addition to the legal shambles of the Government's own creation, there has been the political fiddling of the system to buy off the much-leaked Tory revolt. How ironic it is to see Tory Members who demanded those policies being attacked by their own colleagues in local government, and by their own local Tory associations, for the capricious failures of those same policies—failures described by the editor of Local Government Chronicle as
  "mere financial gerrymandering without accuracy,"
  and, in a classic line, as the "height of loony government". How right the editor is.
  All that was too much for the staunchest of Conservatives in the borough of Bromley, who watched in bemused disbelief as their grant went up and up, only to plunge down again by £3 million this year following the Secretary of State's failure to deliver his promise to make good their loss of £3 million last year—that is £6 million in two years from the staunchest of true blue supporters. How angry they must all feel.
  Mr. John Hunt: Will the hon. Gentleman give way?
  Dr. Cunningham: I was about to refer to the hon. Gentleman, but I shall give way.
  Mr. Hunt: Does the hon. Gentleman accept the logic of Bromley's case and recognise the injustice of the court result, which has meant that Bromley is deprived of that money? Will he go on record as saying that he recognises that the court got it wrong?
  Dr. Cunningham: I recognise that the London borough of Greenwich did not act on some piece of arcane local

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  government law dug up from the middle ages. It acted on an Act of Parliament of 1986, introduced by the Government. The hon. Gentleman voted for it. Greenwich took advantage of that Act of last year, which the hon. Gentleman and his colleagues from the London borough of Bromley supported. So we are not talking about some little error. We are not talking about some computer miscalculation. We are talking about Conservative Government law. That is what has caused the problem in the borough of Bromley. That is what Greenwich acted upon, and that is what it won the court case on. That is an accurate record of what happened.
  Mr. Ridley: Will the hon. Gentleman give way?
  Dr. Cunningham: I shall give way in a moment. I have not finished with the hon. Member for Ravensbourne.
  I say to the hon. Member for Ravensbourne and his hon. Friends from Chislehurst, Orpington and Beckenham: in view of what has happened to the Conservative borough of Bromley, will they go into the Lobby and vote for the report? Will they support the taking away of that money from their borough? Will they support the incompetence of their own Government and, even worse, the failure of their own Secretary of State to honour his promises? Will they vote for that? We shall watch with interest, and so will the voters in the borough of Bromley.
  The final irony is that the hon. Member for Ravensbourne's own friends and colleagues in the local Tory association—in Tory Bromley—are now taking this Government to court to sue them because of what has happened. I can well understand the Secretary of State reaching for yet another Silk Cut and nipping out of the Cabinet Room for a quick fag, in the face of that irony and the disbelief of his colleagues around the Cabinet table.
  Mr. Ridley: The question asked by my hon. Friend the Member for Ravensbourne (Mr. Hunt) was not answered by the hon. Gentleman. I leave aside the point of law that is the subject of a legal action and will be decided on appeal. I have made it clear that I believe that the rate support grant distribution resulting from that decision is inequitable to the boroughs concerned. I ask the hon. Gentleman a straight question: does he think that it is equitable? Would he be in favour of the distribution being put back to what everybody thought it was, or would he not?
  Dr. Cunningham: The right hon. Gentleman must think that all of us in the Opposition are daft. He made an allocation of resources. He then decided to change the allocation. He was challenged by several authorities. One went to court and won. The right hon. Gentleman asks us to justify those actions. Of course we would not justify them for a moment. The right hon. Gentleman has been caught fiddling the books and now even his own side, the Conservatives, are complaining about it. It is totally unjustifiable behaviour and we would not support it for a moment. We have considerable sympathy—
  The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): Does the hon. Gentleman support Greenwich?
  Dr. Cunningham: The hon. Gentleman had better keep quiet, or we shall come to him and some of his decisions and speeches.
  We have considerable sympathy with what has happened to the people of Bromley and of the borough of Greenwich. The reality is that this shambles will not be ended until the Government are out of office and new policies for local government finance are introduced. That is how I respond to the right hon. Gentleman.
  Mr. Ridley: The hon. Gentleman still has not given—
  Dr. Cunningham: The right hon. Gentleman may not have noticed. I have not given way.
  Mr. Ridley: I asked the hon. Gentleman—
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. If the hon. Member for Copeland (Dr. Cunningham) is not giving way, the Minister cannot intervene.
  Dr. Cunningham: Astonishingly—
  Mr. Ridley: Will the hon. Gentleman give way?
  Dr. Cunningham: No.
  Astonishingly, even more legislation cannot be ruled out—
  Mr. Ridley rose—
  Dr. Cunningham: I shall give way in a moment.
  The Secretary of State is asking the House of Commons to approve the report, but he is appealing against it in the House of Lords at the same time. This is absolutely unparalleled. On the one hand the House is recommended by the right hon. Gentleman to say yes to the report, and at the same time he is taking a case through the courts to have it set aside. It is cloud-cuckoo-land in the form of benighted Tory bungling. That is the reality that the right hon. Gentleman has got himself into. If he is successful in the court case, further changes will be necessary. They will affect 13 London boroughs in a major and serious way, and many other authorities in less serious ways.
  Mr. Ridley: I should simply like to ask the right hon. Gentleman, when he has stopped waffling, whether he realises that Greenwich has benefited from an error to the tune of 3 million quid at the expense of Bromley, and whether he would be in favour of having a grant that is paid to the roads paid to the borough in which the roads are situated. That is the question which, three times, the hon. Gentleman has refused to answer—because, of course, he does not have the guts to say what is right.
  Dr. Cunningham: The right hon. Gentleman is now being less than candid with the House. He is falling back on the myth that somehow there was an error. There was no error. There was a change in the basis on which the grant was allocated. There was no error. It is a Government excuse for the cock-up that they have engineered. When the right hon. Gentleman lost in the courts, he announced his intention last year to change the law, and in doing so—[Interruption.] It is no good the right hon. Gentleman waving for his hon. Friends to intervene. They will not take any notice. It is no good sending for the Tory party equivalent of the fifth cavalry, because most of them are laughing their heads off at the predicament that the right hon. Gentleman has got himself into. I expect that some of them are even gritting their teeth at the prospect of having to walk through the Lobby to vote for this nonsense.

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  The reality is that no reasonable purpose can be served by the Secretary of State trying yet again to change all the figures. Rate-limited authorities in particular will lose cash and be unable to change their rates to make up the shortfall. Authorities could be forced into deficit as a result of the combined incompetence and gerrymandering of the right hon. Gentleman. When the Association of London Authorities asked the Department of the Environment about the matter, it was told:
  "Ministers have not yet considered the matter".
  Apparently Ministers have not even considered the implications of the changes that may result from the appeal.
  The Government have made much of an alleged increase of £1 billion in aggregate Exchequer grant. It masks an increase of 15 per cent. in specific and supplementary grants and an increase of only 6 per cent. in block grant itself. That increase in specific and supplementary grants carries with it yet more central control over local government services. Much of the remaining increase in block grant—£530 million—may not materialise because of the end to grant recycling. The right hon. Gentleman suggested that the figure might be only about £200 million. I ask the obvious question: why is his right hon. Friend the Chancellor of the Exchequer planning, in the Budget Red Book, to recoup at least £400 million? That is what the Budget document says. The right hon. Gentleman must be aware of it. Is he trying to mislead the House in what he has been saying today? Is he trying to disguise the nature of the clawback?
  The Rate Support Grants Act 1987 abolishes grant recycling, the process by which initial claims on the block grant pool are rescheduled so that all available grant is distributed. The distribution of the total block grant pool is crucially dependent upon the expenditure assumption that the Secretary of State adopts. He assumes in the report that authorities will increase their expenditure by only 2·8 per cent. in the coming financial year. This is an unrealistically low estimate. If authorities spend more than the right hon. Gentleman deems necessary, they will lose grant.
  Only last week the Chancellor of the Exchequer said that general inflation would rise to 4·5 per cent.—at least the Secretary of State got that figure right. Grant-related expenditure assessments, on which grant entitlements are based, have been set at £1 billion lower than total expenditure provision. That unallocated sum will have a serious effect on grant distribution, disbenefiting high-need authorities, many of which are metropolitan authorities. It is merely a means of reintroducing expenditure targets in another guise. Severe block grant mechanisms are designed to force expenditure restraint. This is contrary to what the Secretary of State tried to say earlier about increasing expenditure. The implication of what he said was that the Government thought that that was good and wanted it, but the mechanisms is the report deliberately act against it.
  The grant proposals include a continuation of severe financial penalties, which are made worse by the abolition of recycling. Many authorities lose £1 of grant or more for every additional £1 of spending, making a cost to the ratepayer of £2 or more. That penal regime is made worse by the loss of grant that is recycled to the pool. Instead, it will go direct to the Chancellor of the Exchequer, who
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  calculated in the Budget statement documents that he would recoup £400 million in that way. That is not the much smaller sum to which the Secretary of State referred.
  This rate support grant report does nothing to address the criticisms of Government policy failures made by the Audit Commission in its report on the management of London authorities. The authorities concerned have made positive responses to the recommendations in that report and are acting on them. Some boroughs have already established teams to work with the Audit Commission to deal with those issues. That is a much more positive response to the report that anything that has come out of the Department of the Environment to date.
  In addition to the plan to recover that £400 million from the total available to councils as set out in the Budget documents, the Chancellor and the Secretary of State outline plans in those same documents for an increased rates take of £1·5 billion. That is what the Chancellor's Red Book says. Thus, the Government are assuming that rates will rise as a result of their policies by an average of 9 per cent. The Secretary of State was trying to convey the impression that the Government were assuming that the rates increase would be 6 per cent. or less, but the Reel Book directly contradicted that. Who is telling the truth —the Chancellor, or the Secretary of State? So much for the Secretary of State's claims in the House in July, in January and again today that no rate increases—or only low ones—would be necessary.
  In the context of ministerial pronouncements anticipating lower rate rises, it is significant that the Treasury is forecasting a substantial rise in rates income for the coming financial year. Table 1·2 of the Financial Statement and Budget Report for 1987–88 shows that rate receipts are forecast to increase by 9 per cent.—that is the Chancellor's figure—compared with a 4·2 per cent. increase in income tax receipts and a 6 per cent. increase in general Government receipts.
  Why does the Secretary of State repeat his claims, knowing that his colleague in the Cabinet, the Chancellor of the Exchequer, who is in charge of running the economy, does not agree and is quoting a higher figure? Is the right hon. Gentleman trying to mislead the House?
  A key component in the mechanism to distribute grants to local authorities is the grant-related expenditure assessment that is assigned to every local authority, which provides a measurement of what the Government consider that each authority should spend to provide a similar level of services. For the coming financial year the GRE total will be £23,742 million, which is £961 million less than the total expenditure that local authorities anticipate.
  The gap between the two totals—total expenditure and GRE—is important, because spending more than the Government's assessment — particularly above threshold—leads to a high rate of grant loss for each additional pound of expenditure. Therefore, the failure to increase the total of GRE in line with total expenditure will result in many authorities running into a higher rate of grant loss for increased spending.
  Following the intense Tory lobbying from shire counties, in southern England in particular, the settlement includes a limit of 7p at ratepayer level on grant losses arising from changes in the block grant mechanism, and a limit of 12p on grant gains. The major beneficiaries of the Secretary of State's fiddling in the current financial year—compared with the Government's previous plans, as set out in October—are authorities such as Surrey,

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  which will receive £7·7 million extra, Hertfordshire, £6·4 million, and Hampshire, £3·9 million. Here again the Government are redirecting cash to areas that are least in need of it and away from many other areas that need it more.
  Mr. Timothy Wood: Is it not true that Hertfordshire and Surrey will receive less grant than this year? Does the change not mean that the reduction in grant has been alleviated, not that there is a new bonanza for the home counties?
  Dr. Cunningham: That is true. In general, those authorities have lost grant every year under this Government. I hope that the hon. Gentleman will ponder that before voting for the motion tonight and that he will make it clear to his electors that every year people in Surrey, Hertfordshire and elsewhere have lost support for essential services such as education and social services as a direct result of Government policy. That is what the policy is about.
  Dr. Michael Clark: Have not the shire counties, such as Essex, lost grant because the Government are directing more funds to the urban and metropolitan counties? That shows that they are being immensely fair in helping counties that are Labour-controlled and, unfortunately, penalising Conservative-controlled counties.
  Dr. Cunningham: I am sorry to disagree with the hon. Gentleman, because he and I are the only two hon. Members with a PhD in chemistry, but if he believes that, he will believe anything.
  The reality is that every year the Government have cut what they pay to local authorities as a percentage of their expenditure. Grant has decreased from 62 per cent. in 1979–80 to less than 46 per cent. now. Each year the amount has been lower, and all authorities have suffered. The inner cities have suffered grievously as a result of Government policies. It is not a matter of taking money from the shires and giving it to the inner cities. There may have been some adjustments within the smaller total, but all authorities have lost heavily, and I am sure that in his heart of hearts the hon. Gentleman knows that, too.
  The Government cheat local councils in another way. The assumption that total expenditure will increase by only 2·8 per cent. in the coming financial year is contradicted by the Financial Statement and Budget Report, which forecasts a rise in the gross domestic product deflator—the Government's own measure of the probably rise in costs across the economy—of 4·5 per cent.—a significantly higher figure. If the Government had been more honest, if that figure had been used, a higher total for local authority costs would have resulted. The Government, then, have deliberately planned a shortfall in what they are prepared to make available.
  We are told that the answer to all this is a new system, a medieval solution, a poll tax with a uniform business rate attached to it—proposals already widely condemned by business, commerce, local government and political parties.
  Mr. Ridley: Rubbish.
  Dr. Cunningham: The Secretary of State says, "Rubbish." I can tell him that at a very recent meeting with the London chamber of commerce, even it condemned the proposals, and it wrote to the Chancellor of the Exchequer saying so. I do not know where the right hon. Gentleman is looking for friends in support of a poll tax with a uniform business rate, but they are not too thick on the ground. The proposals have indeed been condemned not only by Opposition parties, but by the Tory Reform Group, in a massive, damning report, in page after page of it. The Tory Reform Group has such patrons as the right hon. Member for Mole Valley (Mr. Baker), the cpresent Secretary of State for Education, the right hon. and learned Member for Rushcliffe (Mr. Clarke), another current Cabinet Minister, and the right hon. Gentleman the Home Secretary.
  Mr. Chope: Will the hon. Gentleman read out the disclaimer on the second page of that report, which dissociates those patrons of the Tory reform Group from the content of that report?
  Dr. Cunningham: Is that not typical of the Tories? All their names are on the front page to give the thing credibility and standing, but in the small print they say that they want nothing to do with it. That is typical of the Tory party's approach to these matters. No doubt the Tory manifesto will say the same. If it does not, it should, because that is what it will be like.
  In addition to giving the Government effective control over almost 80 per cent. of local council finance, the social, economic and administrative implications of a poll tax are horrendous and grotesquely unfair. The veil of secrecy over the impact of a poll tax was lifted a little by the Minister of State, tantalisingly, on Monday, when apparently he embarked upon a major press briefing session about the consequencies. I am quoting the hon. Gentleman's words exactly from his Department of the Environment hand out. I have picked the one concerning Lancashire, but there are several others. This is what the Minister of State had to say about the consequences of the poll tax in Lancashire:
  "for the average two-adult household in north east Lancashire, the community charge"—
  that is, the poll tax—
  "is likely to produce a substantial increase in the amount to be paid. This is because domestic rateable values in the area at the moment are among the lowest in the country. This means that the people in north east Lancashire are getting local authority services far more cheaply than those elsewhere. Although. when community charge is fully introduced, bills will rise, the community charge will still (on the basis of 1986–87 spending) be in the range £180 to £215…
  The Government is still considering what transitional arrangement might be introduced to help those in areas where bills would rise substantially as a result of the introduction of the new system."
  This is the wonderful alternative to the rates, to help people. The answer is that they pay more, and we have that on the hon. Gentleman's own admission. The news will really buck up the Tories canvassing for local government elections throughout the country. We are grateful to the Minister of State for his candour, because in Blackburn, Darwen and Rossendale, Pendle, Hyndburn and elsewhere we intend to help him get his message across to people. We intend to ensure that in the local elections, and especially in those parliamentary constituencies that are marginal in

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  the general election, the people know exactly what the Minister of State wants them to know about the consequences of a poll tax.
  Mr. D. N. Campbell-Savours: Would my hon. Friend care to inform the Minister of the hostility that is building up in west Cumberland, in my hon. Friend's constituency and in my constituency, to the news already circulating about the level of new rates that would be paid by our constituents if this Government were to be allowed to win? Would my hon. Friend care to comment on the document which we have produced and which sets out in great detail the effects that this will have and shows that for the great majority of people in west Cumberland the new rates will mean a massive increase in what they pay? The only people who benefit from this new system are people who live in expensive property. They are the only beneficiaries. Is that not quite disgraceful?
  Dr. Cunningham: I am grateful to my hon. Friend the Member for Workington (Mr. Campbell-Savours), not only for his intervention, but for all the work that he has done on the details of the local consequences of the introduction of a poll tax, not only in his constituency in the borough of Allerdale, but in my constituency in the borough of Copeland, because the same fate awaits thousands of families in west Cumbria, as he has rightly made clear.
  The irony is that in my own constituency of Copeland, with an excellent Labour council, there has not been a single increase in rates for six years. Indeed, this year the Labour council of Copeland is reducing the rate, but it is to have this poll tax imposed upon it, which will force it to charge people more as a result of this Government's policies. It is exactly the same in my hon. Friend's constituency in the borough of Allerdale. People will be appalled to learn that a Tory Government will ensure that they pay more in local taxes, regardless of their income, the size of their property or anything else.
  Mr. John Home Robertson: At least in my hon. Friend's part of the world this is still a hypothetical question. Would he spare a thought for the predicament of the people in Scotland, for whom the Government have already got legislation, not only through this House, but on its way through the House of Lords? The people of Scotland are to be used as guinea pigs for this appalling new taxation.
  Dr. Cunningham: I agree with my hon. Friend and I think that the people of Scotland agree with him. The way things are going, the Tory party will be lucky if it is not completely wiped out in Scotland when the general election takes place. The same is likely to happen in the north of England, too.
  It is also very significant that the Government are being evasive about rebates and reductions for those families and individuals facing financial difficulties. Everyone will have to pay at least 20 per cent. of the tax, regardless of income. Even rebates may apply only to a fixed amount, less than the total tax charged, according to a recent article in New Society.
  While Ministers announce a speeding up of these unfair proposals, they operate a go-slow on the highly sensitive issue of rebates. It took the Prime Minister more than two months to reply to a letter from Councillor Jack Loyden, the leader of the Association of Metropolitan Authorities,
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  on this issue and then her reply was completely vacuous, giving no answer at all. As I have said, even the Tory Reform Group, with several existing and many former Tory Cabinet members as patrons, has rubbished the Government's own proposals.
  The country is facing a mounting crisis in housing in parts of our major cities, in education and training and., not least, in research establishments and the consequent brain drain. Local government has a crucial responsibility in many of these policy areas. Undermining local government, demeaning it, as the right hon. Gentleman does every time he speaks in the House and elsewhere, serves the nation ill. Undermining local government finance, taking more central powers, and preventing better and more effective investment in people is guaranteed to make those problems worse. As the new director-general of the Confederation of British Industries has said, city technology colleges are an irrelevance in the face of these problems, for without decent homes, good schools and better training and skills our country is doomed. No amount of manipulation of trade figures and unemployment statistics, in a post-Budget, pre-election Tory propaganda effort can solve those critical problems.
  Labour party policy on new skills, jobs and industrial strategy offers effective solutions and a clear choice to the people. A clear majority of the British people prefer investment in jobs and services to tax cuts. The majority support investment in people—in ourselves and in our communities, schools and hospitals. That cannot be achieved without effective, improved and strengthened local government, which is an urgent national requirement. Those objectives cannot be achieved by this Government, by their policies or by reports such as this. That is why we oppose it.

  Royal Assent
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:
  Consolidated Fund Act 1987.

  Rate Support Grant
  Question again proposed.
  4.50 pm
  Sir Bernard Braine:: I do not mean to be unkind to the hon. Member for Copeland (Dr. Cunningham), but frankly I was unimpressed by his argument. He was eloquently unconvincing. The fact remains that, under the present Government—leaving aside what I am about to say about them—spending on local government services has increased substantially in real terms and they are not to be castigated for trying to impose financial restraint and introducing discipline in what is after all a massive sector of public expenditure.
  We are light years away from a Labour Chancellor going cap in hand and in frantic haste to the International Monetary Fund to beg for financial support, at a time when the average rate of inflation was 15 per cent. peaking to well over 25 per cent. at the end. That is long past and best fogotten. Methinks the hon. Gentleman was protesting too much.

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  Having said that, I feel that I must intervene, albeit briefly, to protest against the unfair distribution of grant as it affects my own county. For years, Essex has been prudently administered. It was prudently administered under the last Labour Government and it has been prudently administered under the present Government. Throughout, it has been among the lower-spending local authorities.
  Indeed, I recall a previous Secretary of State for the Environment suggesting that the county council should call in consultants to find out whether further savings could be made. The county council took that advice, and the consultants reported that everything possible was being done. Indeed, my right hon. Friend's predecessor praised Essex here in the Chamber for its prudent administration. Yet, year after year, Essex has been penalised under the grant support system and year after year the pleas of my hon. Friends who represent consituencies in the county have been ignored.
  This year's settlement is palpably unfair and unacceptable to us. As my right hon. Friend knows—it is best to be honest and straight about these matters—no Essex Back-Bench Members will go into the Division Lobby tonight in his support.
  Nor is that all. A further blow has been delivered as a result of the administrative muddle to which reference has already been made. I accept the explanation of my right hon. Friend the Secretary of State. I do not think that he personally is to blame in any way, but nevertheless the blow has fallen. As a result, Essex will lose a further £2 million on top of what it has lost in this year's distribution of grant. I find it unbelievable that we should have been penalised in favour of high-spending local authorities elsewhere. That does not make any sense. It goes against the letter and the spirit of what the Government have been seeking to do. It adds insult to injury, and we cannot accept it.
  Will my hon. Friend assure us when he answers the debate that if the court decides—as I hope it will—that the Government were right all along, then the £2 million will be repaid to Essex automatically and without further argument? If, on the other hand, the court decides otherwise—it would be quite improper for me to say whether such a decision would be right or wrong—a situation will have arisen for which Essex county council can in no way be blamed. If that should happen, will the Government make up the shortfall of £2 million in some other way? That, in my submission, is the least that should be done. The treatment of Essex is completely unacceptable to its Members of Parliament. I ask, therefore, whether the Government are now prepared to do justice to our county.
  4.58 pm
  Mr. Michael Meadowcroft: First, I shall deal with matters arising from two earlier rate support grant settlement reports. We are again dealing with retrospection and changes of the rules, although control of some councils has changed since 1985–86. That is bizarre. We are having to go back to 1985–86 to deal with matters that were fully dealt with by the councils at that time.
  There are now one or two gains for administration for that year, in that authorities could set aside money spent
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  on disaster funds and regional crime drug squads. One question that has been raised with me is the loss of interest on money wrongly withheld during the miners' strike, which affects Derbyshire and Cheshire in particular. Perhaps the Minister will address that point in his reply.
  In the 1986–87 settlement, the increase in the rate of the police-specific grant to 51 per cent. appears to be a gain to local authorities, but in fact it is a reduction of 1 per cent. in the block grant and an example of further centralisation.
  As the right hon. Member for Castle Point (Sir B. Braine) said, the Government determine central expenditure on local authorities in ways which bear capriciously on those authorities. It is strange that the Government determine centrally what is to be spent and then decide which councils have been sinners rather than saints in the administration of those resources. Whose money is it? It is certainly not the local authorities' money, but it is not the Government's either. It is public money, of which elected representatives are simply the trustees. We must consider who should be the real trustees and determine what expenditure is realistic, and where the blame lies if blame it be, or where the commendation lies if people in local government have behaved with due circumspection and attention to the balance between services and economy.
  The Government's cynicism and arrogance are reaching staggering proportions. They fix the rules centrally, they determine appropriate levels of expenditure centrally, and then they fix the penalties centrally. Finally, they castigate the councils against which they are determined to discriminate. It is reprehensible that the Government should cynically take that attitude, giving no recognition to the fact that they have caused the local authorities' problems.
  I compare that action with the attitude of the Minister of State. I disagree with him, just as Labour Members disagree with his policy, but at least we get the feeling that he understands what he is doing. The Secretary of State never gives the impression that he has a clue what he is doing. That is a great problem. His short speech today failed entirely to address the reports that he was introducing. He used his entire speech to castigate and blame the Opposition for what is his responsibility.
  In Committee on the Local Government Bill, the Minister and other Members have been grappling with the analogy of whistle blowing, as if we were discussing some kind of football match. We have enjoyed the analogy, but to fix the rules and penalties centrally is rather like the Secretary of State saying that the home team will always have 13 players and then blaming the away team for losing. Those who have lost have done so because of the Government's policies, not because of decisions taken locally in the county councils.
  Let me take some examples. In three neighbouring councils in Sussex, arbitrary assumptions about spending have meant that the Conservative-controlled council of Hove will receive from the Government £67·30 per resident, the Conservative-controlled district council of Worthing will receive £36·66 per resident, but the alliance-controlled council of Adur will receive precisely £11·86 per resident, yet the councillors in Adur are castigated for putting up the rates. If the Government determine what revenue will accrue to the district councils, it is monstrous for them to accuse councillors of being responsible for a high rate rise.

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  Again, the Secretary of State made great play of the results of rate fixing in the counties for 1987–88, but he failed to relate the variations that have occurred within the different bands of local authorities under different party control. For example, he made the point that the Conservative-administered county councils had a low average rate rise, but that hides the fact that the rate rises have varied from 2 per cent. at the lowest to 17·5 per cent. in Northamptonshire at the highest. That range is mainly caused by the different limitations imposed by the Government and the Secretary of State.
  Sir Trevor Skeet: The hon. Gentleman said that Northamptonshire had the highest rate rise. In fact, Bedfordshire had the highest, at 21·3 per cent. He must get his facts right first.
  Mr. Meadowcroft: If the hon. Gentleman had listened carefully, he would have realised that I was talking about the Conservative-administered county councils. I will come to Bedfordshire later. The hon. Gentleman need not worry about that. I was referring to the different categories mentioned by the Secretary of State.
  The Labour-controlled county councils have a rate rise which varies from as low as 7 per cent. to as high as 12·5 per cent. Therefore, the average may be higher than those in the Conservative-controlled authorities. But then the Secretary of State said that the one jewel in the alliance crown, the Isle of Wight, had a rate rise of 10 per cent. But that is the only authority with an overall alliance majority. Therefore, there is no way in which to balance one council against averages for the others. Again, that is because the Government fixed the limitation centrally. They fix the grant-related expenditure centrally and then castigate us.
  When we come to those authorities with minority administrations, we find a very different state of affairs. The county councils with a Labour minority administration have a 6·5 per cent. average rate rise, those led by the alliance a 7·75 per cent. and those led by the Conservatives a 9·5 per cent. increase. It is ludicrous, therefore, to relate those figures to one another in the way that the Secretary of State did.
  The Secretary of State was also selective. If one party opts out of its share of the administration and there is no overall majority on a council, it is ridiculous then to complain about the rate-fixing thereafter. The interesting fact about Bedfordshire is that the Conservatives opted out of any responsibility for controlling the county. If they are not prepared to negotiate and make their case for the rate levels that need to be fixed, it is wrong for the hon. Member for Bedfordshire, North (Sir T. Skeet) to complain.
  Sir Trevor Skeet: The Labour party wanted a 25 per cent. increase in rates, the Liberals wanted a 19 per cent. increase and the Conservatives wanted only a 10 per cent. increase. The alliance ganged up with the Labour party to increase the figure. That increase is due to excessive expenditure in that area, and the hon. Gentleman should know that. When the alliance has any control in an area, the situation is made much worse.
  Mr. Meadowcroft: The hon. Gentleman rests his case purely on what happened at a council meeting. He should know that for years the Conservative party has opted out of any decision-making. That is the problem. If the hon. Gentleman wants to see the difference in areas where his
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  party has not opted out, he should look at Avon county council. That is one case where we can hand out some credit. There the rate increase is 1·7 per cent., with alliance support. The hon. Gentleman cannot castigate one party alone. If the Secretary of State wants to deal with the mathematics of this and throw figures around the House, he should not be selective; Ile should look at all the different figures in the different councils.
  Let me take one more example to illustrate how ludicrous such central control is. When the Budget debate approached, Somerset county council agreed its expenditure and the amount to be taken from reserve. But then the Conservative party on the council proposed a precept. lower than that then being discussed, of 198p in the pound. That would have meant a revenue deficit of £1 million. In other words, it was proposing precisely what those in Liverpool were surcharged for—planning a deficit on the revenue account. It was not by any means on the same scale, but nevertheless the principle is the same. Such matters cannot be determined centrally in that way.
  Taking flowback out of the consideration has clobbered my city council of Leeds almost as much as any other district council. Of course, I and my colleagues have criticised spending priorities within the limitations in Leeds, but the Labour-controlled Leeds city council, with the agreement of the leader of the Liberal group, has, over the years, set increases at less than the level of inflation.
  If the Government wish to play fair by my city council, as the right hon. Member for Castle Point was saying about Essex, there should be art extra £3 million from the Government just to keep pace with inflation. It is nonsense to castigate councils for increasing rates when the amount coming from the Exchequer has declined, thus forcing up rates.
  The policy proposed by the Government is wrong both in conception and justice. Its key factor is that it separates the power to tax from the power to spend, and artificially translates those decisions from the place where they should be taken. That is not particularly new. Way back in the Municipal Review of May 1974, the city treasurer and director of finance, Mr. Fred Tolson, of my city council wrote:
  "unless some workable RSG system is evolved after due research, giving Exchequer aid related to spending needs and taxable (not just rateable) capacity, local government will decline into mere agency for whatever Government happens to be in office … there is nothing to choose between the two major parties when it comes to imposing a political solution on the complex grant issues of the day, issues that have been chewed over for weary months by officials on both sides of the negotiating table, who are more hampered by lack of hard facts about current levels of expenditure and inflation than by their affiliations."
  That is precisely what has happened. Local government is declining into a mere agency for whatever Government happen to be in office.
  I reiterate what I said earlier. If the Government are right, why on earth cannot they carry the support of their own colleagues within local government? Why has the Conservative leader of the Dorset county council had to tell the Government that they are not living in the real world?
  What has happened to the men of stature in the Conservative party in local government? Where have they gone? What has happened to the Sir Maxwell Entwistles in Liverpool? The Tory party controlled Liverpool city council for 17 years after the war, yet now it is reduced to a tiny group of seven. When I became a member of Leeds

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  city council in 1968, it had 101 Conservative members out of 120, and that was before reorganisation, when it took in more of the leafy suburbs. In the past 20 years, the Conservatives have controlled Islington and Sheffield, albeit briefly. But no one can conceive of them doing so today. The Tory party's men of stature have disappeared from local government.
  Where have the Lord Marshalls or Lord Bellwins of Leeds gone? Today, such men are nowhere to be found. The Tory party hardly exists in the urban areas. It is totally demoralised and one can see its centralising tendency not just in this House, but in local government as well. Now it is Conservatives such as the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) who carry on the battle here for those people from the districts and the older cities.
  Every time the Government introduce measures for local government, they represent a huge vote of no confidence in Conservative councils, candidates and Conservative campaigning. If Labour-controlled local government is so bad, why is it that the Government cannot defeat Labour at local level? If alliance-controlled local government is so bad, why is it that the Government cannot defeat the alliance at local level? The Government set up political targets in local government as a diversion from their lack of policy and lack of understanding—a diversion from the true argument.
  The Government's anger and rage is synthetic. It is about time that they gave up their attempts to control local government—they will never succeed. They can only continue this campaign until the general election and not a day after.
  5.10 pm
  Mr. John Hunt: I am glad to have the opportunity to participate in this debate. The House will appreciate that it has particular significance for my constituency and the London borough of Bromley. Therefore, I propose to confine my remarks to what has become known as the "Bromley error".
  Let me say at once that my borough takes no pleasure in having become part of parliamentary vocabulary. The revised rate support grant figures now before the House follow inexorably from the bombshell that my right hon. Friend the Secretary of State dropped upon Bromley on the afternoon of 5 March. I must tell him that his statement to the House was greeted with horror and disbelief throughout my borough.
  My right hon. Friend will be aware that that statement came just four days before Bromley council's rate-fixing meeting. It meant that, at a stroke, and on the eve of the rate decision, Bromley was deprived of about 6·5 million, which until that moment it had confidently expected to receive.
  Anyone who has anything to do with local government finance will be aware of the protracted and painstaking way in which a borough's estimates are prepared and discussed for many months. They will realise the traumatic impact of a sudden last-minute decision of this nature. The leader of Bromley council, Councillor Dennis Barkway, has rightly referred to it as a
  "crippling additional financial burden"
  As a direct result, Bromley's rate has had to be increased by about 4 per cent. to meet the new circumstances.
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  I am sure that my right hon. Friend will readily concede that, over the years, the London borough of Bromley has established an outstanding reputation for prudent spending and sound administration. I believe that it is one of the best-run councils not only within greater London, but in the country. Therefore, it is especially galling that, through no fault of its own, Bromley must now impose a much heavier burden upon its ratepayers than was forecast. That burden cannot be justified by any test of logic or fairness. It has been a grave blow to Bromley and its citizens.
  I readily concede that my right hon. Friend has no personal responsibility for the situation that has arisen. The House will be aware that the original error, from which all the consequent problems have flowed, was made back in 1985, long before my right hon. Friend came to the Department.
  Dr. Cunningham: The hon. Gentleman keeps on describing this matter as an error, as though some administrative mistake had been made with pencil and paper or the wrong figures fed into the computer. That is not the case. The Government decided on one set of decisions, but they then faced objections from Bromley and others. As a result, the Government decided to do something else. They made a conscious decision to make the change. The Greenwich result in the court forced the Government to return to their initial decision. There was no error—nothing happened by accident; it was the result of deliberate acts by the Government and Ministers.
  Mr. Hunt: I am not sure that I can agree with the hon. Gentleman. In the autumn of 1985, Bromley carried out an analysis of the rate support allocation—of which it had been notified—for 1986–87. At that time, Bromley discovered that, far from taking account of its obligation to maintain 60 miles of metropolitan road that it had inherited from the GLC, the grant had been reduced. I maintain that that was an error rather than a policy decision. The commendable efforts that have been made by the Government to put that glaring error right have led to the further complications.
  With all the sophisticated computerised equipment available to the Department, one wonders how an obvious mistake of this magnitude could possibly have been made and, once made, have gone undetected. We can only hope that the official responsible is no longer in his post. If there was ever a case for dismissal or demotion, surely this is it. One can only devoutly pray that the official in question will never be allowed within a thousand miles of the draft legislation for the abolition of domestic rates.
  Mr. Jack Straw: The hon. Gentleman is known to be a reasonable man. I put to him that it is an important constitutional convention that Ministers, not officials, are responsible and answerable for decisions. Does the hon. Gentleman deny that it was Ministers who agreed the original approach to the allocation of grant-related expenditure previously held by the GLC?
  Mr. Hunt: I am merely saying that the calculations were presumably made by an official and that a mistake was made in those calculations that was not brought to the notice of the Ministers until a late stage. Once Ministers were aware of what happened, they took immediate steps to put the matter right. Those actions have since been challenged in the courts; hence the impasse that we have reached today.

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  My right hon. Friend will recall that, in the exchanges that followed his statement to the House on 5 March, I referred to the "clearest commitments" that had been given to me by Ministers. On 6 March last year, hon. Members may recall that I tabled a written question asking the Secretary of State for the Environment whether
  "he can now say how he proposes to deal with the issue raised by the London borough of Bromley regarding the level of grant payment for the upkeep of the highways to be transferred from the Greater London council to Bromley after abolition."
  My hon. Friend the Minister for Environment, Countryside and Planning outlined the way in which he intended to deal with the matter and categorically stated:
  "These changes will mean that Bromley will receive the proper amount of grant for taking over responsibility for highway maintenance in Bromley from the GLC."—[Official Report, 6 March 1986; Vol. 93, c. 280]
  Nothing could be clearer. That is why Bromley council is now so bitter about what has happened. The leader of Bromley council takes the view that, in the light of the Greenwich judgment, Ministers should simply have increased the size of the rate support grant pool and made a compensatory payment to Bromley. However, I recognise that that would have been extremely difficult and might have created further problems with the courts. On balance, therefore, I consider that it is preferable to await the result of the appeal.
  My right hon. Friend the Secretary of State is firmly on the record as saying—he said it again in the House today—that he regards the result of the High Court decision as inequitable. I certainly hope that the somewhat eccentric judgment will be set aside in due course. I wish my right hon. Friend and his lawyers every success in that endeavour. Perhaps my hon. Friend the Minister will give some sign of the likely time scale in the matter. The ratepayers of Bromley and Bromley council are anxious to have the matter resolved at the earliest possible opportunity. I hope that my hon. Friend will do whatever he can to speed up the legal process. We do not want the matter to drag on for months.
  Perhaps my hon. Friend will also confirm the anticipation that was expressed in a letter that I received yesterday from the Chartered Institute of Public Finance and Accountancy, to which the hon. Member for Copeland (Dr. Cunningham) also referred. In part, the letter states:
  "if the Secretary of State is successful in his appeal against the Greenwich decision, a further set of proposals may be put forward for 1987–88."
  Naturally, in spite of the sneering remarks made by the hon. Member for Copeland earlier in the debate, such an outcome would indeed be satisfactory from Bromley's point of view. It again underlines the immense difficulty that such continual shifts and changes in grant allocation create for local authorities. As the hon. Member for Copeland pointed out, no fewer than four consultative papers in respect of the 1987–88 settlement have been produced. An allocation on 3 October 1986 provided Bromley with £51.91 million. The allocation on 3 December 1986 gave it £53.96 million. Another allocation on 13 January pushed it up marginally to £54.1 million. On 5 March, the body blow came when the allocation was cut to £50.87 million.
  The letter from CIPFA states:
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  "Central government often stresses the need for better administration. Local government is entitled to expect central government to help rather than hinder the achievement of that objective."
  I hope that message will be learned and digested by the Department of the Environment, so that we shall never again have to go through the agony and uncertainty of the past few months that have created much heartache for my right hon. Friend.
  I pay tribute to the most courteous way in which my right hon. Friend has received representations from the four hon. Members whose constituencies are in the Bromley area. It has been a trying time for ratepayers and for the London borough of Bromley. I share my right hon. Friend's hope that the matter will soon be satisfactorily resolved, to the benefit of my borough.
  5.23 pm
  Mr. Eric S. Heffer: One thing about which I am pleased is that I have not been a member of a council for the past few years. Because of the incompetence of the Government and the Secretary of State for the Environment, problems have consistently arisen at local level which could and should have been avoided.
  I have a great deal of sympathy for the chairman of the Bromley council finance committee, as I do for all people on finance committees of various councils who have faced problems arising out of the Government's attitude. Local authorities have been thrown into total uncertainty. For example, there were six separate announcements on the 1987–88 rate support grant and five sets of grant entitlements were issued.
  The Association of Metropolitan Authorities has given me a good briefing and perhaps the facts should go on the record. On 22 July 1986 a Department of the Environment consultation paper was produced on the 1987–88 rate support grant. In October 1986 a further Department of the Environment consultation paper with provisional grant entitlements for 1987–88 was issued. On 3 December 1986 a third consultation paper, showing revised grant figures as a result of better information being available, was released. On 13 January 1987 the Secretary of State announced his firm intentions and the grant figures were again revised. On 23 February 1987 the Department of the Environment advised authorities that the grant figures issued on 13 January were incorrect because of an error in calculating the grant-related expenditure for housing revenue account, and revised figures were issued. On 5 March 1987 the Secretary of State announced that he was changing grant entitlements vet again because of the implications of the Greenwich court case.
  Over the same period there have been major legislative changes in the operation of local government finance. I refer to the Rate Support Grants Act 1986 and the Rate Support Grants Act 1987. The calculations were made illegally and legislation was required to make them legal.
  Just over a week ago 47 Liverpool Labour councillors were disqualified from holding office and are now being surcharged. Their crime was that they were late in setting a rate. They were faced with the terrible problem of interest charges that amounted to £106,000. Now they are faced with an additional bill of about £500,000. Of course, a certain number of legal people will do rather well out of it, but the fact is that the councillors are disqualified.
  The Secretary of State presented hon. Members with three documents on local government in England. He is

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  not criticised. Nobody is surcharging him. The hon. Member for Ravensbourne (Mr. Hunt) mentioned millions of pounds, the location of which Bromley council did not know. Will the Secretary of State be surcharged for the millions of pounds involved? Will he be disqualified from holding a place in the House of Commons? As a matter of fact, he is one of the Prime Minister's favourite Ministers. I am not surprised. He has done more damage to local govenment and to bus operations than any other Minister. He is an absolute disgrace. I would not only disqualify him; I would kick him out of the House of Commons right now. He should be kicked out. Those who support him should also be thrown out of the House of Commons.
  The terrible crime of the people of Liverpool is that they did what they said they would do. They said that they would build houses for the people. They have done so. They said that they would keep down the rents of those who live in local authority houses, and they have done so. They said that they would build nice sports centres to take the youngsters off the streets. They have done so. Of course they got into financial difficulties, but the reason was that since this Government have been in office the rate support grant has been reduced by over £350 million. I agree with my hon. friend the Member for Copeland (Dr. Cunningham) that the cuts apply to every local authority, but I am dealing with Liverpool and the problems that it faces.
  I am not surprised that the Secretary of State for the Environment is leaving the Chamber. He never likes to listen to the truth. He is one of the most abusive Ministers. Whenever hon. Members want to tackle him about anything, his answer is to get up and walk out of the Chamber. I am not surprised. I wish that he would walk out for good. It would be very good for this country.
  The Liverpool councillors have their counterparts in Lambeth. Lambeth councillors also fought for the people of Lambeth, yet one of the biggest disasters that this country has ever known, the Secretary of State for the Environment, is allowed to go scot-free. This is an absolute disgrace. With his free market philosophy and his narrow sectarian outlook, it is no wonder that he is one of the Prime Minister's favourites. I say again that he ought to go.
  Since 1979, the rate support grant has been reduced throughout the country, but particularly in the large cities. Those who live in the inner cities, particularly where there are high levels of unemployment, as in the north, have suffered considerable hardship. Although the services in those areas are stretched to the limit, the needs of the people who live there are being disregarded. Their needs are great. People require houses but there are long waiting lists. The result is overcrowding. Areas such as mine need additional support, but they are not getting it.
  When Liverpool went to the Government, all that it asked for was the £30 million that represented part of what it had lost because of the cut in rate support grant, but it did not get it. Why was it that the first thing that the temporary minority administration in Liverpool did was to ask the Government for £30 million? It did it because Liverpool requires that money. Additional grant aid is needed by areas with high levels of unemployment and with the problems that are caused today by life in the inner cities.
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  The rate support grant settlement ought to be based on an analysis of social and economic needs. This settlement does not even begin to do that. It is neither effective nor fair. The Government constantly tell us that local authorities are high spenders. The same record about profligate local authorities was played today, but local authority expenditure has not .been as great as Government expenditure since 1979.
  Local authorities are entitled to money for their housing investment programmes. Liverpool's housing investment programme for 1985–86, 1986–87 and 1987–88 has been cut by 9·8 per cent., but housing is required on a greater scale than ever before. In 1985–86 the HIP allocation was £31 million and in 1986–87 it was £27·5 million. For 1987–88 it is £24·8 million. That demonstrates this Government's attitude towards areas where there is high unemployment and where there are problems of the kind that are faced by Liverpool. The local authorities have not been irresponsible. It is the Government who have been completely irresponsible.
  Even if the next election is not in June or September, this Parliament will not last for very much longer. We are at the fag end of it. After the next general election, Conservative Members, in diminished numbers, will be sitting on this side of the House. [Interruption.] Many people do not believe that; they believe what they read in the newspapers. I do not believe what I read in the newspapers. I believe what I hear when I talk to my constituents and to other people.
  The days of this Government are numbered. When they have been removed from office, a Labour Government will have to introduce a completely different rate support grant system. We shall have to get rid of what I can only describe as the abortion that has been introduced by this Government. We shall have to abolish the terrible system that has been forced upon us by them. Large-scale investment in housing will be needed. Housing construction will be the way to get our people back to work, particularly in the areas of greatest need.
  After the local government elections in May, local authorities should be asked to draw up their plans for housing and other needs so that the new Labour Government will know what local authorities require and what money will he needed so that they can get on with the job. I should like a conference to be held in my area at which the local authority, Government Departments and the trade unions could discuss what is needed. When a Labour Government are returned to power, the rate support grant system will he scrapped and we shall assess the social and economic needs of each area.
  In my opinion, the Secretary of State for the Environment should go. He has the anti-Midas touch. Everything that he touches does not turn to gold; it turns to ashes.
  5.39 pm
  Mr. Timothy Wood: The hon. Members for Copeland (Dr. Cunningham) and for Liverpool, Walton (Mr. Heffer) seem to have forgotten that it was a Labour Secretary of State who first expressed major concern that local government expenditure had risen to unacceptable levels. It is fascinating how these matters are forgotten when a party is in opposition. The hon. Member for Copeland seemed anxious to defend the wholly irresponsible expenditure of some authorities. One of the problems in terms of local authority finance is that a

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  significant number of Left-wing Labour authorities have spent, spent and spent. Their failure to control expenditure has created problems for the mass of local government.
  Mr. Meadowcroft: I hold no torch for the policies of the councils to which the hon. Gentleman is referring, but why, if they are so bad, are he and his colleagues unable to defeat them locally? Why is it that in Manchester, for instance, the proportion of the Conservative vote has declined to about 20 per cent.? If Conservatives are failing locally, why should they expect help from big brother in Westminster?
  Mr. Wood: I intend to come to that point later in my speech. However, let us be quite clear why that is so. It is because only a small minority of the electorate in that area are cost losers as a result of the way in which they vote. If many people are employed by a local authority, if many people are not paying rates for one reason or another and if large amounts of money are coming from business, commerce or rate support grant, it is hardly surprising that the electorate is biased in its judgment.
  Mr. Meadowcroft: If that were true, why is the alliance in Liverpool able to outvote Labour by policies put forward in contradistinction to the spending policies of the Labour council?
  Mr. Wood: I am interested to know that the alliance has, in general, been outvoting Labour. My understanding is that the arrangement in Liverpool at the moment—in some ways, sadly—may not be permanent.
  Many of the problems which have beset local authorities over the past 10 years or more were perceived not just by the Conservative party but by the Labour Government when they were in power. That Labour Government did not succeed too well in controlling some of the madcap spending of local authorities, and it must be said that this Government have also had difficulty.
  Mr. Terry Patchett: Did that Labour Government spend money on building council houses?
  Mr. Wood: That Labour Government did build council houses. Indeed, they reduced the number of council houses being built each year.
  I shall discuss some of the aspects which are peculiar to the rate support grant in terms of Hertfordshire. I am particularly grateful for the careful hearing that the Minister of State gave to hon. Members and county councillors from Hertfordshire. He agreed to look at the particular problems of the county. He did more than provide tea and sympathy; he did something about those problems and improved the rate support grant.
  Mr. Richard Page: My hon. Friend is carrying the Hertfordshire banner in the debate, but is it not true that that was the first time that any Minister had listened to any of the Hertfordshire pleas for help over the last five or six years? We are exceedingly grateful to my hon. Friend the Member for Brent, North (Dr. Boyson) for his kind consideration and his realisation of the problems of reducing the rate support grant in Hertfordshire.
  Mr. Wood: I am grateful to the Minister of State. My attitude to making representations to Ministers is that if at first one does not succeed, one should try, try and try again.
  Mr. Straw: Will the hon. Gentleman confirm that, for every one of the previous five years, Hertfordshire Conservative Members have been shown the door and told no by Conservative Ministers?
  Mr. Wood: I shall not confirm anything of the sort. If my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) makes his own speech in due course he may be able to develop that particular point. I have represented my constituency since 1983 and when I have been to see Ministers I have been given sympathetic hearings. I am glad to say that when we effectively and forcefully presented our case on this occasion, it was heard and accepted.
  When counties have been pursuing a policy of relative moderation in terms of expenditure, those local authorities have a right to expect that the rate support grant and financial support from the Government will remain satisfactory.
  It is necessary, in considering local government expenditure, for the local electorate to be able to perceive that a responsible local authority is able, as a result, to provide a low rate for people in that area. Where that does not happen the electorate have every right to be discontented and their representatives have even more right to be discontented. I am grateful for the review that was carried out of the rate support grant and for the changes that were made in safety nets and so on.
  I should now like to pursue what the prospects may be until we get the major change in local government finance that we hope to see after the general election. It would be disturbing for local authorities if they found that the rate support grant movements in the intervening years, prior to major changes in local government finance, were adverse in an unfair way. Therefore, I ask the Minister to pay particular attention in the coming two or three years to the situation that may apply to counties such as Hertfordshire, Surrey, Buckinghamshire, Berkshire and Essex, and ensure that the rate support grant position does not deteriorate in a way that would be contradictory to the situation that may exist after the change in the financing of local government.
  The difficulty is that, in terms of the rate support grant system that we now have, the principle is sound. It endeavours to make some tolerably objective measures or need in different areas. The previous system of rewarding high spenders with more grant needed replacement. That is all right so far in terms of principle; it is when we come to the practice that the difficulties arise.
  The rate support grant system—this has been said by a multitude of people before—is incomprehensible to almost everyone. It is incomprehensible to nearly all hon. Members. It is incomprehensible to all councillors. I believe that it is incomprehensible to 99·9999 per cent. of the electorate. I deliberately use six significant figures, just as we have six significant figures or more in so many of the measures of need that we see in the local government finance document appendices. Et is absurd that multipliers of various items of expenditure should run to that number of decimal places. Like the hon. Member for Copeland I was involved in science. If one conducted an experiment that was accurate to only one or two decimal places, it did not matter how good the computer or calculator was because to come up with an answer accurate to six, seven or eight decimal places was grotesquely misleading, confusing and unhelpful.
  Mr. Richard Page: Does my hon. Friend agree that in Hertfordshire there is no calculation about the ability of the ratepayers to pay? The average income of the people of Hertfordshire is not at a level to justify the high rates that will ratchet up year by year and increase the demands on ratepayers' pockets.
  Mr. Wood: My hon. Friend is right. Many of the figures presented in the tabulations before us have an apparent accuracy and objectivity that is wholly false because, quite reasonably, a variety of political judgments have been made about which things should be regarded as significant and which things should be left on one side.
  I was involved in local government and I remember a debate on the magic item E7, which relates to notional housing revenue account surplus. The decision about that item was that where local authorities charged rents that were low relative to their localities, they might be expected to transfer sums to their general revenue account. As a result, the rate support grant could be lower. The amount that followed from that move could, for some local authorities, be several million pounds. Quite rightly, the way that item was handled was changed and the change affected the support grant received by some local authorities by well over 50 per cent.
  To say, on the one hand, that we can have changes for justifiable political reasons that have an effect of 50 per cent. or more on the rate support grant that a local authority receives, and, on the other, that figures should go down to six or seven decimal places is the height of absurdity. When one reaches that number of decimal places, one can be certain that the tabulations will be placed at the bottom of a file because people will not understand them and, more significantly, the electorate will not understand them.
  If the electorate do not understand the basis on which local government finance applies, they may make rather ridiculous decisions about the merits or otherwise of local government candidates. The system must be simple and straightforward. It must also allow for a reasonable constraint on expenditure. In an ideal world, that constraint should be exercised at the wish of the local electorate rather than necessarily at the behest of central Government.
  Because of the complexities of the present rate support system and the inadequacies of local government finance in terms of who pays, we have been forced into a system where, year by year, the Government have repeatedly tried to introduce alternative means of controlling quite excessive expenditure. The Government's efforts to control that have not worked very well, because the irresponsible have continued to be irresponsible, except in cases where, because of rate capping, they have been obliged, at least to a certain degree, to toe the line.
  Mr. Richard Page: I apologise to my hon. Friend for intervening again. I promise that this will be the last time.
  Mr. Deputy Speaker: Order. Interventions should be addressed through the Chair to the House and not to the hon. Member who is speaking.
  Mr. Page: Does my hon. Friend agree that the position is even more disastrous? In Hertfordshire, some houses are cheek by jowl with houses in the London area. Authorities in the London area that are guilty of extreme over-expenditure are given a weighting in favour of their rate
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  support grant to give them more money. Herfordshire, which has the same problems, is then penalised. Is that not a further injustice in the system?
  Mr. Wood: It is a grotesque injustice that in the London area there is effectively a 25 per cent. allowance from which the home counties do not benefit in any way. For exactly equivalent services one could pay considerable lower rates in a council adjacent to Hertfordshire or one of the other home counties. That is quite unreasonable.
  In Hertfordshire the rates levied on the average person are approximately 30 per cent. higher than the national average, but the incomes of people in Hertfordshire are about 12 or 13 per cent. higher than the national average. Again, that is a massive injustice which has been provided for in London but not in the home counties. It is one of the things that hon. Members for Hertfordshire constituencies have campaigned about for years, with singular lack of success.
  These issues of discontent lead me to speak about future prospects. I welcome the prospect of a change to the community charge and to a uniform business rate. Even more, I welcome a simplification of the rate support grant system. It is perfectly reasonable in the financing of local government to provide a community charge system of paying. As has been said, the vast number of services provided by local government are related to people, not to the properties that they occupy. A very small percentage of such services relate to property. Therefore, the proposals to introduce a community charge seems wholly reasonable.
  It is also reasonable to have a level community charge rather than to have an alternative, such as a local income tax, because it is appropriate that the redistribution of incomes implicit in income tax should be on a national rather than a local basis.
  Mr. Straw: Does the hon. Gentleman think that there should be any rebate within the poll tax for people on low incomes? If so, at what level does he think it should start?
  Mr. Wood: I support the view that for those on very low incomes there should be a rebate which will allow perhaps 20 per cent. of the charge to be paid by the individual and 80 per cent. by the rebate. That seems a reasonable sort of balance because it makes the individual aware and conscious of the costs of local government and the relatively high costs of some local authorities compared with others and does not impose an unreasonable burden on people on low incomes. That is a perfectly acceptable protection for those with particularly low incomes.
  There is a strong case to be made for a uniform business rate. In the Liverpools and Newcastles, the rates being charged are such as to deter businesses from going to the very places where there are masses of people desperately seeking work.
  Mr. David Clelland: Where is the hon. Gentleman's evidence that businesses have been deterred by the rates from setting up in places such as Newcastle?
  Mr. Wood: I have no statistical evidence, but I have the evidence of business men who have spoken about rates and told me that, when they are contemplating a move, one of the major factors that they take into account is the level of rates. I know of one or two businesses that have expressed concern, when they were thinking about moving to my local authority area, about the relatively high level

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  of rates there, and in one or two other districts in the county of Hertfordshire. They have told me that that is one of the judgments that they make. I see no reason to disbelieve them.
  It would he false logic to assume that if the rates charged for businesses in, say, the Wokingham area were about half those charged in, say, the Newcastle area and one had the advantages of, say, Heathrow, people would choose to go to Newcastle rather than to Wokingham. If they had the combination of the benefit of lower rates and the convenience of an airport, other things being equal, they would go where the lower rate is. That is obvious, but we have the tragedy of many local authorities deterring businesses, and businesses may not bother to go there to have a discussion on the subject because they can see figures and statistics on the rates.
  Mr. Neil Thorne: I fully support my hon. Friend in his assessment that high rates deter businesses from opening or continuing in a particular area. However, might there not be a little difficulty when the new community charge comes in if the commercial rate is dealt with on a national rather than local basis? Will that not take away many of the advantages that businesses have of going to well-managed areas? Should we not encourage the Government to consider relating commercial rates to the locality in which they operate, and not doing this on a national basis?
  Mr. Wood: I hope that the people working in the businesses in various areas will, because of their community charge, put pressure on the local authority to operate economically. That seems an appropriate way to move. Although businesses and commerce now have a right to be consulted on the way in which local authorities are spending their money and the way in which they are going to place their rates, nevertheless, sadly, the influence that businesses and commerce have on the rates is minimal. I wish that it were otherwise. On the other hand, the impact that the community charge will have in terms of causing people to endeavour to influence their local authority will be much greater.
  As I have already said, both those things depend on a simplification of the rate support grant system. The proposals for a removal of some of the penalty arrangements seem to me to be wholly desirable. While I can understand the reasons for those penalty conditions being introduced, I believe that they serve to confuse rather than help the electorate in their judgment of the merits of a local authority.
  We have heard much today about reductions in rate support grant. Some of those reductions have followed from budgeted over-expenditure so that increased local expenditure has been combined with reduced rate support grant, and the local authority has blamed the increase in the rates on the reduction in rate support grant. The electorate become confused and the council becomes less accountable, when the whole objective of our moves on rate support grant and the financing of local government must be to make a council much more accountable.
  I hope that, in terms of the assessment of need for local authorities, we may be able to simplify the number of items that we take into account in assessment and simplify the numbers associated with those items that we take into account. I hope, too, that we make a presentation of the whole system of finance that is understandable to
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  Members of Parliament—it should be, but it is not—to local councillors and, perhaps most important of all, to the electorate. If I showed these documents to a member of the electorate, he would either laugh or cry, because he simply would not understand half the words.
  I welcome the rate support grant settlement that has been made for Hertfordshire. I welcome the fact that my hon. Friend the Minister and the Government paid attention, as they said they would, to the representations that were made by councillors, Members of Parliament and others. I urge the Government to give careful consideration to the rate support grant position in the interim years before the next Conservative Government change to the new system, so that counties such as Hertfordshire are not disadvantaged. I urge, yet again, that in the new system that we introduce the rate support grant mechanism is made simple and clear to all.
  6.7 pm
  Mr. Max Madden: We have come to this debate after eight years during which the Tory Government have launched a bitter and sustained attack on local democracy. We have seen the Government abolish metropolitan county councils, cancel elections and manipulate local government finance, with councillors disqualified and surcharged. In the absence of anything to say about the pressing social and economic problems in many parts of the country, the Government have taken refuge in making the most malicious and scurrilous attacks on many councillors—men and women who are desperately trying to serve their electorate and do something about the urgent social and economic needs that they see around them.
  In Bradford, the Government and their policy, which is centralised to a breathtaking extent, have robbed us of £70 million over the past seven years. This is despite the Government's measure of need, saying that Bradford needs to spend this money to provide services for its growing population. The Secretary of State makes considerable efforts to establish the spending needs of all local authorities, the grant-related expenditure assessment, to provide a basis for supporting rate support grant.
  Those spending needs—GREs—are determined in accordance with criteria applicable to all local authorities according to the statutory functions for which they are responsible. The rate support grant is then calculated by relating those needs to a local authority's rateable value.
  In the past, multipliers have been used by the Secretary of State to limit the amount of rate support grant payable by reference to other criteria. Thankfully, the Secretary of State has abandoned the grossly unfair system of expenditure guidance controls. However, the use of the multipliers still enables the Secretary of State to fiddle the figures in an even more unfair way. Because rate support grant is related to GRE and rateable values, the amount of grant can be affected by increases or decreases in GREs which reflect increases and decreases in a local authority's needs and increases or decreases in a local authority's rateable value.
  The Secretary of State is using the multiplier under the power available to him under section 59 of the Local Government, Planning and Land Act 1980, as amended, to limit any reductions in the amount of rate support grant to certain authorities for 1987–88, compared to the grant payable in the current financial year. In effect, the Secretary of State is subsidising those authorities which

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  have either decreasing needs or increasing rateable values. In practical terms, those local authorities are getting more rate support grant than they necessarily need in relation to their GREs and rateable values.
  The Secretary of State has belatedly decided to apply a multiplier to limit the increased grant for 1987–88, compared to the current financial year, due to those authorities with substantial increased needs or substantially decreased rateable values. Substantial decreases in rateable values do not happen and, in effect, the multiplier affects only those authorities with major increased needs. However, the multiplier penalises those authorities, in that they do not get the grant to which their GREs would otherwise entitle them.
  The operation of the two multipliers is fundamentally different in effect. In the first case, the multiplier provides an extra subsidy for those authorities which, if the Secretary of State firmly applied his needs criteria, would not otherwise get it by reference to their GREAs. In the second case, it is a penalty, penalising those authorities which clearly need the grant, having regard to their needs criteria fixed by the Secretary of State. The overall effect is to deny an element of grant needed by the poor authorities to provide a more comfortable cushion for those authorities which, on the Secretary of State's own criteria, already get their full grant entitlement. It is a classic case of robbing the poor to pay the rich.
  Mr. Wood rose—
  Mr. Madden: I would prefer to continue, particularly as the hon. Member for Stevenage (Mr. Wood) made a long contribution. I must say, my contribution is not going to be brief.
  How can the Secretary of State, committed to a platform of relating rate support grant to local authority needs, justify providing some local authorities with additional grant when they are already getting their full grant entitlement in relation to their needs, and, at the same time, take grants from other authorities so that they do not even get their entitlement in relation to their needs? The true answer is that the Secretary of State was leaned upon by those councils losing grant by reason of decreasing needs or increasing rateable values, their representations being supported by their respective Tory Members of Parliament concerned about their seats and electoral prospects.
  Therefore, between October 1986 and December 1986, the Secretary of State changed his mind. He drew back from the fair principle of giving rate support grant where it is needed. Instead, he compounded the felony of his predecessors by manipulating the system for political ends. Why did the Secretary of State change his mind?
  Mr. Wood rose—
  Mr. Madden: It is no coincidence that the authorities suffering grant reductions under his October 1986 proposals were Tory marginals. Bradford, Birmingham and a few other authorities with pressing increased needs had grant taken away from them to enable those frightened Tory marginals—Surrey, Hampshire, Hertfordshire, Bedfordshire and Oxfordshire—to get bonus grant, presumably in the hope of buying Tory votes.
  In the October 1986 proposals, the Secretary of State identified for Bradford £146·2 million of block grant—
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  for spending at settlement expenditure assumption. In the December and January proposals, that figure is reduced to £138·4 million, taking into account an adjustment of the council's GRE. Some £10 million potential grant was taken away from Bradford, despite the clearly identified needs of Bradford, to pay for the Secretary of State's extra cushioning to the wealthy southern counties. The Secretary of State teasingly waved that £10 million grant in front of Bradford, recognising Bradford's needs, then took it away. That joke on Bradford is compounded in its bad taste by the money being given publicly to wealthy southern authorities.
  There is a legal argument to suggest that that manipulation of grant is a misuse of the Secretary of State's powers. Furthermore, the Secretary of State is departing from the long-established principles of his Department, of treating all local authorities evenhandedly. It is not surprising that the Secretary of State is anxious to obtain legislation preventing challenge of his decisions before the courts. What was once a carefully devised system of allocating central Government money to local authorities in an even-handed way has now become a means of the Secretary of State manipulating grants to get votes.
  Is the Secretary of State aware that, in applying the multiplier-limiting rate support grant increases, he is forcing the affected councils either to fail to perform their statutory functions to meet the demands on those functions—which demands are clearly recognised by the Secretary of State in his own grant-related expenditure assessments — or to impose a greater burden on ratepayers than other authorities to enable those needs to be met? How can the Secretary of State demonstrate that this is an even-handed support grant distribution, when such inequities are fundamentally apparent? Will the Secretary of State give any assurance that these artificial manipulations will not be used in future years?
  Will the Secretary of State not come clean and state publicly that what he really wants to achieve by his successive changes in the legislation is absolute and unchallengable arbitrary control to determine, in whatever way he wishes, in his absolute discretion, what amounts of rate support grant should be given to each local authority, without reference to any principles or criteria applicable to all local authorities.
  I have referred to the fact that in the past seven years Bradford has been robbed of £70 million. The situation in our city is desperate. During the period 1980 to 1986, Bradford's total rateable value has increased from £42·9 million to nearly £46 million. However, that figure hides the fact that, during that period, the rateable value of industrial undertakings has fallen from £6·1 million to £5·7 million. If the rateable value from those properties had still been at the 1980 level of £6·1 million, Bradford would be receiving £900,000 more in rates income in 1987–88 than it will be receiving. That means that £900,000 extra block grant will be going to Bradford which, if the industrial base had been maintained, could have been redistributed among all the authorities.
  Since 1980 Bradford has lost £3 million in rates income from a number of major industrial concerns. Salts (Saltaire) Ltd. was empty from 1 April 1986. Its rateable value was £76,000. International Harvesters is now demolished and that had a rateable value of £75,000. GEC is part-demolished and its rateable value was reduced by £48,000. Crofts Gear Works is part-demolished and its

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  rateable value was reduced by £44,000. Bulmer and Lumb is part empty and its rateable value was reduced by £48,000. Alston Works is now demolished and its rateable value was £40,000.
  That shows the contraction of our industrial base, which has put between 30,000 and 35,000 men and women on the dole. The £70 million of which we have been robbed during the past few years has paid for tax cuts for the rich. The Government have done that again in their latest Budget, which is an insult to those who are unemployed and to the problems in our city.
  The alternative that the Government now dangle before us in the form of a poll tax—or, in their terms, the so-called community charge—presents prospects that are far from happy for my constituents and for the other citizens of Bradford. This week, the Minister for Local Government let the cat out of the bag. He issued information showing the effect of the poll tax on Bradford. He stated:
  "For the average two-adult household in Bradford, the community charge is likely to be about 20 per cent. higher than existing rates bills. Even so, on the basis of 1986–87 spending, the community charge would be less than £200—below the national average. The increase largely reflects the fact that domestic rateable values are so low at present. This means that Bradford ratepayers have been paying less than those elsewhere for the same level of service."
  On non-domestic rates, the Minister said:
  "Businesses in Bradford will gain considerably from the introduction of a national rate. On 1986–87 figures, there would be a reduction in poundages of over 20 per cent. … In total, non-domestic rate payers will save around £15 million a year in Bradford and nearly £60 million in West Yorkshire as a whole. That is very good news for existing businesses and for anyone thinking of setting up business in the area."
  Once the Prime Minister gets word of that candid admission from the Minister, and once Mr. Ingham is alerted to the fact that those interesting revelations have been made, I fear for the hon. Gentleman's future because he might find himself back in Northern Ireland. His comments about the unfavourable impact that the poll tax will have on the citizens of Bradford — if the Government are given an opportunity to introduce it—will make extremely interesting reading for my constituents.
  Mr. Straw: My hon. Friend has just informed the House that the Minister has stated that the poll tax would be about £200 per head in Bradford, and that that represents a 20 per cent. increase. As the average domestic rate bill in Bradford last year was only £251, does that not mean that the local tax bill for the average two-adult household is likely to rise from £251 to £400, which is far more than a 20 per cent. increase?
  Mr. Madden: Yes, that is likely to be the case. I shall certainly be interested to hear any further comments about those revelations when my hon. Friend replies to the debate.
  On Tuesday, there was an interesting article in The Guardian, headlined,
  "Material to bridge the great divide: Christopher Haskins suggests ways to narrow the North-South gap".
  In a most perceptive and persuasive article, Mr. Haskins who is the chairman of Northern Foods, called upon the Government to marshal their resources and priorities to lessen the gap between the north and the south. He said clearly that unless that was done, the position would deteriorate sharply and that the difficulties of allowing
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  disadvantage and deprivation to continue to worsen in the north would cause acute economic and other difficulties for the south. That is absolutely right.
  Mr. Haskins concluded his article by stating:
  "London and the South-east continue to be a source of inflationary pressure in the economy as too many people pursue too few houses. If the pressure continues, industry in the South-east will suffer from higher and higher wage costs. But if the green belt is eased, to allow the building of more houses, the environment of the South will suffer. Either way, the South will become a less pleasant place to live.
  There are many things we, as northern businesses, can do to help—by not moving our headquarters to London for a start—but only society, through government action, can radically change the position. And it must do so not so much out of altruism, but rather out of enlightened self-interest. It is in the South's interest that the North is a success."
  I agree with that view. Since returning to the House in 1983, I have tried to do what I can to persuade the Government to act on an interdepartmental basis and to marshal the resources and priorities that are available to them to help my city and the others that are enduring the same plight.
  Unlike those of the hon. Member for Stevenage, my appeals have met with a wholly negative and unhelpful response. Twice in the past 12 months, I have asked the Prime Minister to meet a deputation of representatives covering a wide spread of interest in Bradford. Those requests have been refused. I have also asked the Secretary of State for the Environment twice in the past 12 months to meet a deputation from Bradford to discuss our problems. Those requests also have been refused. The only meeting that I have had was with the Minister, who was good enough to meet a deputation from the West Yorkshire passenger transport authority, which wished to discuss the difficulties of deregulation and the precepts and grant allocations that it faced. We have not had even a dialogue with the deaf with this Government about the problems that we face in the north.
  Mr. Chope: Does the hon. Gentleman accept that the implementation of the national non-domestic rate would reduce the rates burden on businesses in Bradford by about 24 per cent.? Does he accept that that positive step by the Government will help the people of Bradford?
  Mr. Madden: As my hon. Friend the Member for Blackburn (Mr. Straw) has suggested, a revaluation would have the same effect. However, that is an attempt to divert me from this argument.
  I charge the Government with a deep uncaring complacency about the problems of the men, women and children in the north, who are desperately worried about their future and concerned also about the present. Tonight in Bradford, in 30,000 houses, people will go to bed in homes that need serious renovation. There are 8,000 people on the council housing waiting list and hundreds of families are homeless. Thousands of people who live in poor private accommodation are being harrassed and face great difficulties. However, only a few weeks ago we saw the payroll vote, in which Ministers were brought here in their limousines to vote down a measure that would have given some relief to tenants in multi-occupation.
  I make no apology for another quotation. This time, I refer to a document recently published by my own council in Bradford, entitled "The Legacy: The Challenge—Poverty, Health and Disadvantage. A portrait of the Bradford District." In the foreword to that report, the leader of Bradford council, Councillor Phil Beeley, wrote:

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  "The legacy inherited by Bradford Council is one of worn out schools, bad housing and a growing sense of despair among the poor and the unemployed.
  The challenge is to defeat this spiral of decline which has followed a chronic lack of investment, withdrawal of Government grants and massive rent and rate increases.
  The council's new policy is to Put People First in deciding how and where the money is spent. To do this, we need to know and understand the needs of the people of the district and to work with communities to regenerate areas within the inner city and outer estates. This document shows in visual terms the way in which deprivation is concentrated in certain parts of the district and pin-points vulnerable groups such as the over 85's, single parent families and young children. We are extremely concerned about the increasing division between the 'haves' and the 'have-nots' and the way in which unemployment, poor housing and overcrowded, crumbling schools deprive young people of the chance to succeed in their lives.
  We are not prepared to close our eyes to the needs of the district. We believe the Council has a responsibility to encourage local initiatives and motivate other institutions to invest in the district.
  Bradford's single most valuable resource is its people, a multi-cultural population with a wide range of skills and aptitudes unique to the area. We shall seek to use these skills both to improve the prosperity of the district and to support and protect the vulnerable members of our community."
  The Prime Minister may pay secret visits to Bradford and appear frightened to meet the people to discuss their anxieties and problems. Ministers may come to Bradford to drink our tea and give us sympathy, only to go away and do little about addressing the city's problems. We may be ignored, robbed of £70 million in seven years and denied grants to meet the urgent social and economic needs that all of us with a social conscience see around us.
  I hope that the Minister will not only look at the words in the report but heed them, instead of attempting to slur men and women who are elected to serve their communities, to defend jobs and services, and to bring a better life to our people. I hope that he will consider the reality of our plight, because our electorates know the difficulties. They know that their only hope of a genuine improvement comes when this Government are pushed from office and a Labour Government are elected.
  A Labour Government will work in partnership with local authorities to repair the damage which this Government have done to local democracy. We are committed to that, and I look forward to an early opportunity for that Labour Government to be elected.
  6.31 pm
  Mr. Kenneth Hind: In answer to the hon. Member for Bradford, West (Mr. Madden), the Prime Minister may have come to drink his tea, and he may have felt that my right hon. Friend did not meet many people from Bradford, but I assure him that the amount of notice for a visit by the Prime Minister is small, no matter which part of the country it is. Those of us who were in a hotel in Brighton three years ago understand why. Everywhere my right hon. Friend goes she risks her life and, accordingly, she is surrounded by strict security. It is most unfair of the hon. Gentleman to criticise my right hon. Friend on that basis.
  I must shoot down the conspiracy theory that in some way Ministers at the Department of the Environment have manipulated the rate support grant to improve Conservative chances in their marginal seats in the south of England. The hon. Gentleman may not be aware that
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  there is a Conservative Member in Bradford, North whose seat some would regard as marginal. Moreover, I can remember when there was a Conservative Member for Bradford, West in the 1970s. He is now the hon. Member for Ruislip-Northwood (Mr. Wilkinson) and he, too, may feel that his seat is marginal. It is absolute rubbish to suggest that there has been some conspiracy. That idea must be well and truly nailed to the floor by all Conservative Members.
  We constantly face the suggestion that local authorities have been robbed of rate support grant. It is as if the financing of local government is wholly divorced from the rest of Government spending and falls into some safe little sacred corner where it cannot be touched by the Treasury's long-term planning. Prudent, sensible financing must be a theme of local and national Government. No Government can contemplate the years ahead and not see that they must place certain cash limits on public expenditure. Indeed, Labour Members have spent much time in recent weeks issuing policy documents about how they will spend money, presumably because they have costed their policy and thought about it. They should not expect us not to do the same.
  Labour Members should not forget that in talking about robbing local authorities they are talking about the total amount of tax paid, whether through income tax, corporation tax or rates. Let us not forget that rates are a tax. They affect businesses and individuals in the community, as do more direct taxes. It is significant that businesses pay as much in rates as in corporation tax, so the effect of rates on employment prospects is fundamental and can never be forgotten.
  It is worth commenting on the increase in rate support grant and local government expenditure, as planned by the Government, of £25·2 billion—an increase of 4·1 per cent. on 1986–87, which is in line with inflation, but it does not stop there. Exchequer grant to local authorities amounts to £12·842 billion, which is an increase of 9 per cent. and is nearly three times the rate of inflation. The list of local authority spending in the shire counties shows that the vast majority of local authorities are spending more, and well above the rate of inflation. They can increase their services because the Treasury agrees to their planned expenditure. On top of the £12·842 billion of Exchequer grant, £183 million has been given to help pay for teachers' salary increases.
  The hon. Member for Bradford, West said that there was a divide between the north and south and that the north has come off worst. The figures show that £375 million extra has gone to the north, compared with £150 million to the south. In other words, the north has received more than twice as much as the south to deal with its problems in inner-city areas, high unemployment and the need to upgrade housing. The Government have tackled the so-called north-south divide realistically.
  I represent the district of Lancashire, West which has a Conservative-controlled council. Its financial policies are prudent and this time it will increase rates by only 5 per cent. The people respect that. Over the past 18 months we have been able to attract to the district an additional 500 or 600 jobs. We could not have done that if we had charged exorbitant rates, because that would have deterred potential manufacturers or service industry business managers from coming to our area. New businesses are brought in because rates are low.

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  I cannot understand, and I am sure that many hon. Members will fail to understand, why it is necessary for local authorities in London which are newly under Labour control to increase their rates as they have done. Waltham Forest has increased its rates by 62 per cent. Hammersmith and Fulham by 50 per cent. and Ealing by 65 per cent. I note that my hon. Friends the Members for Ealing, Acton (Sir G. Young) and Ealing, North (Mr. Greenway) are present in the Chamber and no doubt they will be addressing us in full on the problems facing that authority. I cannot understand, and I am certain that my hon. Friends cannot understand, why it is necessary to raise the rates in that way, effectively increasing the money drawn in on the rates by more than 25 per cent. However, I do not have to go very far to find the answer to that.
  Mr. Straw: Will the hon. Gentleman give way?
  Mr. Hind: I shall give way in a moment.
  I can find the answers to those problems in my constituency. When I reviewed the problems facing my constituency, I became aware of them. Having done that, I considered the plans of the local Labour party to deal with those problems. When those plans are costed, we find that the promises and plans will involve a rate increase next year of 150 per cent. in the district rates, irrespective of the consequences for local businesses or the fact that such a rise would drive away potential investors and so prevent the creation of new jobs. Many of those Labour-controlled local authorities never seem to understand that high rates and high unemployment go hand in hand.
  Mr. Bill Michie: Nonsense.
  Mr. Hind: Potential business is driven out if the rates are raised to ridiculous levels.
  Mr. Straw: The hon. Gentleman's figures about the local Labour party's plans are almost certainly moonshine.
  Mr. Hind: Thanks very much. Is the hon. Gentleman accusing me of being a liar?
  Mr. Speaker: I did not hear that word.
  Mr. Hind: I withdraw the word "liar".
  Mr. Straw: I am glad that the hon. Gentleman has withdrawn that word, because I made no such accusation. I said that his figures were likely to be moonshine. As the hon. Gentleman is so concerned about increases in the local tax burden, how does he feel about the fact that the poll tax will result in a significant increase in the local tax burden on the local taxpayers of Lancashire, West?
  Mr. Hind: I do not agree that there will be an increase on local taxpayers. I shall consider the poll tax in a moment. There may be increases in certain areas. However, the poll tax will be a much more equal spread of the cost of the services of local government. The changes that will come about in industrial and commercial rates in many inner-city areas that are desperately in need of new jobs and new investment will allow many businesses a tremendous degree of relief and so encourage them to invest, and will encourage new businesses to come in to tackle the problems of those communities.
  I am sorry that the hon. Member for Blackburn (Mr. Straw) is not listening to the points that I am making in response to his question, but every day I am approached by business people from Liverpool who say that they
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  would like to set up businesses in Lancashire, West, in Ormskirk, or in Skelmersdale because they recognise that the rates charged there are much lower than in Liverpool and that there is a more sensible local authority upon which they can depend.
  Mr. Peter Pike: Will the hon. Gentleman give way?
  Mr. Straw rose—
  Mr. Chope: Does my hon. Friend recognise that the point made by the hon. Member for Blackburn (Mr. Straw) in relation to Lancashire, West is not correct? At the moment the average rate bill per adult in Lancashire, West is about £200. Under the community charge, the average charge per adult will be only £170. That represents about a 14 per cent. reduction.
  Mr. Hind: I am much obliged to my hon. Friend for that and I am sure that the people of Lancashire, West will be extremely grateful for a 14 per cent. reduction in their—
  Mr. Pike: Will the hon. Gentleman give way?
  Mr. Straw: Will the hon. Gentleman give way?
  Mr. Hind: I have given way to the hon. Member for Blackburn once. He will have an opportunity to speak. I mean him no discourtesy, but other hon. Members wish to speak.
  Mr. Pike: Give way.
  Mr. Hind: We must also look very carefully at some of the decisions made in the shire counties with regard to rates. If we take the average across the board, we see that the shire counties under Conservative control have increased rates by 6·5 per cent. and have been able to increase expenditure by a further 1·1 per cent. thereby increasing the standard of their services. That is well below the average when compared to the London Labour-controlled boroughs, and below the figures for shire counties controlled by Labour councils and for others such as Lancashire.
  Lancashire is a good example to raise in this respect. The Conservatives in that authority proposed a budget, yet the Liberals and the Labour party combined to raise a rate higher than that which the Conservative group considered to be necessary to maintain proper services in the county. That is a good example of what is happening throughout the country.
  I want to consider what has happened in Liverpool. That city is on the doorstep of my constituency and reveals some of the problems faced as a result of irresponsible financing in local authorities. Last week, Sir Trevor Jones, now the Liberal leader of the council, said that the Labour councillors who had been surcharged and removed from office had set a rate of 5 per cent. However, once they had assessed the money that was needed, they found that the rate increase should have been 30 per cent. Therefore, the rate levy was 25 per cent. short of what was needed.
  Letters of intent were signed for contracts for which there was no money in the budget or in the bank. The Labour councillors left corporate debts of £800 million and, before they departed, their last-minute gesture was to increase that £800 million by spending a further £25 million on housing schemes, against the advice of the executives. That is Militant, some of the loony Left, at their worse in control of a big city. I admire the courage

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  shown by Sir Trevor Jones. He is trying to maintain the same level of housing by transferring it to co-operatives in order to build the same number of houses. Sir Trevor Jones has had to wrench back a school from a supermarket chain in order to increase parental choice and abolish Labour's rigid catchment area for schools.
  The hon. Member for Liverpool, Walton (Mr. Heifer) complains that the treatment of those Labour councillors in Liverpool was most unfair. However, he forgets that Parliament makes the law and that the law is to be obeyed. The way to change the law is through the ballot box, not by taking on the Government in direct clashes, as the Militant Labour councillors did in Liverpool in an attempt to get their way. They should not have risked 30,000 jobs by threatening to lay off staff. All that was highly irresponsible. The Labour councillors failed to recognise that the parliamentary mandate must always overrule that provided by the local electorate. That fact was ignored and, as a consequence, Liverpool's affairs were turned into a mess.
  Liverpool is a typical example of high rates leading to unemployment problems and driving out businesses. Liverpool is probably one of the finest examples of how not to run an authority in order to attract jobs into the community.
  Many Conservative Members cannot understand how certain authorities can find plenty of money to spend on anti-police propaganda, as Manchester did, of £500,000 for nuclear-free zones, as occurred in Manchester again, or for gay and lesbian units, police monitoring units, racial advisers, women's rights advisers, and so on. They all have their place, but those authorities complain about the lack of Government spending on local services. If local authorities are to act responsibly, it is no good their complaining to us about the housing budget or the social services budget when £500,000 of ratepayers' money can be found to build a nuclear-free zone in Manchester. That will not wash.
  Mr. Pike: Will the hon. Gentleman give way?
  Mr. Hind: I am sure that the hon. Gentleman will have an adequate chance to speak.
  We must all recognise that prudent, sensible financing must be an important part of central Government and local government financing. It is no good imposing it on national Government and letting local government have a runaway free ride as to how it should spend its money. That is why I shall happily vote for these reports and give them my full support.
  6.50 pm
  Mr. Willie W. Hamilton: I come directly to the point on which the hon. Member for Lancashire, West (Mr. Hind) closed his speech — the attempt to blame democratically elected local councillors and councils for all the ills that prevail in general finance, local or national. The facts need to be stated bluntly. Over the past five or six years, central Government expenditure has increased substantially more than public expenditure by local authorities. On 31 March 1986, I asked the Chancellor of the Exchequer:
  "what has been the increase in central Government's current spending in each year since 1980; and what are the corresponding figures for local government."
  The Chief Secretary to the Treasury replied:
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  "Between 1980–81 and 1984–85 central Government current spending rose by 46·3 per cent. and local authority current spending relevant for RSG by 37·5 per cent." — [Official Report, 13 March 1986; Vol. 93, c. 584.]
  Central Government expenditure has increased substantially more than local government expenditure.
  The Chief Secretary excused the increased expenditure by central Government on the grounds that there are considerably more unemployed now. Of course, we are spending £20 billion a year on dole money. Whose responsibility is that? That crass waste of public expenditure is central Government's responsibility. It has nothing to do with Liverpool or the so-called loonies of the Left. The loonies are in central Government. There is no better example of that than in the documents that we are debating. I agree that these documents are completely incomprehensible. The rate support grant report on England cost £6. Anyone who pays £6 for it is an idiot, because no one understands it. I do not understand it, nor do other hon. Members, Ministers or anyone else.
  I shall quote some of the indicators that the Government used to decide how much help to give local councils. It is unbelievable. I shall read direct from page 51 of the wretched document where an adjustment is made for road maintenance.
  "The sum in the area of the authority of Indicators B5a, B6, B7a and B8 as defined above, multiplied by the sum of the following"—
  I hope that you are following this, Mr. Deputy Speaker—
  "(i) the annual average number of days of snow-lying during 1979/80 to 1982/83 as estimated by the Secretary of State for Transport, multiplied by 9·60745"—
  is that clear to everyone?—
  "(ii) the annual average number of days of air frost during 1979/80 to 1982/83 as estimated by the Secretary of State for Transport, multiplied by 1·14303."
  Crystal clear.
  On page 50 provision is made for road maintenance for which local authorities are responsible. I shall quote paragraph B9 at length to let people understand the idiocy perpetrated by the Government on local authorities. The report says:
  "B9. Usage adjustment factor for road maintenance. The sum in the area of the authority of (i) and (ii) below:—

  (i) Indicator B5a as defined above, multiplied by 1·0;

  (ii) Indicator B7a as defined above, multiplied by 0·3283"—

  everyone is following this—
  "multiplied by the sum of the following:—

  (iii) -1209·35;

  (iv) Indicator A1 divided by the sum of Indicators B5a, B6, B7a and B8 as defined above, multiplied by 9·91626".

  Hon. Members are doing their sums; they have the calculators out. Sub-paragraph (v) is a beauty:
  "annual average vehicle kilometres on principal roads in built-up areas excluding principal motorways during 1982 and 1983 divided by the length (in kilometres) of principal roads which are subject to a speed restriction not exceeding 40 miles per hour and of principal motorways in the area of that authority as at 1 April 1984, but excluding any such roads or motorways responsibility for which passed to the Secretary of State for Transport from 1 April 1986, all as estimated by the Secretary of State for Transport, multiplied by 0·0007899357".
  That is the type of rubbish produced by civil servants and the Government to determine how much local authorities should get in rate support grant.
  Mr. Clelland: Is my hon. Friend aware that what he has just read out results from this Government's legislation which, in their words, was intended to simplify and clarify the system?
  Mr. Hamilton: Hon. Members understand that, but the poor councillors—those Left loonies—do not. If they are not loony now, they will be when they try to sort out this rubbish produced by the Government at £6 a time.
  I did not intend to take part in this debate, but then I read some of these figures and happened to receive a reply from the Under-Secretary of State for the Environment — the hon. Member for Southampton, Itchen (Mr. Chope) — who is sitting there bemused by the figures produced by his Department. He cannot understand them. He cannot tell me how that figure of 0·000 and seven other digits has been arrived at. I should like him to say who produced that figure — and give him the sack immediately-and then say why it should be that figure and not one millionth of a per cent. less or more.
  In response to popular request, down in Devon, I asked the Minister today whether he would publish in the Official Report a table showing the amount of rate support grant paid to each district council in Devon in each of the past five years. As the House knows, I shall be the new Member of Parliament for one of the Devon seats after the general election. I see that I am the only hon. Member in the Chamber representing Devon: I do not see a single Tory, Liberal or SDP Member defending local authorities in that county. Therefore, it is my responsibility to defend their interests, and I shall now proceed to do so.
  The Minister gave me the figures, and I now wish to put on record certain facts about them. They show that in 1982–83 the rate support grant for South Hams — a constituency that I shall be representing in due course—was £2·745 million. In 1986–87, it is £2·857 million. That is an increase of £ 112,000 in four years. Assuming that the rate of inflation was only 3 per cent. in each of those four years, that should have meant a 12 per cent. overall increase; and 12 per cent. of the original figure of £2,745,000 in 1982–83 would have meant that South Hams needed £329,400 just to stand still. However, the increase in cash terms, as suggested by the Minister's own figures, is £112,000. Therefore, there has been a cut in actual cash terms of at least £217,000.
  Devon is a very pretty county; that is why I am going there. However, the natural beauty of that county hides considerable deprivation in housing, education, health, transport and, not least, employment. All those services are bound to be adversely affected by what is shown in the Minister's figures.
  Mr. Straw: I am grateful to my hon. Friend, particularly for his elucidation of the way in which road maintenance grant-related expenditure assessment is calculated. Does he agree that the poll tax is even worse news for the people of South Hams? At present, the average rates bill in South Hams is about £260, while the Chartered Institute of Public Finance and Accountancy estimates that the poll tax will be about £160 per head. That means that the bill for an average two-adult household will go up from £260 to at least £320, an increase of £60 per family.
  Mr. Hamilton: I shall make sure that those facts get down to Devon. I am defending as best I can the rights and interests of the people of Devon, which are being
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  repeatedly neglected by Devon Tory Members, none of whom is present and none of whom is taking any interest in these matters. They must know the adverse effects of the poll tax on the people of Devon who are struggling away under the incomprehensible system.
  Mr. Chope: Will the hon. Gentleman take back to his constituency in west Fife the correct figures for the community charge exemplification in respect of South Hams? At present, the average rate bill per adult in South Hams is £176; in other words, a two-person household is paying about £350 in rates. However, following the implementation of the community charge, that same household would receive a 15 per cent. reduction and pay less than £300. The figures given by the hon. Member for Blackburn (Mr. Straw) were not a true representation of what would happen then.
  Mr. Hamilton: The last thing that I would do would be to accept statistics from any member of the Government. For a start, the Minister has got my constituency wrong; west Fife does not exist as a constituency. Apart from that, I would accept the figures given by my hon. Friend the Member for Blackburn (Mr. Straw) very much sooner than I would accept those given by the Minister.
  The Minister and the Government must know that the imposition of a poll tax runs against every royal commission and every authority that has examined the problem over the years. The Government are introducing the tax because they are running scared. They did the same in Scotland when we had the revaluation a year or two ago. The Tory party in Scotland will be damn lucky if it wins 10 parliamentary seats out of 70-odd in the next election, partly as a consequence of the poll tax. I suspect that when the electors in England know its implications, and realise how much it will benefit the rich rather than the poor, they will also rebel against it.
  I have said enough to show how local government finance—[Interruption.] The hon. Member for Glanford and Scunthorpe (Mr. Hickmet) is well able to make a long speech off his own bat. He still has the opportunity to do so, as we have three hours to go.
  I am sure that local government electors understand that, as a direct consequence of the Government's meddling, local government finance is in the most unholy mess that we have seen since we first had elected local councils. This is a further and, I hope, final example of the colossal mess that we are now in.
  7.8 pm
  Sir George Young: I do not quite understand why the hon. Member for Fife, Central (Mr. Hamilton) made such an impassioned speech about the impact of the rate support grant on South Hams. I am sure that his constituents will be most upset to learn that he is deserting them for South Hams because it is such a delightful area. I do not know Fife very well, but it seems a very attractive area. I wonder what the hon. Gentleman's local newspaper will say about that part of his speech when it is reported, later this week.
  I can answer the hon. Gentleman's question. The figures that he quoted will actually bring relief to the north. They show that where there is snow a local authority must spend more because it has to clear the roads. Something in the rate support grant must reflect that additional responsibility. Likewise, the reason why

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  temperature is mentioned in the figures is that the colder it is, the more damage is done to the road surface. That too must be reflected in the formula. The more roads there are, the more expenditure there must be.
  While we all enjoyed the hon. Gentleman's speech about the complicated formula, I hope that he will not say that he does not defend the principle behind it. The exemplifications that he mentioned will bring greater relief to the north than to the south.
  It makes sense to debate the rate support grant settlement just two days after debating the Budget. In the same week, we are debating the two major impacts on the pockets of our people. On Monday we debated the Budget and national taxation; today we are debating rates and local taxation, and of course the two interact.
  On Monday Opposition Members voted unanimously against the reduction of some £3 a week in income tax, and we heard their reasons. In Ealing the rates are going up by £4 a week for council house tenants and by £5 a week for home owners. Without the £3 a week reduction announced on Monday, the sums would not have begun to add up.
  Ratepayers in Ealing have got the message that if by any chance we had lost the vote on Monday, not only would their rates have gone up quite a lot, but they would not have had the reduction in national taxation with which to pay for that. Businesses in Ealing, which have been hard hit by the business rate, are looking forward to the reduction in interest rates that has been made possible by my right hon. Friend the Chancellor's Budget.
  Likewise, an integral part of the rate support grant settlement has been rate capping. The only party that believes in rate capping is the Conservative party. The alliance and the Labour party will abolish the rate-capping legislation. In areas with high-spending councils such as Ealing, which covers my constituency and that of my hon. Friend the Member for Ealing, North (Mr. Greenway), and where there will be no local elections for another three years, the only protection that ratepayers will have in those three years will be from a Conservative Government committed to rate-capping legislation.
  Mr. Piers Merchant: Does my hon. Friend agree that that situation applies also to Newcastle city, which has had large rate increases over the past three years? Rate capping has saved the situation from the point of view of the ratepayers there. Does my hon. Friend further agree that the proposed community charge will make a distinct improvement for the majority of ratepayers in Newcastle or in my constituency, who will see their present high rate bills reduced to a much more manageable level?
  Sir George Young: I welcome what my hon. Friend has said. No doubt over the next few months he will put forward those arguments with his customary vigour.
  I refer to the settlement that we are debating. I welcome what has been known as the adjustment for realism. For many years there were two sets of figures—the Treasury books, with a figure which the Treasury thought local authorities should spend, and another figure, which was what local authorities actually spent. This led to enormous complications when the annual public expenditure debate took place. It took place on two separate sets of accounts. This year we have put that right with the adjustment for realism, and I very much welcome that step forward.
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  I also welcome the end of recycling, which comes into effect on 1 April. It is essential for local authorities, when they fix their rates and budgets, to know exactly how much grant they will get. I understand the principle of recycling, but it made it impossible to forecast with any accuracy how much money would be received in the municipal year. So I welcome that innovation as well.
  I should like to raise a specific point about Ealing. As we heard earlier, at the moment we have an industrial dispute in Ealing, which has an impact on the distribution of expenditure as between this year and next year. For example, no bills are being paid. Businesses that are owed money by Ealing council are not getting paid. Inevitably, there is an accumulation of work on the housing stock and other parts of the estate. Normally that expenditure would have fallen in this year. It will now be pushed forward to next year. Expenditure, already planned to increase by a substantial amount, will be higher still. Can my hon. Friend the Under-Secretary say what the impact will be on the rate support grant settlement the year after that, or is it somehow swept up in the supplementary grants?
  My hon. Friend the Member for Ealing, North has already mentioned the hardship that is being caused by the dispute. A woman rang me this morning to say that she is to lose her job because the day centre to which she takes her child has been closed for 10 days and her employer is no longer prepared to put up with her absence. Someone who attends an adult training centre was to go on holiday last Friday, but needed his £8 pocket money to pay for his weekend. The ATC was closed, and he asked what he should do.
  In Ealing we are threatened with the highest rate increase in the country—about 65 per cent. We have a virtual absence of any services because of the industrial dispute. It has blown out of the water in a short time the argument that the Labour party gets on with the trade unions. For eight years we had a Conservative administration at Ealing town hall and we never had such a dispute with the National and Local Government Officers Association, yet within a relatively few months of the Labour party being elected we have an all-out strike by NALGO, with the problems to which my hon. Friend the member for Ealing, North and I have drawn attention.
  I return to the impact of the rate support grant on Ealing. It is always easy to blame someone else for one's problems. There has been a repetition of that from Opposition Members, who have blamed the Government's rate support grant settlement for the problems in their constituencies. We have heard emotive phrases, such as "being robbed" of £50 million, and so on. As I said, it is always easy to blame someone else rather than oneself.
  I refer to the settlement for Ealing. My hon. Friend the Member for Ealing, North and I will always argue for more money if it is around, but we must accept that if the council had budgeted to spend in line with inflation, having made allowance for the extra money needed to settle the teachers' pay dispute, Ealing's local rate need not have risen if the balances available from the London residuary body had been taken into account. In the debate on Ealing on 13 March my hon. Friend the Minister for Local Government made that clear when he said:
  "In fact, overall, Ealing's local rate need not have risen at all if the extra balances had been used in such a way."— [Official Report, 13 March 1987; Vol. 112, c. 670.]
  Instead, we are faced with a 65 per cent. rate increase because some rather extravagant decisions have been

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  taken. The only consolation is that at the moment we cannot pay our rates because the town hall is on strike and the post is not getting through, but, sadly, the day of reckoning will come.
  We have problems in Ealing at the moment, caused not by the Conservative Government, but by the Left-wing Labour administration, which, sadly, we are saddled with for three years. We hope very much that the Government will announce later this summer that Ealing will be rate-capped.
  7.16 pm
  Mr. David Clelland: I welcome the opportunity to speak again on the subject of local government. After all that has been said over the past months and years, people may well wonder whether there is anything new to say about local government and local government finance. Had they listened to what the Secretary of State said in opening the debate, they would have definitely concluded that there was nothing new to say about the subject because he said nothing new, apart from the usual venom that he spits out, in his inimitable way, about Labour-controlled local authorities.
  Today's announcement presents the opportunity to draw attention to what has happened as a result of the Government's complete ineptitude and bungling and fumbling over local government affairs. It is now well established that the Government have used the vehicle of legislation to attack Labour-controlled councils and at the same time to attempt to reward or avoid penalising councils under Conservative control—or at least that had been the Government's plan and intention. However, Labour councils are far more knowledgeable and expert in local government affairs than Ministers thought, and every attempt to punish people for voting Labour has been fought. Often the Government's plans have been frustrated or defeated.
  This Government-inspired battle between local communities and Ministers has resulted in a record number of Acts, orders and announcements such as today's on local government matters. Such is the Government's ineptitude that not only has it resulted in successful court action being taken by individual councils, but it has sometimes meant, as in the Greenwich case, that Labour councils have gained at the expense of Conservative councils — the very opposite of what the Government intended. Such a chaotic farce would be hilarious were it not for the real harm that it does to local communities, regardless of how they vote in local elections.
  Today's announcement comes not only four months late but after every local authority to which it applies has fixed its budget and its rate for the next financial year. It is the seventh announcement on the 1987–88 rate support grant and adds to the confusion and the future uncertainty, completely contrary to the Secretary of State's statement to the House on 22 July 1986, that his efforts would mean that local
  "authorities will be able to plan their budgets and rates with much greater assurance"—[Official Report, 22 July 1986; Vol. 102, c. 182.]
  The Secretary of State is a great joker, although like many of his jokes, this one was neither funny nor practical.
  Today's announcement follows the Government's consistent policy to cut the overall level of Exchequer grant to local authorities, with the result that, as a proportion of relevant expenditure, it has been reduced
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  from 60 per cent. in 1981–82 to 46 per cent. in 1987–88. I have explained the formula before to the Minister, but in case he missed it last time, I shall explain it again.
  For £100 of relevant expenditure in 1981, when the grant was running at 60 per cent., the local authority contribution from rates and charges was £40 to £60 from the Government, and £40 from local rates and charges. To spend the same £100 in 1987, with no increase in expenditure—no profligacy, no overspending, no loony Left-wing politics—the local contribution must be £54. If the Minister has his calculator, he can work it out. That amounts to a 35 per cent. increase in local contribution, and it is one of the major reasons for the rate increases of the past few years. Those are entirely the Government's responsibility, however much they may like to argue about it.
  The chaos that has ensued has been evident in the latest episode of the long-running farce. For instance, Tyne and Wear fire and civil defence authority had met and set its rate precept before it received new figures from the Government that caused it to hold another meeting to fix a new rate based on the new figures.
  Newcastle-upon-Tyne city council, which was mentioned earlier by the hon. Member for Newcastle upon Tyne, Central (Mr. Merchant)— unfortunately, he has left the Chamber, but I hope that he will return before I have finished — had to make 160 amendments to its budget documents only hours before its rate-making meeting because of late announcements by the Government.
  Gateshead councillors were faced with an amendment to the rates report on the day on which they sat to fix budgets for next year because of the Government's late announcements. And, as I have said, today's announcement comes after budget meetings have taken place.
  The letters RSG—rate support grant—should stand for "Ridley's Silly Games"; that would be a more appropriate description of the way in which the Secretary of State has dealt with local government during his term office. Those silly games lead also to contradictions. The Government have acknowledged that special assistance is necessary for the inner cities, and in recognition of that, special area grants are made via the inner-city partnerships set up by the last Labour Government. To the credit of the present Government, they have been continued.
  The inner-city areas of Newcastle upon Tyne and Gateshead have received about £100 million in inner-city grant since the Government came to power. That may be thought generous and helpful to the inner cities of Gateshead and Newcastle, and of course they are grateful for it, but the same Government during the same period have caused a loss of more than £300 million in rate support grant for the same two local authorities. Where is the sense or logic in that? Nothing could be sillier, although Conservative Members apparently think that that is prudent and sensible.
  Newcastle council spends wisely and effectively the money that it takes and, in private, many Ministers admit that. That is the expressed opinion of the Daily Mail, which could not, in any circumstances, be construed as a loony Left-wing publication.
  Funding through partnership has been used more effectively than appears to be the case elsewhere. That is the opinion that is expressed in a report by the police staff college, following a visit by its representatives to Newcastle city council last year. I should add that, in the

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  context of elections and the views of the electorate, Newcastle city councillors have to face the electorate every year, not every three years. Every year, the Labour party has been consistently supported by the people of Newcastle, despite what the hon. Member for Newcastle, Central said.
  The Government are not finished yet. Their stated intention is to introduce a community charge and a uniform business rate to replace the rates and the Minister for Local Government has had something to say about that in the past day or two. I see that he has now returned to his place on the Treasury Bench. He did a great service to the nation when he made a comment that was reported in a press interview. He said—he will correct me if I am wrong, but I am sure that I am not—that people must pay for the way in which they vote. The Minister does not object, so I presume that those were his words.
  According to the Minister's figures, however, the people of Newcastle and elsewhere will pay dearly if they vote Conservative in the next election. He has said that the introduction of the community charge will mean a 10 per cent. increase for the average ratepayer in Newcastle. Every household with two adults or more will pay more under the community charge if the Government are reelected. The average rate in Newcastle, which is now about £500, will increase to about £600, according to figures that I have received today from the Department of the Environment — a bit later than the hon. Member for Newcastle, Central, but I managed to get them. It is a prospect that will not be welcomed, despite the fact that the hon. Member for Newcastle, Central thought that it would be welcomed by the people of Newcastle. I am sure that they will have something to say about that in the general election.
  According to the Minister's figures, the uniform business rate will mean a 40 per cent. decrease in business rates in Newcastle. It would seem that the chairman of the Conservative party is asking businesses only for a loan when he appeals to them for money for the Conservative party election fund. He is not asking for grants or help, because if the Conservatives are re-elected, the businesses will be paid back their money at the expense of domestic ratepayers.
  Mr. Chope: Does the hon. Gentleman accept that that is a travesty of the truth? Under the national non-domestic rate, the revenue from the business sector will be the same as it is now from business rates.
  Mr. Clelland: The figures for Newcastle that I have state that businesses will be paying 40 per cent. less. If, as the Minister says, they will pay the same, I do not see how businesses will benefit from the uniform business rate.
  Mr. Chope: The hon. Gentleman needs to have a better understanding of these matters. There will be a redistribution throughout the country as a result of bringing in the new domestic rate. That will mean that, in general, businesses in the north will benefit substantially. The hon. Gentleman should welcome that. Businesses elsewhere will have to pay a little more, but the Government believe that that is a price worth paying to attract businesses back to the north.
  Mr. Clelland: If the Government think that that should be hailed as a boost for businesses in the area, they should
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  give some evidence. In my view, the benefits to businesses in Newcastle depend entirely on the differences between the costs of setting up businesses in Newcastle, and those of setting up elsewhere, and on considerations such as the surrounding amenities—airports and road connections, for example.
  Secondly, there is not one scrap of evidence that rates are a significant factor to be taken into account when businesses decide to settle in, or move from, a region.
  In view of the Government's appalling record in local government matters, any statement or any change that promises to improve, enhance, simplify or clarify the system has to be considered with great scepticism. I believe that the Minister's statement that people must pay for the way in which they vote will ring in his ears: that is why they will not vote Conservative at the next election.
  7.30 pm
  Mr. Harry Greenway: I take issue with the hon. Member for Tyne Bridge (Mr. Clelland) when he says that there is no substantial difference between areas, because it is clear that jobs are being sucked out of my constituency into areas where there are development grants. For example, the Hoover factory has now effectively been removed from Perivale, where it was started in the 1930s, to Scotland and Wales. The attraction is redevelopment grants and rates. Any redistribution of the rating system which strongly favours the north, where it is much cheaper to set up, could have a very damaging effect upon industry in areas such as mine, and we shall have to watch that very carefully. I ask the hon. Gentleman to take that into account.
  The rate support grant is particularly welcome because of the help that it gives to local authorities to meet the cost of the teachers' pay award and in many other ways. I particularly welcome it, apart from that, because in Ealing it would have had the effect, if the balances of the London residuary body and the former Greater London council had been properly applied, of giving us no rate increase at all, as my hon. Friend the Member for Ealing, Acton (Sir G. Young) said. I want to expand on some of the things that he said and also to make my own comments on the situation in Ealing, as well as on the national situation.
  No Member for Ealing could take part in this debate without reflecting the agonies of his constituents at the present time. Following a rate reduction of 4 per cent. last April by the outgoing Conservative council, my constituents now face an increase of 65 per cent. and a drop in local services at the same time. One cannot imagine a more appalling situation than to know that one will have to pay an extra £4 a week if one is a council tenant, and an extra £5 a week if one is in owner-occupied accommodation, that one cannot get repairs of any kind done, and that absolutely fundamental services, such as the provision of home helps even to elderly people of 96 or 98, are not available. That is the situation.
  I had a telephone call this morning from a man of 98 who is attempting very courageously to live on his own. He has had home help service for some time, and needs it, but he is not getting it now, and his meals-on-wheels are packing up at weekends too. In addition to that, he is faced with an additional £5 a week on his rates. That is where one sees the Labour party as it is, and I was interested to hear Labour Members picking up the term "loony Left".

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  I hope that they will recognise that it is a very hard and evil Left and that Members will dissociate themselves from it.
  Mr. Roland Boyes rose—
  Mr. Greenway: The hon. Gentleman will have an opportunity to speak, I am sure.
  I am deeply concerned about the disadvantaged and everybody else in my constituency because of the present situation. The National and Local Government Officers Association sent me a paper this morning which reads as follows:
  "We regret the problems you are having at present due to the council workers' strike. Important services are either closed or seriously disrupted: Housing benefits, Homeless persons, Council housing officers; Schools and colleges; Social Services; Libraries and Sports Centres."
  There are others, of course. It goes on:
  "We are striking because of a long-term grievance over London cost-of-living allowances. Our members receive less than other Council workers in Ealing—the Teachers receive £1,215 and the Manual workers receive £1,020, whereas we get £738."
  They were promised by the Ealing Labour party, the hard Left, that if it won the election last year that would be put right and NALGO workers would receive the same London weighting as teachers. Having gained control, however, it put the rates up by 65 per cent., started to throw money at everything imaginable, including homosexuals and lesbians, and made a determined drive to get the teaching of homosexuality as being as valid as heterosexuality on to the school curriculum. This is continuing in high schools but was repudiated by the chairman of the governors of a large church school in front of the Labour council which has perpetrated this evil policy, before an audience of 600 or 700 people and in the presence of the Cardinal Archbishop of Westminster.
  The council has given £10,000 for peace parks and money for nuclear-free zones, provided special birthday cakes to celebrate the first anniversary of the women's committee, and all that sort of thing. The council having thrown money about like that, it was natural for the NALGO people to say that they were waiting for the council to honour its promise and pay the London weighting promised to them, but it has refused to do so.
  That money could be paid today or tomorrow if the council would reallocate expenditure earmarked for political purposes, such as the huge payment to a firm to distribute political propaganda in the interests of the Labour council and the cost of the large number of staff taken on for that purpose. If all that were cancelled, the money could pay for the London weighting and the strike could end tomorrow and my constituents, including the elderly and many who are suffering grievously, would be able to return to normality, as they are entitled to do.
  Who is all this hitting particularly? It is hitting people in sheltered accommodation. In one place the heating has been out of action for a month and there is no sign of its being repaired while the strike continues. Indeed, some old people have not had a bath for a month. So it goes on. The wardens are on strike. One lady told me that the milkman and the postman are not allowed to come in. That is the sort of thing that is happening, and it is the responsibility of the London borough of Ealing council, which has to settle the dispute, and could settle it.
  The mother of a mentally disabled child came to see me the other day. She had managed to get a teacher whom she
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  knew well to be with her child. Otherwise, she said, she could not have left the child even to do a little shopping. The child's school is closed because of the strike and it is easy to imagine the damage to the child, to the mother and to her whole family. That is the effect of the strike, and 31) or 40 schools are closed as a result of this situation.
  Who has caused it and who is failing to sort it out? The answer is Ealing council.
  Mr. Clelland rose—
  Mr. Greenway: The hon. Gentleman made his own speech, and I am not seeking to speak for a long time.
  What is the situation for domestic ratepayers? 01' course, it is all related to the RSG, which I mentioned at the beginning of my speech and which is fundamental to all that I am saying. The RSG for Ealing, with the balances that will be coming the way of the council shortly from the London residuary body and the former GLC, could have had the effect of no rate increase at all, but we have a 65 per cent. increase, and that is what makes people so incensed about the situation.
  In industry the increase is 57·5 per cent., and of course this matters very much to people. The firm of Taylor Woodrow is to have a rate increase of £428,000. This means that it has to earn an extra £15 million. That will cost a great deal of effort and possibly jobs. It is a very enterprising firm and perhaps it will overcome the difficulties, but it is an unnecessary burden on the back of that great company.
  Mr. Boyes rose—
  Mr. Greenway: Lyons Companies have had a rate increase of £700,000, and that means that the price of tea, coffee, porridge and everything that they produce will have to go up or more people will have to be made redundant. Hon. Gentlemen say that high rates do not cost jobs. They had better come and see what is going on. Of course they cost jobs.
  Mr. Boyes rose—
  Mr. Greenway: I shall give way in a moment.
  I shall give another example. A launderette owner wrote to me yesterday to say that his rates will go up by £8,000. This means that people from the nearby flats who use the launderette will have to pay much more. That is a direct increase in the cost of living of people who cannot afford it.
  Ian Perryman runs a car repair firm and employs five people. His rates are to go up by £5,000. As a result, he will shortly have to get his five employees around the table to discuss the matter, and one of them will draw the short straw and be made redundant. High rates cost jobs, and I do not want to hear any more nonsense from the Labour party, the Liberals or anyone else to the effect that they do not.
  Mr. Boyes: The hon. Gentleman says that increasing rates cost jobs. Does he agree, therefore, that if a local authority reduces its rates, employers should be able to create more jobs? I believe that the hon. Gentleman was a school teacher before he came to the House. Does he agree that since May 1986 Ealing has recruited 150 extra school teachers? Surely that is good for Ealing. It has reintroduced admissions to schools for the rising-fives.
  Mr. Greenway: The hon. Gentleman is making a speech.
  Mr. Boyes: I am not. I am making a couple of points about education. The council has used rate increases to good effect, by creating a large number of jobs for teachers—at least 150.
  Mr. Greenway: The figure is 140. I have no objection to more teachers, but that figure has to be looked at along with the 1,235 extra jobs at the Great Western centre next to Ealing town hall which has been acquired and which costs £3·1 million a year in rent. Those staff will need secretarial and research back-up, telephones and so on. Those are non-jobs, and some of them, I am told, are jobs for the boys — for the friends of the Labour party, including Labour councillors from other boroughs. It is no good Labour Members pretending that that does not happen or using the Leader of the Opposition's tactic of trying to pretend that the Labour party is respectable and decent, when it is corrupt, disgraceful and evil.
  Mr. Boyes: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Gentleman to suggest that the Leader of the Labour party and his right hon. and hon. Friends are corrupt?
  Mr. Deputy Speaker (Sir Paul Dean): I did not understand the hon. Gentleman to be referring to hon. Members of this House. If he was, he was, of course, out of order and must withdraw his comments.
  Mr. Greenway: I referred, not to Members of this House, but to the Labour party.
  Mr. Boyes rose—
  Mr. Deputy Speaker: Order. The hon. Member should let me hear the explanation of the hon. Member for Ealing, North (Mr. Greenway) first.
  Mr. Greenway: I said that the Leader of the Labour party and others—it seems that the hon. Member for Houghton and Washington (Mr. Boyes) is joining them — are attempting to cover up some of the worst behaviour. That is deplorable. I hope that the hon. Gentleman will stop trying to intervene and wait for his own turn to speak.
  In addition to schools being closed and children, including disabled children—
  Mr. Boyes: This is a disgraceful speech.
  Mr. Greenway: Does the hon. Gentleman approve of disabled children being sent home for days on end and their families suffering? Does he approve of hospitals grinding slowly to a close because Ealing council cannot manage its staff and provide local services for discharged sick people in their homes? People cannot be discharged to their homes, which means that others cannot be taken into hospital because beds are taken up—all because of the council's inadequacy. Does the hon. Member for Houghton and Washington approve of that? What is his explanation to those who need serious hospital treatment and who face even more severe illness because they cannot get it?
  What does the Labour party say to those looking forward to jobs in a computer company to be set up in Greenford, which I personally negotiated and which will provide 100 jobs, but which cannot be established because the strike is preventing committees from meeting to give the necessary planning consents? What does the Labour party say to that? It does not care, or it would do something about it and those jobs would be saved.
  Mr. Boyes: Rubbish.
  Mr. Greenway: The hon. Gentleman had better find out the facts for himself. He does not know what he is talking about.
  The GLC forced so-called improvements costing £1·5 million on the Ault and Wiborg paint factory, which found itself struggling to meet the cost.
  Mr. Clelland: On a point of order, Mr. Deputy Speaker. I have listened carefully to the hon. Gentleman's speech, but I find it difficult to see what it has to do with the rate support grant — however regrettable the circumstances that he describes might be.
  Mr. Deputy Speaker: Perhaps I should explain to the hon. Gentleman and the House that it is customary for debates on the rate support grant to range pretty widely over local government finance, and that is what is happening.
  Mr. Greenway: The hon. Member for Tyne Bridge provides further evidence of the way in which the Labour party tries to gag those who speak the truth. It does not like it. It wants to conceal the truth.
  I have given a number of examples of the way in which jobs are lost as a result of heavy rates. There are plenty before me today and I fear that I shall be faced with more. The evidence is there. Let me give one last example.
  The Ault and Wiborg paint factory in Perivale in my constituency has always had difficulty meeting high rates—like everybody else. The money that goes on rates could be spent on research and development and in other areas. The Ault and Wiborg paint factory had forced upon it by the late GLC measures costing £1·5 million, which made it vulnerable to a takeover by the Berger paint company. It has therefore had to say no to a takeover by Manders, a paint company in Wolverhampton, because its offer falls about £1·25 million short of the price being offered by Berger.
  The difference between the two takeovers is that under the Berger takeover all the jobs will go, whereas under the Manders takeover 300 jobs will be saved. I wrote to Ealing council saying, "You are interested in industry. Out of your largesse, will you put up the £1·25 million required to save the 300 real jobs?", but the council refused. For my constituents, that sums it up. The Labour party does not care. It would rather create 1,235 non-jobs than save 300 real jobs. It is a disgrace.
  7.48 pm
  Mr. Bill Michie: I am glad that you have ruled, Mr. Deputy Speaker, that we can range widely in rate support grant debates, but unfortunately my speech will stick to the rate support grant. Had I known, I could have managed four or five more pages.
  I have listened with interest to some Conservative Members extolling the virtue of the rate support grant settlement and saying that it has been welcomed in their areas. Is it not a strange coincidence that most of the areas that seem to benefit from the rate support grant settlement seem to be under Conservative administration? Sheffield city council has not received adequate recompense for its needs. It is ranked 23rd out of 36 metropolitan district councils in terms of grant-related expenditure per head of population in 1987–88. The Minister has obviously heeded the words and warnings of some Conservative-controlled local authorities and delivered the goods, but that has

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  certainly not happened to Sheffield. Indeed, while our deputation was arguing the case with the Minister, the report was presented in its present form, and there seemed little point in continuing the discussions.
  The Government appear to ignore the needs of areas, such as Sheffield, which have very high unemployment. Before hon. Members start shouting that that is because of the high rates, I assure them that I shall come to that point later. High unemployment has been caused by the decimation of the steel and engineering industries in that part of the country. Again, that has nothing to do with local authorities but a lot to do with the Government. This afternoon the Government said that nothing could be done to stop unfair trading in Japan, yet they are prepared to stop any so-called unfair practices in local authorities. If we really want to put our house in order for the sake of industry and jobs, we should he looking across the water, not to the high rates of local authorities.
  Local authorities such as Sheffield have 40 per cent. youth unemployment. That applies not just to the poorer east end; I believe that there is 40 per cent. youth unemployment in the only Conservative constituency in Sheffield. It is affecting working-class and middle-class families alike. That has been going on since 1979, and perhaps slightly before, because of the deterioration in trade. Middle-aged craftsmen and craftswomen are now long-term unemployed. Such skilled workers will not be able to find jobs in their industries again in their lifetime. The Government have not taken such problems into account when working out Sheffield's rate support grant.
  In order to offset some of the difficulties the city council has set up educational courses which, according to my latest information, are likely to be affected by the financial constraints placed upon the local authority. Those courses could be kept at the expense of something else, but there are so many pressures on local authorities in areas such as Sheffield that moves cannot be made without causing suffering to somebody.
  Facilities have been provided for the young unemployed which have helped to maintain some contact between the younger and older generations, providing the young with some guidance in their idle hours waiting for employment. But those facilities, too, are faced with such financial constraints that some are likely to be closed or at least experience some slowing down of their activities.
  The services provided for old-age pensioners are under threat, not by the loony Left, but because we no longer have the resources to provide them at the level that we wish. They certainly cannot be increased. That is despite the fact that Sheffield, as I understand it, has the highest number of elderly people of any equivalent local authority. Again, that seems to have no effect upon the city's rate support grant.
  Despite everything that Sheffield city council has tried to do to help those in need and those caught by the misfortune of unemployment, the fact is that the heavy trades and industries are no longer needed, so the unemployed, school-leavers without jobs and the old-age pensioners who need proper accommodation have suffered. The council's attempts to help those people have been sabotaged by the Government, or the council has been penalised for doing its best in those areas.
  I have spoken in almost every local government debate in the House since 1983 and I want to repeat what I have said on many occasions. When the Audit Commission investigated Sheffield's finances, it commended the city
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  council on its efficiency and value for money. Yet that efficient service and the work force which administers it are now under threat. Despite Sheffield's high unemployment, there may be redundancies within the local authority itself if the financial squeeze continues.
  The block grant system still incorporates a penalty, whereby authorities lose substantial amounts of grant for overspending—about 79p for every pound for Sheffield city council in 1987–88. The problem is made worse by the abolition of grant recycling which means that money which would usually have gone back to local authorities will now be returned to the Treasury. The Association of County Councils has calculated that about £400 million could be involved in 1987–88. As a result, the effective level of Government support for local authorities is likely to be considerably lower than that assumed in the statement.
  The Government's assumption of local authorities' spending needs is even lower than their own spending plan and the insistence on the amount not allocated to GRE ensures that more authorities are likely to lose grant at a higher rate for spending above the threshold level. The significance of safety nets and grant caps in the determination of an individual authority's grant entitlement underlines the arbitrariness and unpredictability for the year-on-year changes in the block grant system.
  Mr. John Heddle: I am grateful to the hon. Gentleman for giving way. Are the views that he is expressing at the moment his own or those of Sheffield city council's treasurer's department?
  Mr. Michie: I am sorry that I gave way, because that is not a clever question. Of course I do not create all my own work. I have received some of the statistics from the city treasurer. I do not know what his political persuasion is, but he is a professional. I assume that the hon. Gentleman writes all his own speeches and makes all his own calculations, in which case I concede that he is a cleverer man than I am.
  The settlement is the third version that has been produced in the past three months but even so it is not definitive. The Secretary of State revised his original firm intentions in February, and again in March, following the Greenwich court case. The Secretary of State's announcement that he intends to appeal against that decision means that even this version of the settlement cannot be taken as final. Therefore, it is once again a major source of uncertainty for authorities in determining their rate requirements in 1987–88. Those uncertainties will cause all sorts of further problems for local authorities.
  Now, for the benefit of the hon. Member for Mid- Staffordshire (Mr. Heddle), who is no longer listening, what follows is my own speech; it is not written by anybody else.
  It has been said by many Conservative Members, although not by the hon. Gentleman because he has not been here long, that rates are the main cause of high unemployment. That clearly does not follow. I can give many examples. I do not have to go to strike action in Ealing; I can give straightforward examples from Sheffield. The massive job losses in steel there had nothing to do with the rates, even though the British Steel Corporation said that if the rates were lower fewer jobs would have been lost. That is nonsense because at that time energy prices were rising far higher than rates. We also had to remind the BSC that it was so big that it

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  stretched over Sheffield and Rotherham, and Rotherham's rates were much lower. Therefore, it is nonsense to say that unemployment is a result of high rates.
  Mr. Patrick McLoughlin: I accept that high rates are not the sole cause of companies moving. However, if an industry was looking for somewhere to go, would it go to Derbyshire, where the rates next year will be 262p in the pound, the highest rated shire county in the country, or to Staffordshire, whose rates next year will be 198p in the pound? It would be most likely to go to the area where cheaper rates prevail. Although that is not the be-all and end-all, it is certainly an important on-cost to any industry.
  Mr. Michie: I am glad to have given the hon. Gentleman the opportunity to make a speech. I would prefer to go to Derbyshire than anywhere in Staffordshire, but the hon. Gentleman is saying that no firm will set up in Derbyshire, which is not the case. Firms could go to Staffordshire because it is cheaper, but they do go to Derbyshire.
  Despite all the hoo-hather about the rates, Sheffield has been successful in attracting new firms. Indeed, I went to the opening of one only last Friday morning. That firm had chosen to come to Sheffield from a lower-rated authority because of the services that are offered in Sheffield. We must get away from the idea that if everyone has low rates and receives low pay there will be full employment. If that is the case, I cannot understand why everybody is not working in the Third world—that is the logic of the argument. It is claimed that if workers are paid peanuts and there is no ground rent or rates, firms will spring up. That is not the case—firms spring up for reasons other than ongoing overheads. Firms that are attracted to lower-rated authorities may find that those who own the private land will put the rents up accordingly. Perhaps there should be a policy of rent capping as well as rate capping to prevent the exploitation of people and businesses.
  Some areas, known as free enterprise zones, do not pay any rates, but I still see vacant signs in those areas. I do not see people knocking on the door saying, "For God's sake, let me go to that enterprise zone." There is an enterprise zone just across the border of my constituency, but Sheffield has attracted more firms than that enterprise zone.
  New firms and the consequent new jobs also demand the necessary services. Firms need services such as roads to the factories, education for the workers' children, housing, recreation facilities, and so on. All those are among the services required by new firms and new jobs. Sheffield has done reasonably well to achieve those objectives. Unfortunately, because Sheffield is rate-capped, the possibility of that city providing those services in advance of a new factory development is difficult because of that financial constraint.
  Rate capping and the rate support grant levels imposed on Sheffield have destroyed the progressive programmes of that local authority. They have been continuously barraged by financial constraint. The problem will not go away while we have a Government who will not listen to reason. I do not mind losing the argument with the Minister or anyone who has a different point of view, but
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  I object to losing the argument because that individual or the Minister did not listen. I object to losing the argument to the Government on the basis of their political spite.
  8.2 pm
  Mr. Bowen Wells: The purpose of my contribution to this debate is to ask my hon. Friend the Minister for Local Government if he will make certain that the rate support grant settlement that he has achieved this year is maintained in every succeeding year until he introduces the new system that will replace the present rate support system.
  We owe a great debt to my hon. Friend the Minister of State for Local Government for the way in which he has listened to the representations made to him this year. He has listened with more care and to a greater degree than any previous Minister for Local Government, and especially in relation to the difficulties faced by Hertfordshire and East Hertfordshire district council within my constituency.
  In answer to the hon. Member for Sheffield, Heeley (Mr. Michie), thank goodness our Ministers have introduced rate capping. If they had not, there would be no rate support grant available for Hertfordshire, because counties and authorities such as Sheffield eat up all the money available in a finite rate support grant. Therefore, areas such as mine would receive nothing. The rate support grant system was introduced by the previous Labour Government and ever since we have suffered, year after year, reductions in the rate support grant. At present, it is a small percentage of the total amount of money that is spent in the county.
  As a result of that declining amount of revenue, we have had to neglect the maintenance of our schools in order to maintain the staff-pupil ratio and the quality of education. We have had to neglect roads and highways, but at the same time we have been contributing a large amount to the redistribution system under the rate support grant settlement. That redistribution helps areas such as Sheffield and Ealing, but what thanks does the Minister get for that redistribution? He has met nothing but abuse and total intransigence. Local government under Labour control, rather than listening to central Government, has proved intransigent; such authorities have a great deal to answer for in the part they have played in breaking down the system of rating that the country previously enjoyed.
  If such authorities continue to follow such a policy, successive Governments will need additional resources and additional legislation to curb the overspending behaviour of such authorities. Such behaviour shows that the authorities do not listen to the national needs of the country; their behaviour is exemplified by the attitude and chaos in many Labour councils.
  I am aware that Ministers have increased the rate support grant settlement by 9 per cent. more than they did in 1986–87. I do not expect successive Governments continuously to increase the rate support grant in this manner, but I am asking the Minister to cap the rate support grant settlement at the present rate, in real terms, for the next three years until he introduces the new system.
  The changes in the system of calculation are also extremely important and I shall explain that in terms of its effects on Hertfordshire. The rate support grant settlement for Hertfordshire has fallen this year—we have had no increase. Through redistribution, Hertfordshire has contributed to the council in Sheffield and the council in

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  Ealing. Hertfordshire faces a reduction in rate support grant, but because of the intervention of my hon. Friend the Minister it is less than was originally expected.
  Mr. McLoughlin: Does my hon. Friend agree that that almost gives the lie to some of the information that certain Labour authorities have issued? This morning, I received a rate explanation leaflet from my county of Derbyshire. That leaflet tries to point out that, in some way, all the money will go to councils such as my hon. Friend's, as a reward to those in the south. My hon. Friend should underline the fact that Derbyshire had been given an increase in rate support grant this year because expenditure is under control in areas such as my hon. Friend's. Derbyshire has the highest rate in the country and is suffering from the profligate spending of the Socialist authority.
  Mr. Bowen: I am grateful to my hon. Friend, because he illustrates the way in which the people of Hertfordshire have been willing to play their part in trying to assist the poorer areas — the underprivileged and unemployed in other parts of the country such as inner-city areas in Sheffield or the poorer areas of Derbyshire. However, if the councils in those areas do not play their part to curb their expenditure, by focusing expenditure on real needs and running an efficient organisation, I believe that the people of Hertfordshire have good reason to feel extremely angry and poorly treated.
  Hertfordshire has suffered a 6·4 per cent. reduction in the rate support grant settlement this year.
  Mr. Michie rose—
  Mr. Wells: No, the hon. Gentleman has had his opportunity and, as I hope that my remarks will prove, I listened to him with great care.
  As my hon. Friend the Member for Derbyshire, West (Mr. McLouglin) is aware, the distribution of grant depends on what is described as the "need to spend". According to the extraordinary statistical system that has been developed in the Department of the Environment, Hertfordshire does not have a great needs element. That is why we continually lose the argument for getting a reasonable settlement under the rate support grant system.
  Year after year I have got angry, frustrated and furious with Ministers, officials and statisticians of the Department in an attempt to change this absurd calculation, but to no avail. Because of my experience, I do not believe that we should change the calculation until we get the new system that my right hon. Friend the Secretary of State will be able to propose when we win the next election.
  Rateable values in Hertfordshire are much higher than those in many parts of the country. That is the element on which statisticians have depended for their argument that the county has low needs. However, I have argued that Hertfordshire has a 35 per cent. higher than average rateable value, and that translates into low needs. But we have only 13 per cent. above the normal level of income. We are by no means as plush as other counties. We are only 13 per cent. above the national average, yet we are calculated to have 35 per cent. lower than average needs.
  That is the basis on which the absurd calculation always makes a low settlement in favour of Hertfordshire. I should like the hon. Member for Sheffield, Heeley (Mr. Michie) to take home to Sheffield the point that, of total
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  county expenditure, only 7·8 per cent. is met from the rate support grant. The rest must be raised in Hertfordshire — from our constituents, workers and businesses. Indeed, that results in the county paying more in rates than almost any other county.
  The county is accused by Opposition Members of being lush pastures that benefit from the Government's largesse. Indeed, the Government have been over-generous. They have ignored the abuse that has been heaped upon their heads, and have redistributed the grants. Nonetheless, they do not get much thanks for it. I do not think that they ever will be thanked. I have often pointed out that fact. Ministers have said that they need to redistribute the grant in favour of the needy. I should be delighted to make that transfer—most people in Hertfordshire will agree with me—if it went to that purpose. As my hon. Friend the Member for Ealing, North (Mr. Greenway) demonstrated, it certainly does not. To my certain knowledge, it does not go to that purpose in inner London, either. That makes us even more angry at the continuation of a system that is extremely unfair to my constituents.
  As a result of the system, we have managed to raise our rates by only 7 per cent. The rate settlement is about 3 per cent. more than it should be, simply because Hertfordshire is now afflicted by an unholy alliance between Labour and alliance members of the county council, who are inexorably pushing for higher and higher expenditure. It is only by virtue of the efforts of Conservative county councillors that we have managed to keep the increase down to 7 per cent.
  If the settlement had been made with no increase in expenditure, we could have kept the rate at 3 per cent. Because of the need to spend money after a long period of austerity and because the council had been losing rate support grant at a considerable rate, Conservative Members wanted to spend more money on maintaining our schools, some of which are in an appalling state, on increasing much-needed nursery school education, and on increasing the number of primary school teachers.
  I do not exempt my county council from the need to be efficient. Although it may point, as the hon. Member for Heeley did, to the Audit Commission giving it one or two plaudits, I am convinced that there is a great deal more to be done within the county to increase efficiency and reduce costs in all areas. For example, the borough still has an exceedingly expensive school meals service. If that service were contracted out and conducted on a proper basis, it would result in our being able to reduce the pupil-teacher ratio still further—particularly in primary schools—and open more nursery schools, which are obviously needed The county council has not tackled that matter. Indeed., there is continuous opposition from the Labour and. alliance parties on the county council to prevent that kind. of efficiency. We are criticised for proposing to contract out other services to save money.
  A great deal of efficiency and rigour is needed if we are to run the county council efficiently as people deserve in the county and in the areas that need more money. I accept that more money is needed in inner-city areas. If we do not maintain the present system of distribution to which my hon. Friend has agreed, we shall have a horrendous rise in rates next year. Counties such as Hertfordshire will go out of the rate support grant system altogether.
  Let us examine the way in which we have kept down rates in Hertfordshire this year. I should like the Minister to note that we have taken all our money out of reserves

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  to keep rates as low as we have been able to, and we have added to that money from our balances. If the system were to revert to what my hon. Friend originally proposed in July, it would mean that the county council will have no reserves or balances to put towards keeping the rate support grant down, and we will see extremely high rate increases next year. Therefore, it is essential, if we are to get any kind of justice or equity, to maintain the present distribution system, in spite of the blandishments of Opposition Members, which my hon. Friend has heard, to benefit themselves disproportionately and thus deprive my county council and its constituents from at least getting a fair amount—or even the 6·8 per cent. that we got this year—from the rate support grant settlement.
  I despair of persuading statisticians and other people in the Department of the Environment to change their incredibly stupid method of calculating needs in the rate support grant settlement. The reason for higher rateable values in Hertfordshire is that, since 1945, the county has been substantially built over. Therefore, all our rates and valuations are up to date. Thus, Hertfordshire is depicted as a much richer county than it should be. I despair of getting the system altered. I beg my hon. Friend to keep the distribution system as it is for the next few years until he can introduce a new system. I ask him also to maintain the grant in real terms. If he does that, we shall have a predictable system in the next few years. It will give him fewer headaches because he will not have me buzzing around his ears and telling him that he is doing the wrong thing and that he is depriving my constituents. Other boroughs will be able to know what they are getting. That will be the best way to proceed.
  8.18 pm
  Mr. Peter Pike: I apologise for not being in the House at the start of the debate. Unfortunately, I was on the Select Committee on the Environment, so was engaged elsewhere in the building. That is one of the unfortunate matters that afflict hon. Members from time to time.
  The matters that we are debating are regrettably similar to issues with which we have dealt many times over the past few years. Unfortunately, as yet the Government have not been prepared to see common sense and change the direction of their policies. I agree with the Government on one point. A Government of whatever party have the right to set the maximum amount that they are prepared to put into local government.
  The maximum amount that the Government are giving to local government is insufficient. Local government has the right to pursue that argument. If there is to be local democracy, local authorities should be able to raise from their ratepayers whatever amount they believe is needed and acceptable to meet the needs of the community.
  The speech of the hon. Member for Lancashire, West (Mr. Hind) showed that he has little interest in local government. He is very much against local government and local democracy. I regret that he is not in the Chamber now. However, I do believe in local government and local democracy. We should strengthen, not weaken, local government. Local government is weakened if we continue to tighten the capital and revenue constraints within which it has to work.
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  The hon. Member for Lancashire, West referred to a number of rating problems, but in 1979 the Government contributed to the problems that we are facing now. They cancelled the rating revaluation. Rating revaluation might have had an effect that I should not have liked, but the Government have compounded the problems that now face local government because of their failure to implement the rating revaluation in 1979. However, even if there were to be a rating revaluation instead of the community charge, such a long time has passed since the last rating revaluation that a realistic revaluation would have an unacceptable impact on many areas.
  Earlier this week the Minister for Local Government sent certain information to hon. Members. It has been extremely useful. It is far better that that information should have come from him rather than from me or from my hon. Friend the Member for Blackburn (Mr. Straw). His message is the same as the message that I have been giving to the people of north-east Lancashire ever since the Government proposed a move in this direction.
  The Minister for Local Government said that because of the community charge a two-adult household in northeast Lancashire will probably have to pay substantially more than it now pays. He also said that this was because domestic rateable values in the area are among the lowest in the country. I believe that Pendle, the constituency that is adjacent to mine, has the lowest domestic rateable value in the country. The domestic rateable values of Burnley, Hyndburn, Rossendale, and Blackburn are very low, too.
  The Minister then said that the people in those areas enjoy the benefit of far cheaper local authority services than can be enjoyed elsewhere. That is an amazing statement. This Government have consistently accused Burnley of being an overspender and a wasteful authority. When I was the leader of Burnley council, I disputed that statement with Department of the Environment Ministers.
  Mr. J. F. Pawsey: On a point of order, Mr. Deputy Speaker. I apologise to the hon. Member for Burnley (Mr. Pike) for interrupting him, but may I draw your attention to the total absence of members of the Social Democratic party and of the Liberal party on the Opposition Benches? Do you agree with me that it is deplorable—
  Mr. Deputy Speaker: Order. That may be a point of argument, but it is certainly not a point of order.
  Mr. Pike: The problem is largely caused by the low rateable values of residential properties. To be fair to the Minister for Local Government, he then said that on the basis of the 1986–87 figures the rate poundage for industry in Lancashire will be cut by between 5 and 12 per cent.
  The people of north-east Lancashire will not welcome this increase. The present rating system creates difficulties. At a Labour party conference before the 1959 general election we considered what could be done, but despite the anomalies and the friction that the present system creates I cannot think of a system that would not create even greater problems, or just as many problems as the existing system.
  I have studied the final supplementary report for 1985–86 but I have been unable to find in it the information that I seek, and I hope that the Minister will be able to enlighten me when he replies to the debate. I refer to the very high cost of policing the Conservative party conference at Blackpool. Lancashire county council

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  has pursued the matter with the Minister. Several of my hon. Friends and I have pursued it, and we were told that the matter would be dealt with in the final supplementary report. This is not a political issue. When the Labour party forms the next Government, I accept that the same security costs will be involved. However, we do not want Brighton and Blackpool to be penalised. Very few towns have the facilities that would enable them to accommodate Labour or Conservative party conferences. It is wrong that county ratepayers should have to meet such massive costs, following the Brighton bombing tragedy of 1985.
  Mr. Greg Knight: Does the hon. Gentleman agree that after the next election virtually any city will be able to accommodate the Labour party conference?
  Mr. Pike: I should have known better than to give way to the hon. Gentleman. Labour party conferences will always be far more democratic than Conservative party conferences, which are predetermined by the platform from day one.
  Mr. Allen McKay: Does my hon. Friend agree that according to the latest opinion polls, 140 Conservative Members will lose their seats?
  Mr. Pike: I am sure that many Conservative Members are sweating about the date of the next general election, because they know that they will lose their seats.
  The point that I am making is important and I ask the Minister to respond to it. In annex IV of the report, the Minister gives the description of further expenditure to be disregarded under section 8 of the Local Government Finance Act. Item 9 shows that total expenditure incurred under the precept of mass demonstrations on Ministry of Defence sites in respect of which a special payment has been made is to be considered, and it goes on to explain why. I argue that if that is perfectly fair, where those establishments have been bought by the Government—I do not agree with the missiles being there, but that is not an issue for today — there is no great dissimilarity between that and a county having to contend with a conference of one of the major political parties.
  I want to pursue yet again the question of the factor that is used to calculate GREA with regard to the figures that are allowed for art galleries and museums. The calculation that is used for this part of the grant is nonsense. It is based on the square footage of shops and restaurants in a local authority area. That means that a local authority which makes no provision for its citizens in those two respects, or the theatre or the arts, gets exactly the same grant as a council that is providing an excellent service. It is of significance to my local authority—which has a museum and art gallery and has opened a multi-purpose arts centre at the Mechanics in Burnley—because it is already on maximum grant, so the cost of that over the year, as it gets into full running, must be borne by the ratepayers of Burnley. I give that example, and I have given other examples over the years, but I do not intend to do so tonight because other hon. Members wish to speak in the debate.
  If we have a system which is based on all those factors, with all the complexities that are explained in the report, it is crucial that the basis on which those figures are calculated is fair and reasonable; otherwise we cannot
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  come forward with a fair solution. Although we have had this system in operation for all these years, we still do not have a system that deals with these points on a fair and equal basis for the local authorities involved.
  Before I close I wish to give an illustration of the effect of the Government's policy on rates in Burnley by the grant that they have made and the figures for Pendle. In 1981–82, the Government grant was £5,435,000. In 1986–87, it is expected to be £5,112,000. We know that it will change with the final adjustment. It will be some time before the final figure is known. I asked the Minister to give me those figures.
  In a written answer on 24 February the Under-Secretary of State, the hon. Member for Southampton, Itchen (Mr. Chope), said that in 1981–82 prices, using the same basis all the way through, the grant for that year, would have been the same—£5,435,000—but in 1986–87, using the constant price basis, it had gone down to £3,997,000. In Pendle in 1981–82 the figure was £4,430,000, in both cash and real prices. Using the same basis, it had gone down in cash terms to £4,354,000 in 1986–87, and in comparative prices it had gone down to the equivalent of £3,405,000. That means that to stand still, councils have been forced to pass on a massive burden to local ratepayers. The Government must accept that a large percentage of the rate increases that have been forced on ratepayers have been a result of the Government's action and it is the Government's responsibility.
  I omitted to mention one point with regard to the community charge when I was saying that people in my constituency will experience a substantial increase. It is also important to remember that ratepayers will be paying 20 per cent. of their rates—those on maximum housing benefit at the present time — and they will also be bearing that percentage of the community charge. Whatever adjustment is made in other forms of benefit, the areas that are bearing the worst as a result of the community charge will lose as a result of this move by the Government.
  It is time that the Government changed direction and lived up to the promise that they made when they were first elected, to give freedom to local government, and to do that they need to give local government the cash resources, both capital and revenue, to get on with the job for which they were elected.
  8.37 pm
  Mr. Neil Thorne: I was pleased to hear the hon. Member for Burnley (Mr. Pike) acknowledge that the Government should have the final word on total local government expenditure. There is no doubt that, ever since local government expenditure has been of a sufficient volume to affect the national economy, successive Governments have had to take a considerable interest in what local government is spending.
  For many years, local government was allowed to put in a bid for whatever it considered necessary for its needs, and it was then told by the Government that it had to cut back by so many percentage points. Local government that was careful with its expenditure had considerable difficulty in doing that, much more so than those authorities that were free spenders. That is where matters started to go wrong.
  The matter was compounded when some local authorities refused to accept the requests of central Government to trim their sails. They declined to do so on

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  the basis that there was no legal requirement for them to comply. Clearly no Government could accept that, because of the enormous total expenditure of local authorities in relation to total national expenditure. Local authority expenditure now has a significant effect on many matters, including interest rates and the availability of funds to spend elsewhere in the economy. Quite clearly the Government had to do something about it. That is how the Local Government, Planning and Land Act 1980 came into being.
  It is clear that throughout those many years before the Act was passed, local authorities were able to put their hands into the pockets of the Government, because Government subsidies were paid out as a proportion of total expenditure. If local authorities decided that they wanted to spend a larger amount, they could call on the Government to make a contribution to that sum. That meant that taxpayers up and down the country were paying over the odds to those authorities that had decided that they wished to spend widely. It ill becomes Opposition Members to make such a song and dance about their authorities being rate-capped and deprived of grants, when clearly local authorities had it so good for so long at the expense of everybody else. Local authorities did not draw anyone's attention to that at the time because they were only too happy to take those funds. Local authorities that are being trimmed back do not like it because they are being told that they must fall into line with everyone else.
  I participated in the system that was introduced in 1980, because I was a member of the Standing Committee on that Bill. The Committee sat for quite a long time and we went into the matter in great detail. The complexities that have arisen still leave a lot to be desired. In order to have an effective tax we must have one that can be seen to be working properly, had one that can be seen to be fair in the way in which it distributes resources. Many areas are receiving rate supports grants that are so difficult to calculate that it is not easy even for quite skilled professional people, let alone the man in the street, to understand exactly what is happening. I urge my right hon. and hon. Friends to try to make it a lot simpler to understand so that people can see how fair and equitable it is. Clearly, that is not how it looks at present.
  I hope that my hon. Friends will shortly turn their attention to creative accounting. This is creating enormous debts that are likely to be passed, without any valid excuse, to future generations. I trust that my hon. Friends are looking into the possibility of ensuring that some penalty falls upon the heads of those who indulge in this practice, which is quite unfair to succeeding generations.
  I shall now turn to the community charge. I was rather alarmed to hear my hon. Friend the Under-Secretary of State say that one of the designs of national commercial rates, is to transfer resources from the south to the north. That would not be right and it is one of the main drawbacks of the community charge. Whether we like it or not, local people become involved in commercial undertakings in their areas, especially in shopping and industrial properties.
  Although it is intended that there should no longer be a locally assessed business rate, authorities that prudently trim their charges to attract shops and businesses to their areas must continue to be encouraged. I hope that a business rate element can therefore be retained to enable
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  local authorities to reflect their desire to attract shops and industry by cutting rates so that additional employment is created. To take away such encouragement and deal with the matter only at national level would be unfortunate, and I shudder to think what it could lead to in the way of manipulation nationally. That would not be a good thing.
  I am worried about restrictions on contractors. Many contracts are now awarded at much higher figures than those that are in the interests of the ratepayers and the localities. Some local authorities have taken it into their heads to restrict the number of firms that can tender for work. They do that by way of various political requirements. That is a severe handicap. I hope that my hon. Friends will try to ensure that any extra costs incurred by this kind of behaviour can quite properly be assigned to the councillors who decide that contracts should be awarded on that basis.
  Ratepayers ought to benefit from the lowest estimates for work, and any extra charges that arise because the contractor who can give the lowest bid is excluded on political grounds should be a direct charge on councillors who impose political conditions. I hope that my hon. Friend will look into the possibility of surcharging councillors who indulge in this kind of political gerrymandering.
  I marvel at the way in which Opposition Members appear completely to disregard the effect of rates upon industry and commerce. They declare that rates have no effect upon employment. That is quite extraordinary. My local authority area is the London borough of Redbridge.
  Mr. Straw: I am grateful to the Minister for giving way.
  Mr. Thorne: I am not a Minister.
  Mr. Straw: I apologise for prematurely elevating the hon. Gentleman. I know no more than he knows about his future. The hon. Gentleman suggests that somehow we have manufactured our ideas about the relationship between rates and jobs. Our conclusions come directly from a £50,000 Department of the Environment study, which came to the same conclusion.
  Mr. Thorne: I note what the hon. Gentleman says, but the arguments advanced by the Opposition in this debate have been negative. They have tried to prove that because the steel industry was reduced in size, low rates had no effect upon saving jobs. That is an entirely false theory. We must study the effect of rates upon industry in a specific locality over a longer period than that during which an industry declines. That is where the hon. Gentleman is going wrong.
  Residential ratepayers are flocking to my area from two adjoining areas—the London boroughs of Newham and Waltham Forest—because in those areas the rates on houses are more than double the rates on similar houses in my local authority area. People are so desperate to get into my local authority area that the prices of property in my constituenty are going up considerably. That is a direct result of the rateable value differential. I must confess that that is not due only to rates, but partly because people with children are desperate to get away from the education programmes of those two local authorities. Both those authorities are in the hands of the far Left and people feel that that is doing their children a grave disservice.
  I draw my hon. Friend's attention to the need to ensure that authorities that have taken the advice of Government

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  Departments and relied upon their reserves this year, are not disappointed in the future. They have taken the Government at their word, and I hope that they will be helped.
  My main concern is the Greenwich factor. I know that this matter is now the subject of an appeal. When the judgment is given, my hon. Friends should be careful to ensure that local authority areas that have been adversely affected as a result of this factor are not penalised because of some miscalculation by a civil servant.
  It is deplorable that this has happened and I hope that in due course the matter will be put right. I hope that it will be corrected by the judgment of the court. However, there are other ways in which it could be dealt with and in that context I draw my hon. Friend's attention to, section 66 of the Local Government (Financial Provisions) Act 1963. I hope that he will explore that as a way of solving this problem through the rate equalisation scheme.
  This has been an interesting debate, especially in view of the Opposition statement that they do not believe that high rates discourage business activity. I profoundly disagree with that assumption. High rates are a definite disincentive to the creation of employment. I am delighted that the Government will he rate-capping authorities to ensure that firms do not go out of business.
  I notice that the Opposition are particularly concerned about the community charge, because it may have an effect on their election results. My hon. Friends the Members for Ealing, Acton (Sir G. Young) and for Ealing, North (Mr. Greenway), have had this matter illustrated to them extremely well in the past few months. The illustrations that they gave the House were extremely interesting. I know that the House will watch with great interest the election results of my Conservative colleagues in Ealing when the general election comes. The ballot box will show how much the electorate of Ealing disagree with the antics of the local Labour party.
  8.50 pm
  Mr. Allen McKay: I shall pick up one or two of the points made by the hon. Member for Ilford, South (Mr. Thorne) about industry and rates. It seems common sense to say that areas with low rates will attract industry, but that is too simplistic, as is shown by what has happened in my area.
  The hon. Member for Lancashire, West (Mr. Hind) said much the same thing as the hon. Member for Ilford, South. He praised his local authority for having kept to a rates increase of just over 5 per cent., and said that this would encourage industry to go to his area. That is fine, except that my authority has had a rate increase of 4·5 per cent. The average rate in west Lancashire is £331·27, but the average rate in Barnsley is £269·88. Therefore, not only have we had a lower rate increase, but we had a lower average rate to start with. However, we still have an unemployment rate of 22 per cent. How does one correlate the Conservative party's arguments about rates with that point?
  My district looked at its infrastructure because we said that if we have people available for work — it is an excellent work force—a chamber of trade and a local authority that co-operate extremely well and a network of transport north, south, east and west, by every capitalist way of thinking, industry should be flocking to our area. But it is not, and we do not know why.
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  Other factors must also be taken into consideration. There are problems. We have always had the argument about rates and services. The Secretary of State talked about value for money, but I hope that he does not think that cutting services is value for money: it is not. The people I represent are a canny lot when it comes to value for money. They do not look at the amount of rates but ask what are they getting for that expenditure.
  I can illustrate this point. When my small urban authority decided to build a swimming bath, it had to increase the rates, but the people decided whether they should have that facility. The local authority had public meetings to inform people that if they wanted the facility they would have to pay for it. They said that they did not mind paying, provided that they got value for money. The project proved to be worth while. The Secretary of State says that value for money is a cut in services, but that is not true, because people want services. Services vary from area to area, so one cannot take one area as a norm.
  In my constituency, the formula works against the local authority because of its problems and the need to increase rates to overcome those problems. When the Government decided to cut the rate support grant to local authorities, this put the local authorities in the invidious position of having either to cut the services that people wanted or to increase the rates.
  When the Government found out that their ploy was not working, they had to introduce rate capping. The council is making its fifth or sixth attempt to bring in a rate, and this is playing havoc with the way that it is trying to come to terms with rate grants. It is continually in the terrible position of making a rate and of having to make it again and again. The responsibility for that folly falls clearly on the shoulders of the Secretary of State.
  All this is about the removal of powers from local to central Government because central Government think that they know best when they do not. Ours is the central authority, and the Government are too far from the people concerned to make the decisions that they are making. I will continue to say that it is for central Government to determine what grant is sufficient. However, it is not the prerogative of central Government to take on the role of local government and decide what services should be provided. That is the power of people in local government and it is for the electors to decide what services they want from their local authority and what electoral system they should have to bring councils to power. That has nothing to do with us and the more that we try to overcome that by reversing the position and giving power to central Government, the bigger the mess we shall get into. It is time that we got away from the Government's attempts to change the system.
  8.56 pm
  Mr. John Heddle: I am grateful to you, Mr. Deputy Speaker, for allowing me to catch your eye, particularly as I have not been in the Chamber for the whole of the debate, due to a constituency engagement. I shall not dwell too much on what the hon. Member for Barnsley, West and Penistone (Mr. McKay) said, except to say that I wholeheartedly agree that local government should govern locally within the financial strictures and confines imposed by central Government as the custodian of the public purse. I served my apprenticeship in local government and have a great affection for its integrity, provided that that integrity is not abused.

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  The only way that the integrity of local government can be preserved is by increasing local accountability. I am sure that the hon. Gentleman, like many of my colleagues, will agree that there is no real local accountability in local government. If there were, the turnout at local elections would be comparable to that for general elections, but it is not. One in four, possibly fewer, turn out in local elections, as opposed to 80 per cent. in general elections.
  My hon. Friend the Member for Ilford, South (Mr. Thorne) referred particularly to creative accounting, and what he said was most interesting. In The Independent last Friday, we all read how Manchester city council has quite deviously managed to find yet another way round the Government's financial controls, by selling off and then leasing back to itself some of its property assets. It is selling them not at arm's length on the open market, but to a company that it controls. I plead with my right hon. Friend the Secretary of State to take on board that devious form of creative accounting which simply seems to drive a coach and four through prudent financial arrangements.
  The hon. Member for Burnley (Mr. Pike) reminded the House that the Conservative Government of 1970–74 decided not to carry out the quinquennial revaluation which was due in 1973. I regret that as much as he does. However, it should not be forgotten by the House that the incoming Labour Government and then the Lib-Lab pact Government also ignored the fact that the quinquennial revaluation was not carried out in 1973, and they did not carry it out in 1978. That is why there has to be a radical overhaul today of the whole structure of the foundation of local government financing.
  This debate has been useful because it has reminded us that the shire counties, which are much more prudent than many of the Labour-controlled inner-city authorities, have managed to contain their rates rise to 6·8 per cent. The Labour-controlled authorities have averaged overall an 8·7 per cent. increase and Lib-Lab councils are at 9·1 per cent. The jewel in the Liberal tiara, the Isle of Wight, has bestowed upon its ratepayers a 10 per cent. increase. However, those figures all pale into insignificance when compared with Waltham Forest—[HON. MEMBERS: "Not again."] This cannot be repeated too often. Waltham Forest has increased its rates by 67 per cent. and the London borough of Ealing has increased its rates by 72 per cent.
  I welcome and support the rate support grant settlement, for two reasons. First, on the matter of expenditure provision, the settlement is generous with public expenditure provision up to £25·2 billion, an increase of over £3 billion on last year and an increase of 4·1 per cent. over local authorities' budgets for 1986 and 1987. Secondly, I support it because the Exchequer grant to the local authorities has been increased substantially by over £1 billion to nearly £13 billion, a 9 per cent. increase on last year. Grant-related expenditure has been increased by 4 per cent. However, there is still scope for savings by local authorities. They do not have to increase their grant-related expenditure by that 4 per cent.
  I regret, as my hon. Friend the Member for Ilford, South reminded the House, that competitive tendering has not been made compulsory in the Local Government Bill now in Committee. I am sure that if that were done, many other local authorities could follow the example of Lancashire county council which, by bus deregulation, has
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  managed to save the ratepayers in that county £6 million in subsidy. The ratepayers of Arun district council in West Sussex are grateful to the Conservative-controlled council because £300,000 of their money has been saved by the deregulation and privatisation of refuse collection.
  I believe that local government has become too politicised. That politicisation and polarisation has caused an increasing number of local authorities to fall into the hands of extremists. That has caused a number of excellent directors and senior managers in local government to forsake local government as a career and go into the private sector. That is to the discredit of local government and the elected are the poorer for their absence.
  I regret that, although Opposition Members have pleaded that the settlements for their local authorities have not been generous enough, they have not turned inward to their own councils in their own constituencies to see how efficiently their departments are run. When one looks at the number of empty houses and flats and the length of time that those houses and flats have been empty, and when one looks at the rent arrears in virtually every housing authority in the country, one can see money being wasted day by day because local authorities do not have a proprietorial interest in the management of their properties. The housing stock and the management of the housing stock in our local authorities should be put out to more caring and responsible authorities such as housing associations, building societies and other financial institutions. If that happens, the housing voids and rent arrears will be reduced. I welcome the rate support grant settlement.
  9.4 pm
  Mr. Simon Coombs: It must be the profoundest hope of all hon. Members who have spoken in the debate that the days of the rate support grant system are numbered. The days of confusion and over-complication have lasted for too long and should be brought to an end. There is no doubt that during the past few years, under this Government, there has been a move towards local taxation by local government. There has been a steady reduction in central support for local government. That is entirely right if one believes that local government should be paid for locally. However local government is paid for, it accounts for between one quarter and one third of all national public expenditure and no responsible Government can afford to allow local authorities a free rein, especially when the horses are bolting mad, as we see happening in those parts of the country where the Labour party is in control — [Interruption.]
  The hon. Member for Liverpool, Walton (Mr. Heffer) may well be the successor of Lord Birkenhead, but I suggest that he has not yet learned the virtues of the pregnant pause.
  Mr. Heffer: Will the hon. Gentleman give way?
  Mr. Coombs: No. I have only four minutes left before the first of the Front Bench spokesmen rises, and I should like to make my speech, if I may.
  In the recent history of Government efforts to control local government expenditure, we have seen rate capping, capital limitations, grant-related expenditure assessments and the like. As soon as one door has been closed, another has been opened by cunning Labour councillors and those

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  who work for them. However, the borrowing, creative accountancy and deferred payments continue. I advise my hon. Friend the Minister that sooner or later the lid will blow off this pot. What are the Government going to do about it?
  My own local authority is one of those which face disaster. As one eloquent person on my local authority said recently, "It is a Labour Government or bust." There certainly will not be a Labour Government but, for the sake of the people of Thamesdown and Swindon, I hope that it will not be bust either.
  If rate capping were removed from authorities such as Thamesdown, the rates would rise catastrophically. If, at the same time, Wiltshire county council were freed from the restrictions currently imposed upon it, it is highly likely that the rates of the people of Swindon would be doubled. That would be disastrous, not only for the private residents of Swindon, but for all the companies that have moved to the town over recent years to escape the cripplingly high rates in London.
  I hope that the hon. Member for Blackburn (Mr. Straw) will reply to this point. If the Labour party still wants to win seats such as Swindon—there are still one or two people who think that that is the case—it must promise to exercise proper control over local Labour councillors to prevent inflation from hitting the pockets of ordinary people, either by rates increases or by the tax increases that would be needed to pay for the profligate expenditure that would be unleashed.
  Therefore, I hope that the hon. Gentleman will give a commitment to me, to my constituents and to the House that no future Labour Government—if there ever is one—will allow such disgraceful profligacy. I hope that he will make that commitment now so that my constituents can be reassured. I advise him that if he does not, there is no hope on earth that his party will ever win my constituency. I look to the Opposition Front Bench to give such a commitment tonight. If they do not, the writing is on the wall for the Labour party in seats such as mine.
  9.9 pm
  Mr. Jack Straw: I share the confidence of the hon. Member for Swindon (Mr. Coombs) that there will be a Labour victory at Swindon. I want to place on record my confidence in Thamesdown council. Its fine record in seeking to maintain and increase employment in a town which has been devastated by the Government's closure of British Rail Engineering Ltd. has been complimented from all quarters.
  Mr. Coombs: May I point out to the hon. Gentleman that a year after the closure of almost the whole of the BREL workshops operation in my constituency, unemployment is lower than it was the month before the closure? That demonstrates not activity by the Labour council, but the buoyancy of the local economy which would be severely devastated by massive rate rises. I asked the hon. Gentleman to promise the House that that will never happen.
  Mr. Straw: The hon. Gentleman is being far less gracious than normal. He knows that Thamesdown council's record as a job creator is one of the best in the country. Had it not been for the work of the Labour council bringing employment into the area when faced with the loss of 2,500 jobs in Swindon, unemployment
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  would have increased rather than decreased in the past two years. I know that that view is shared by the people of Thamesdown. Moreover, I understand that at the local elections the Conservative party came third, the alliance second and the Labour party first.
  In previous years there has been one statement on the rate support grant in July, another in December giving the Government's final decisions and a single debate in early January. Thanks to the unparalleled incompetence of the Secretary of State, this year has been different. This rate support grant debate takes place 15 days after the legal date by which all the major spending shire counties the ILEA and the metropolitan joint boards, had by law to make their rates, and only six days before the legal deadline for all the district and borough councils. In practice, most of the latter have already set their rates.
  In place of the usual single debate on rate support grant, scarcely a week has passed since Christmas without major debates on the latest instalment of the sad story of chaos to which the Secretary of State has reduced local government finance.
  We started the year with a Local Government Finance Bill. Its Second Reading was on 12 January, Committee stages on 21, 26 and 27 January, and before it had even started its progress through the Lords, we had the Second Reading of the Rate Support Grants Bill on 4 February. Before it had returned from Committee, the Secretary of State introduced his third Bill in six weeks, the much truncated Local Government Bill. The Minister will agree that for some of us rate support grant feels like a life sentence. It is hardly surprising that hon. Members on both sides, to whom fate has been kinder, should now be so baffled by the system and its byzantine complexity that they prefer to leave it to those who must suffer its detail.
  Although aspects of the rate support grant system are tedious beyond belief, and my hon. Friend the Member for Fife, Central (Mr. Hamilton) entertained us, this debate raises crucial issues about the financing of local services and the future of local government.
  The Secretary of State made significant claims for the increase in spending which was implied by the statement. He made much of the assertion that there had been a 30 per cent. real increase in local authority spending during the past eight years. He said nothing in answer to my hon. Friend the Member for Copeland (Dr. Cunningham) about the fact that central Government spending had increased significantly faster — 19 percentage points — than that of local government. Above all, he failed to spell out whether he was in favour of or against that increase in spending.
  In reality, in every year of this Conservative Administration, except for two pre-election years, the Government have intended that local authority spending shall be cut in that year and the following years. It is only because of the resistance of local councils — mainly Labour councils, although there are some Liberal and a number of Conservative councils—standing up for their electors that expenditure has increased rather than decreased.
  Is the Secretary of State aware that it was the Government's plan that there should be a reduction of 9 per cent. in expenditure per school pupil between 1980–81 and 1985–86? Year by year, the Government planned to cut spending per pupil. However, spending per pupil has actually increased. Who is to take the credit for that?

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  The Prime Minister, whose gall knows no bounds, in answer to a hapless Conservative candidate at a by-election that was subsequently won by the Liberals, said:
  "In education, too, this Government has a better record than any other. More money is being spent per pupil than ever before."
  That is true. However, it is only true because Labour and Liberal local authorities have refused to accept the Government's injunctions.
  Mr. Richard Ryder indicated dissent.
  Mr. Straw: I notice that the now speaking Whip from a sedentary position is shaking his head. He is one of the financial experts on the Conservative Benches. His financial acumen goes before him. Even if the hon. Gentleman cannot remember the words, perhaps he can look at the picture. I am showing the hon. Gentleman and my hon. Friends a chart which shows the path of Conservative public expenditure plans for education expenditure per pupil. I am glad to see that the speaking Whip has put his spectacles on. The line on the chart goes down with regard to planned expenditure. The other line shows the difference, revealing the record of local authorities standing up for their electors against the Conservatives' plan.
  Perhaps the Secretary of State will listen to me while he is picking his teeth. As the Secretary of State has praised the increase in expenditure, is he pleased about the line on the chart going up, or is he sorry about the fact that it has not declined? I offer the Secretary of State an opportunity to comment on that. Which is it? He cannot have it both ways.
  There is another way of underlining the record of Labour authorities. We can consider what has happened in the provision of nursery education in local authority after local authority. I must declare an interest, because I have one child in a nursery class at an ILEA primary school and another who has just left. The much abused Inner London education authority has increased the provision of nursery places within inner London by 3,600, and that is an increase of more than one sixth over the past six years. The same is true for Birmingham which in the past three years, since Labour gained control, has increased the number of nursery places by 1,000 from 7,700 to 8,700. That has been achieved against the injunctions of the Secretary of State, although the Prime Minister has given a parliamentary answer saying that she is pleased about the increased number of nursery school places.
  What about Bromley? I am sorry about the pain suffered by the hon. Member for Ravensbourne (Mr. Hunt). We have heard today about Bromley's fine record. Bromley is no different in size from Brent. Brent Labour authority — a much abused and maligned Labour authority—has 2,304 nursery school places. Bromley has 97. It is to the lasting shame of Bromley that that figure has been reduced from 101 in 1981 to 97 this year.
  What about Somerset? When that council was Conservative controlled, it reduced the number of nursery school places from a paltry 137 to a completely derisory 68.
  As the Secretary of State and the Prime Minister are so concerned about nursery school provision and claim unto themselves the record of good Labour authorities, what
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  does the Secretary of State think about Gloucestershire? Gloucestershire has no figures recorded in the parliamentary answer to which I have referred because it has no nursery school places in any maintained school. That is the reality of Conservatives in local government. It is one reason why Conservatives have done so badly in local elections during the past four years.
  Mr. Hind: Will the hon. Gentleman cast his mind back to the imaginative nursery school programme put forward by my right hon. Friend the Prime Minister when she was Secretary of State for Education and Science? In 1974, when the Labour Government came to power, they cancelled it.
  Mr. Heffer: What did she do? She took the milk away.
  Mr. Straw: I apologise for the fact that I could not hear all the question asked by the hon. Member for Lancashire, West (Mr. Hind), but I got the gist of it. I think that he was trying to resurrect the Prime Minister's record when she was Secretary of State for Education and Science. One thing I will concede is that her record in that previous incarnation was marginally better than her record as Prime Minister. As my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) just pointed out, she is most remembered during that period for taking the milk away from schoolchildren.
  Mr. Hind: Labour cut it back.
  Mr. Straw: As the hon. Gentleman is so excited about this matter, I shall send him the reply which I received from the Prime Minister when I wrote to her about this increase in spending per pupil and the fine record of Labour local authorities. Nothing can detract from the reality that the Conservative Government and all Conservative Members have voted year by year for cuts in spending on education. Education has been protected only by the actions of Labour local authorities.
  When the Secretary of State first came to the House in July to announce his rate support grant decisions, he said that he anticipated that on the basis of this settlement, authorities need not increase their rates at all. He also said:
  "This will mean that if authorities spend in line with the generous provision that we have made, there should on average be no need for rate bills to increase at all." —[Official Report, 22 July 1986; Vol. 102, c. 181.]
  The howls then from many Conservative authorities told us that that statement was untrue. We can only assume that the Secretary of State reckoned that it was incorrect. In the event, and despite changes in the rate support grant, designed explicitly to help Conservative authorities and to hit Labour ones, many authorities are having to raise their rates well above the prevailing level of inflation, regardless of political control.
  We have heard a great deal about significant rates increases in the London boroughs of Ealing, Hammersmith and Waltham Forest. Each is a Labour authority which took over from a Conservative authority last year. Each authority, when Conservative-controlled, went in for creative accountancy on a grand scale in a desperate, and unsuccessful, attempt to keep its rates down in a local election year because it raised less by way of rates than it needed to meet expenditure. Those Labour councils have had to put their finances on a sound footing and have sought to provide much-needed improvements to basic services, such as schools, housing and care for the elderly, which had been badly run down by their predecessors.

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  I am glad to see the hon. Member for Ealing, Acton (Sir G. Yound) in his place. I am not surprised that the hon. Member for Ealing, North (Mr. Greenway), who made a disgraceful speech, is not here for the wind-up speeches. That is typical of the way in which he treats his local authority and the House. The Ealing issue raised by my hon. Friend the Member for Copeland remains unanswered. Ealing has recruited 150 extra teachers, employed extra home helps and under-fives staff, restored free milk to 10,000 first-year school pupils and given schools 11 per cent. more to spend on equipment and books. Are Conservative Members in favour of those improvements or against them?
  Sir George Young: As the hon. Gentleman knows, Ealing town hall is virtually closed and the switchboard operators are on strike—[HON. MEMBERS: "Answer the question."] We are faced with a 65 per cent. rates increase, but the services are simply not there.
  Mr. Straw: The hon. Gentleman evaded my question. I know that there is a strike in Ealing. Strikes sometimes take place in authorities, whether Conservative or Labour-controlled. I hope that if the hon. Gentleman is concerned about keeping public expenditure under control, he will support Ealing council in resisting the claims of the local staff who are seeking a gratuitous increase in the outer London allowance. Whom does the hon. Gentleman support? Does he support the council or does he support the staff? Is he trying to make mischief out of a situation of the kind that has affected a number of authorities? The hon. Gentleman, and those who represent Ealing, must say where they stand on those improvements to services. Their silence speaks volumes about their approach to the provision of basic services in that area.
  Many Labour authorities have not had to bear such an inheritance as that borne by Ealing, Waltham Forest and Hammersmith, and they have kept their rate rises at or below the prevailing level of inflation. Leeds has increased its rate by only 4·5 per cent., Barking and Dagenham rates have gone up by only 2·5 per cent., and a number of Labour authorities — for instance, Birmingham — have actually cut their rates.
  Mr. Greg Knight: Will the hon. Gentleman give way?
  Mr. Straw: I have given up 10 minutes of the time available for my winding-up speech to Conservative Members. I should be grateful for an opportunity to finish my speech.
  Birmingham has cut its rate by 6·1 per cent.; Sunderland by 1·5 per cent.; and the authorities in my constituency and that of my hon. Friend the Member for Copeland have also cut their rates.
  The Secretary of State wanted to compliment Solihull for cutting its rate by 1·8 per cent. Does he wish to compliment Copeland and Blackburn for cutting their-rates by an even greater amount? I shall give him the opportunity, if he wishes to do so.
  Mr. Ridley: My hon. Friend the Member for Derby, North (Mr. Knight) wishes to.
  Mr. Greg Knight: Will the hon. Gentleman tell us whether he is as proud of other areas of expenditure by Labour-controlled authorities? For example, does he welcome the expenditure by Derbyshire county council of many hundreds of thousands of pounds of ratepayers' money on items such as television advertising and the
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  publication of a civic newspaper? The latest proposal is to send a number of Socialist councillors on a television interview training course.
  Mr. Straw: My hon. Friend the Member for Copeland has just produced a copy of "Housing Matters" which is published by Conservative-controlled Portsmouth council, and I am very grateful to him—[Interruption.]
  Mr. Speaker: Order. Only one hon. Member can speak at a time.
  Mr. Straw: The hon. Member for Derby, North (Mr. Knight) says that he does not support such expenditure. I know that most of the claims against Derbyshire are fabrications, and that Mr. David Bookbinder has had to issue a writ against the chairman of the Conservative party for a total and malicious falsehood uttered against Derbyshire county council last year.
  The responsibility for the present chaos is the Minister's, and his alone. We do not criticise officials, and I hope that the Minister does not either. However, to excuse himself from the mess, the Secretary of State has tried two diversionary tactics. His first — together with the Conservative party chairman — is to heap abuse on democratically elected authorities with which he happens to disagree. His second is to suggest that the present mess is all of his predecessor's making, and that once the country adopts the idea of the poll tax, sanity and stability will return to local government. Let me deal with those in turn.
  It is a symptom of the Conservative party's desperation that most of its so-called criticism of Labour authorities is based on simple, straightforward falsehoods. The lies that have been printed about many Labour authorities could have come direct from Dr. Goebbels. Of course, we expect nothing else from newspapers that draw their inspiration from pre-war Germany, but we should he able to expect something rather better from senior Ministers charged with responsibility to the Crown and to the House for the conduct of the nations affairs.
  Indeed, we got something better from the Secretary of State's predecessors, such as the right hon. Members for Henley (Mr. Heseltine), for Wanstead and Woodford (Mr. Jenkin) and for Mole Valley (Mr. Baker). We had the most serious arguments with them, but at least we could discern some common ground of concern for the services that local government provides and for the 2·5 million people who work for those authorities. Not so from the present Secretary of State. He is a zealot who despises any institution that he cannot control, whether it be Labour or Tory local authorities, or even the High Court of Justice. When the Secretary of State loses before the High Court of Justice, he comes to the House and bleats that he has been the subject of a vendetta by judges.
  All the authorities on which such abuse has been heaped were elected less than a year ago, in the municipal elections last May. The last accusation that can be levelled against any of those authorities, especially those in London, is that they made any secret of their policies. Each of them made publicly available extensive manifestos. If the Government were serious about extending accountability and re-establishing a better consensus on local government, they would respond positively to the offer that I made on Second Reading of the Local Government Bill for the immediate and agreed introduction of annual elections in London

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  boroughs and in shire districts that do not have them. Conservative Members talk about authorities falling into the hands of people with whom they disagree. That shows their contempt for democracy. Those authorities have not fallen into anybody's hands. There have been elections. Conservative Members and their colleagues have been decisively rejected at the ballot box in towns and cities across the land.
  Mrs. Elaine Kellett-Bowman: By people who do not foot the bill.
  Mr. Straw: I shall come to that point.
  The Secretary of State's second alibi is to claim that the present system has nothing to do with him, and all will be changed under his so-called reforms. Both claims are nonsense. The Secretary of State has supported every one of the 43 Bills that have created the present chaos. This Secretary of State's hands are as stained as those of his predecessors whom he now seeks to disown.
  If it is possible to comprehend or imagine, the Secretary of State proposes—if, God forbid, the Government are re-elected to office—to substitute for this chaos an even worse chaos through the introduction of a poll tax or community charge, as Ministers would have us euphemistically describe it. I tell Ministers for their own good that as the public come to understand what the poll tax involves, support for them among middle and lower income families across the country will disappear.
  Many Conservative Members do not like us quoting the Tory Reform Group. When my hon. Friend the Member for Copeland quoted it, the Under-Secretary of State said that it did not matter and that although 10 former senior members of the Government, including the Secretary of State for Employment, the Home Secretary and the deputy Prime Minister, had signed it, there is a note on the inside disclaiming responsibility for a document written by somebody who used to be assistant director of the Conservative research department and who was adviser to the Secretary of State for the Environment when the poll tax idea was dreamed up. I have to tell the Under-Secretary that if the disclaimer is on his copy, it is not on mine. I notice that none of those senior Cabinet Ministers has decided to take his name off the front of the document. It says:
  "The proposed community charge … is misconceived and it will undermine local self-government … it will involve substantial excessive centralisation of power … isolate businesses from local government; fail to achieve the degree of accountability that is required; be administratively expensive."
  The document gives the game away at the end. It says that Ministers had to act with excessive haste, and states:
  "Suddenly, with a difficult Party Conference debate on rates coming up, Ministers went into a 180 degree turn and felt they had to find a quick alternative to rates. It was one of the rare occasions when a Party Conference actually determined Government policy."
  That is because the Conservatives are not used to democracy in their party or across parties. The document states:
  "The speed of change led the Department to bounce the key Cabinet Ministers into a poll tax".
  They will come to rue the day.
  My hon. Friends the Members for Burnley (Mr. Pike) and for Copeland have already quoted the political present that the Minister for Local Government gave all the
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  Labour candidates in the marginal seats in Lancashire. I am deeply grateful for that. I think that the Minister did it out of affection for his home ground of Rossendale and Darwen. He knows how his people will be badly hit by a poll tax which, in Rossendale, will double the burden on middle income people, so he is trying to subvert the idea before it has even got off the ground.
  I want to ask the Minister some questions about the poll tax. The Government's objection to rates is that only one third of electors pay full rates, and they propose to require every elector to pay at least 20 per cent. of their rate or poll tax bill under legislation that has already been passed. If, subject to that 20 per cent. minimum, the Government continue with the rebate system, no more families will pay the full poll tax than pay full rates. Will the Minister adhere to that, or is it the Secretary of State's intention to raise the floor from 20 per cent. to 50 per cent., or even to 80 per cent., as has been rumoured?
  In the past eight years rates have risen twice as fast as retail prices, but local government spending has grown far less than that of national Government. It is the Government, not local councils, who have deliberately forced up local rate bills and cut the rate support grant by £4,000 million a year, which means over £4 a week for every family in the land. In so doing, they have forced the public to pay more than they have gained through the cuts in income tax rates that have been announced in the past three Budgets.
  Under the settlement, rates are to be forced up again. The only way out of the bog that the Secretary of State can perceive is to introduce a poll tax that would benefit the rich at the expense of middle Britain and of the poor. This is a bad settlement from an unbelievably incompetent Secretary of State, and we shall oppose it.
  9.37 pm
  The Minister for Local Government (Dr. Rhodes Boyson): Like the hon. Member for Blackburn (Mr. Straw), I shall deal with the community charge at the end, and with the basis of the rate support grant first.
  This year's settlement is a generous one, and, as my right hon. Friend the Secretary of State said, it contains an increase of 9 per cent. on the past year—representing £12·842 billion in grant for local authorities. Similarly, Government plans for 1987–88 provide for local authority capital expenditure to increase by almost £700 million—an increase of 15 per cent.—to about £5 billion. For the full grant to be given to each authority, it is assumed that expenditure will increase by no more than 5·25 per cent. That is still above the rate of inflation—now running at about 4·5 per cent.—and the addition for teachers' pay means that local authorities' expenditure can go up by 7·75 per cent. on average without loss of the full grant from the Government.
  Opposition Members have mentioned what local authorities may not get, but authorities will lose money only if they overspend; so it is up to them whether they get grants or not. If they go over the top, they will forfeit them. If they have to hand the money back, that is on their heads. We do not claw it back intentionally.
  I shall give Opposition Members a tip to pass on to their overspending councils. If they can cut the increase in their expenditure to 4·5 per cent., they will get £100 million more. We should be delighted to see such financial sobriety. The hon. Member for Copeland (Dr. Cunningham) mentioned a figure of £400 million that

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  appears in the Red Book. I have looked for it there and have not been able to find it. Perhaps we can meet afterwards with an umpire to discuss the matter.
  Mr. Straw rose—
  Dr. Boyson: The hon. Member for Copeland claimed that the Government expected rate rises from the Exchequer that were significantly higher than the 6 per cent. that was quoted by my right hon. Friend the Secretary of State. I have tracked down the reconciliation of 8·5 per cent. and 6 per cent. in order to put the hon. Gentleman right, because what he said was erroneous.
  The reconciliation with the 6 per cent. increase in rate poundage is as follows. Of the 2·5 per cent difference, over 1 per cent. represents buoyancy in rateable values; 0·5 per cent. represents the fact that we are talking about England alone, and rate rises in Scotland are unfortunately even higher; another 0·5 per cent. is because we now have better information; the final 0·5 per cent is—[Interruption.] Right enough: hon. Members do not like it now that we are putting the figures right. They can throw figures across, but they do not like it when they are thrown back. But there the actual figures are and they are perfectly clear. We can have a look at it together afterwards. The offer is on the floor ready to be picked up. How much more generous could I be?
  One should also put on the record regarding the rate support grant the difference of increase between Conservative and Labour and Liberal authorities, as my right hon. Friend did. These figures are up to midday today, so they could not be more up to date. Conservative authorities as a whole are spending 7·5 per cent. more and are levying a rate of 5·4 per cent. more. Labour authorities not rate-capped are spending 9·6 per cent. more, which is 2 per cent. more than Conservative authorities, and they are levying rates of 12·4 per cent. More—7 per cent. on average more than Conservative authorities. In hung councils they are spending 9·4 per cent. more and levying 7 per cent. more.
  Mrs Kellett-Bowman rose—
  Dr. Boyson: I will give way in a minute. I must just give these figures in case I forget them, and I would not like to deprive the House.
  Among the shires, the Conservative authorities are spending 6·5 per cent. more and the Labour authorities are spending 8·7 per cent. more. Among London boroughs which are not rate-capped, in Conservative boroughs the increase in rates is 4·6 per cent. only. The increase in nonrate-capped Labour boroughs in London is 60·6 per cent.—15 times more. If the electorate wants to know what a Labour Government would be like, there it is.
  Reference has been made to the three London boroughs, and I shall mention them again. I know that Opposition Members do not like them mentioned. [Interruption.] I am glad to hear that they do not mind; we can tell the electors that.
  Mrs. Kellett-Bowman: Is my hon. Friend aware that Lancashire county council has shot away with rates every years since it took office? This year, with the assistance of the Liberals, the rate has doubled. [AN HON. MEMBER: "Niggers in the woodpile."] The Conservative-controlled city councils kept their rates absolutely level and the Wyre borough council's rate was barely in concert with the cost of living. So we are streets ahead of Labour and the Liberals.
  Dr. Boyson: There comes the voice of confidence from the Conservative Benches. We heard the silence from the Opposition Benches as those figures were given.
  I should like to mention again the three boroughs, as a warning to the country. The increase in the local rate in Hammersmith and Fulham is 127 per cent. My hon. Friends the Members for Ealing, North (Mr. Greenway) and for Ealing, Acton (Sir G. Young) have both talked this evening about the increase in Ealing and I believe that my hon. Friend the Member for Ealing, North was absent for only a short while because residents of Ealing were coming to see him about this increase. The increase there is 72 per cent. In Waltham Forest the increase is 67 per cent.
  The only reason that Brent has not increased similarly, when it went from basically Conservative and Liberal support to Labour this year, is the fact that it is rate-capped. I know that many people in the three other boroughs will wish that they were rate-capped as well. As hon. Members know, rate capping is on the basis of budgeted spending for the previous year in relation to GRE, not on the rate increase for the year itself.
  Indeed, 40 local authorities which are subject to rate capping and precept limitation for this coming year were responsible last year for 90 per cent. of the overspending the length and breadth of Britain. If that is not a defence of rate capping, I do not know what is.
  Time and time again Opposition Members have referred to a north-south divide, as though money were being kept in the so-called prosperous areas of the south and even being dragged away from the north. Let us look at the figures.
  Each year, about £1 billion in grant moves from the south-east and London to the north—the north-west, Yorkshire and Humberside. I am not grumbling about that, but that figure should be put on the record. Labour Members have bleeding hearts, as though Conservative Members were hard-faced and taking money from the north. That is not the case. Every year £1 billion goes up there.
  This year, 1987–88, out of the increased expenditure this year, added to last year's figure, the north will receive £375 million in grant from the Government, compared with £150 million for the south. Two and a half times more will go to the north than to the south. That should be put on the record.
  Total expenditure on urban programmes has increased from £140 million from 1978–79 to £531 million in 1987–88 —a real increase of 131 per cent. since the Government took office.
  Fifty-seven authorities now produce inner-area programmes, compared with 24 when the Government took office in 1979. Since 1979, £2·2 billion in resources has been redistributed through the urban programme. More than £2 billion of private finance has also been brought in, because that Government money has been a leader that has helped things along the way. Those figures are important and should be respected. About £1 billion is switched to Merseyside every year by various grants.
  Mr. Straw: The hon. Gentleman knows that that aid to the urban areas is dwarfed by the £18,000 million cut in rate support grant since 1979. The Minister talks about so-called overspending by Labour authorities and blames them because that has gone against Government spending plans. However, will he consider the point that I have put

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  to him? Is he in favour of the fact that that overspending has led to an increase in spending per pupil in schools, or is he against that?
  Dr. Boyson: The Government give money and local authorities should establish the priorities. Ealing is a good example of what such priorities can be.
  Dr. Cunningham: Will the hon. Gentleman give way?
  Dr. Boyson: No, I shall not give way. I have been asked two questions and I have now forgotten one of them. Hard luck—that has gone. I acted genuinely and one answer will have to be the Opposition's lot.
  Now that the hon. Gentleman has brought my attention to Ealing, let us see where the expenditure has gone. I would have forgotten about it if it had not been for his help. Expenditure in Ealing on the police co-ordinator will be £18,000 a year. A new office block to house 1,100 more staff will cost £20,000 a week. [Interruption.] I know that that is difficult to take in, but my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) should try. A teacher in each school paid to rid bookshelves of sexist or heterosexist material will cost £139,000. One could go on.
  Dr. Cunningham rose—
  Dr. Boyson: I shall not give way.
  Dr. Cunningham rose—
  Mr. Speaker: Order.
  Dr. Boyson rose—
  Dr. Cunningham rose—
  Dr. Boyson: No, I shall not give way. The hon. Member for Blackburn has already had two minutes more than me. I gave way to the hon. Gentleman and to my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman).
  A Labour councillor from a neighbouring borough, hired as a personal assistant to the Labour authority, will cost £40,000 a year.
  Dr. Cunningham: Will the Minister give way?
  Dr. Boyson: I shall give way for one question only.
  Dr. Cunningham: I am extremely grateful to the Minister for giving way. He is discussing additional spending in Ealing and I can do better than him with regard to the totals. Does he support the additional spending in Ealing of £500,000 on extra care for the elderly? Does he support the additional spending on education in Ealing? [Interruption.] Does he support the additional expenditure on recreation and sports facilities in Ealing? Does he support the additional expenditure on housing for the elderly?
  Dr. Boyson: The figures quoted by the hon. Member for Copeland represent a minute amount of the 65 per cent. increase in the rates. If that is the only point that the Opposition can make, they are in a bad way.
  Other hon. Members have asked questions and they expect replies. The so-called "Bromley error" has been referred to by hon. Members from both sides of the House. I would like to put on record what the position is regarding that matter, as I am aware of the concern that is felt by many hon. Friends about this matter.
  Due to an error, Bromley and certain other boroughs did not receive their due money for the necessary
  516
  maintenance of the roads that they had inherited from 1986 after the abolition of the GLC. That grant should have been worked out on the kilometre distance of the roads and the usage of the roads. However, certain costs were not worked out properly. My right hon. Friend attempted to correct the error in the first 1986–87 supplementary report by adjusting the multipliers. He was then challenged on a question of law, not on a question of equity.
  That should be made clear, because I believe that, in the ultimate, the test of equity is important in the preservation of good society. My right hon. Friend was not challenged on equity, but on law as to whether he could use the multipliers in that way. The court decided in favour of Greenwich. The hon. Member for Copeland asked why the Government are appealing while, at the same time—
  Mr. Terry Dicks rose—
  Dr. Boyson: If I may just finish this point.
  Mr. Willie W. Hamilton: Abolish the court.
  Dr. Boyson: We did not say anything about abolishing the court—that idea is usually proposed by the Left. One can see how easily the Left consider the idea of abolishing the courts and the rule of law.
  We rightly went to the Court of Appeal, but meanwhile, as a law-abiding Government — I trust that the hon. Member for Copeland would have done the same—we adjusted the figure this year. At the same time, we hoped that we would win on the appeal so that in a supplementary report, after consultation, we could rectify the inequity which existed.
  My right hon. Friend the Member for Castle Point (Sir. B. Braine) asked what would happen if the Court of Appeal's judgment was in favour of the Government. Once that happens, we will consult—
  Mr. Dicks rose—
  Dr. Boyson: I will give way when I finish. But let us get to the loud amen before we start the next hymn.
  If we win in the Court of Appeal, we will consult as quickly as we can and then make an adjustment in a supplementary report. If we do not succeed in the appeal, we shall have to reassess the situation.
  The Government believe that that issue also involves a question of equity as well as law. Eventually, we hope that the law is returned—as we trust that it will be by the Court of Appeal — to an equitable basis so that those for whom money was intended shall have that money rather than the other authorities which were not intended to have that money. I am aware that the main losing authorities were Bromley, £3·1 million; Barnet, £2·7 million; Essex, £2·4 million; Hillingdon, £2·3 million; Kingston, £1·4 million; Sutton, £1·3 million; and Bexley, £1 million.
  Mr. Dicks: I am grateful to my hon. Friend for giving way. First of all, may I correct him? The amount involved for Hillingdon is £4·6 million—£2·3 million this year and £2·3 million next year. As a result of the mess-up and incompetence in my hon. Friend's Department—[Interruption.] — wait for it — and the dishonesty of Greenwich, my local authority has lost £4·6 million. What guarantee can my hon. Friend give me that my local authority will not lose out in the long run because of that?
  Hon. Members: Answer that!
  Dr. Boyson: I shall answer, and the Opposition may listen if they are quiet.
  I have already discussed the matter over lunch with my hon. Friend. He is to see my right hon. Friend the Secretary of State and myself tomorrow. We shall obviously continue the discussion in private. We do not want to delay the matter in any way.
  Mr. Michie: Will the Minister have dinner with me? [Interruption.]
  Dr. Boyson: I am referring only to roads in London. I do not think that the hon. Gentleman's offer is on the menu at present.
  Let me refer to the community charge. [HON. MEMBERS: "Ah!"] I am delighted to refer to it. I find it astonishing that some people were amazed when they saw the figures. They show the impact of the community charge. They have been available for some time. They are in no way secret. The Government have nothing to hide.
  Journalists from various regions visited the Department on Monday. They were given figures that they could have acquired from hooks on Monday. As we had given them the figures, I felt that the least we could do was to send hon. Members of all parties — including the Liberals and the SDP—copies of what we had given the regional journalists. It seemed to me to be the way that hon. Members should he treated. There was amazement. Anybody with a ready reckoner, and knowledge of the current population level of any area and the domestic rate could work out the whole matter in three hours. Indeed, the figures are already shown in three books, two of which are in the Library. First, there is "Paying for Local Government".
  Mr. Straw: I have a copy.
  Dr. Boyson: I am glad that the hon. Gentleman is catching up at last. He is fortunate to know me. It is a great advantage.
  The other book is "The Community Charge—The Effects on English Local Authorities" by John Gibson. I do not get a commission for this. There is also a book by the Institute of Fiscal Studies. Yet there is amazement when we provide the figures. One wonders how the Opposition's Budget figures are worked out.
  Community charge figures have been published separately. Hon. Members should watch for the dates. In May 1986, CIPFA published its figures, which is, as far as I know, ten months back, the Institute of Fiscal Studies published figures in March 1986—even further back—and the Institute of Local Government Studies published figures also in March 1986. Copies of the publications exist in the Library of the House. Although none of the organisations has the figures quite right, it is quite clear that anybody who was interested could have gained a reasonably accurate idea of the impact of the Government's proposals in different parts of the country at any time.
  I make another offer to Opposition Members. We are quite willing to make available our estimates for the level of the community charge in each local authority area. Last year, the Department passed on 1984–85 figures in response to a request from the Association of Metropolitan Authorities. We are happy to provide 1985–86 figures to any hon. Member who wants them. The service that we provide is amazing. It is famous on both sides of the House. We are not even a private enterprise.
  518
  It is our intention shortly to place in the Library a complete set of community charge figures for 1986–87. The whole basis of the community charge on the universal business rate is based on a certain political view. We believe that businesses are moving around the country, not to where they should geographically be positioned, but to where the lowest rates are. That is one reason businesses are leaving the north and going to the south. Undoubtedly, business rates in the north are far higher than they are in the south. If we are to link the north-south divide—as a northerner who lives in the south, I shall like that —that is one of the best ways to do it. That is why we have the universal business rate.
  The community charge is to make sure that all people voting, even if it is on the rebate, are doing — [Interruption.] We said about 20 per cent. It has not been fixed. I shall give a figure. The whole basis of the system is that voters should pay something towards the services that they receive. They should not just be voting to spend other people's money.
  I believe that that is right and that this is a good settlement. I am glad that I have been able to give information to the Opposition that they will be able to study through the night.
  Question put:-
  The House divided: Ayes 314, Noes 173.

  Division No. 125]

  [10 pm

  AYES

  Adley, Robert

  Carlisle, Kenneth (Lincoln)

  Alexander, Richard

  Carlisle, Rt Hon M. (W'ton S)

  Alison, Rt Hon Michael

  Carttiss, Michael

  Ancram, Michael

  Cash, William

  Arnold, Tom

  Chalker, Mrs Lynda

  Ashby, David

  Channon, Rt Hon Paul

  Aspinwall, Jack

  Chope, Christopher

  Atkins, Rt Hon Sir H.

  Churchill, W. S.

  Atkinson, David (B'm'th E)

  Clark, Hon A. (Plym'th S'n)

  Baker, Rt Hon K. (Mole Vall'y)

  Clark, Sir W. (Croydon S)

  Baker, Nicholas (Dorset N)

  Cockeram, Eric

  Baldry, Tony

  Colvin, Michael

  Banks, Robert (Harrogate)

  Conway, Derek

  Batiste, Spencer

  Coombs, Simon

  Bellingham, Henry

  Cope, John

  Bendall, Vivian

  Couchman, James

  Benyon, William

  Critchley, Julian

  Best, Keith

  Crouch, David

  Biffen, Rt Hon John

  Currie, Mrs Edwina

  Blackburn, John

  Dickens, Geoffrey

  Blaker, Rt Hon Sir Peter

  Douglas-Hamilton, Lord J.

  Body, Sir Richard

  Dover, Den

  Bonsor, Sir Nicholas

  du Cann, Rt Hon Sir Edward

  Bottomley, Peter

  Dunn, Robert

  Bottomley, Mrs Virginia

  Durant, Tony

  Bowden, A. (Brighton K'to'n)

  Dykes, Hugh

  Bowden, Gerald (Dulwich)

  Edwards, Rt Hon N. (P'broke)

  Boyson, Dr Rhodes

  Eggar, Tim

  Brandon-Bravo, Martin

  Emery, Sir Peter

  Bright, Graham

  Eyre, Sir Reginald

  Brinton, Tim

  Fairbairn, Nicholas

  Brittan, Rt Hon Leon

  Fallon, Michael

  Brooke, Hon Peter

  Farr, Sir John

  Brown, M. (Brigg & Cl'thpes)

  Favell, Anthony

  Browne, John

  Fookes, Miss Janet

  Bruinvels, Peter

  Forman, Nigel

  Bryan, Sir Paul

  Forsyth, Michael (Stirling)

  Buchanan-Smith, Rt Hon A.

  Forth, Eric

  Buck, Sir Antony

  Fowler, Rt Hon Norman

  Budgen, Nick

  Fox, Sir Marcus

  Bulmer, Esmond

  Franks, Cecil

  Burt, Alistair

  Fraser, Peter (Angus East)

  Butler, Rt Hon Sir Adam

  Freeman, Roger

  Butterfill, John

  Gale, Roger

  Carlisle, John (Luton N)

  Galley, Roy

  519

  Gardiner, George (Reigate)

  Luce, Rt Hon Richard

  Garel-Jones, Tristan

  Lyell, Nicholas

  Glyn, Dr Alan

  McCurley, Mrs Anna

  Goodlad, Alastair

  Macfarlane, Neil

  Gorst, John

  MacGregor, Rt Hon John

  Gower, Sir Raymond

  MacKay, Andrew (Berkshire)

  Grant, Sir Anthony

  MacKay, John (Argyll & Bute)

  Greenway, Harry

  Maclean, David John

  Gregory, Conal

  McLoughlin, Patrick

  Griffiths, Peter (Portsm'th N)

  McNair-Wilson, P. (New F'st)

  Grist, Ian

  McQuarrie, Albert

  Ground, Patrick

  Madel, David

  Grylls, Michael

  Major, John

  Gummer, Rt Hon John S

  Malins, Humfrey

  Hamilton, Hon A. (Epsom)

  Malone, Gerald

  Hamilton, Neil (Tatton)

  Maples, John

  Hampson, Dr Keith

  Marland, Paul

  Hanley, Jeremy

  Marshall, Michael (Arundel)

  Hannam, John

  Mates, Michael

  Hargreaves, Kenneth

  Mather, Sir Carol

  Harris, David

  Maude, Hon Francis

  Harvey, Robert

  Mawhinney, Dr Brian

  Havers, Rt Hon Sir Michael

  Maxwell-Hyslop, Robin

  Hawkins, C. (High Peak)

  Mayhew, Sir Patrick

  Hayhoe, Rt Hon Sir Barney

  Merchant, Piers

  Heathcoat-Amory, David

  Meyer, Sir Anthony

  Heddle, John

  Miller, Hal (B'grove)

  Henderson, Barry

  Mills, Iain (Meriden)

  Heseltine, Rt Hon Michael

  Mills, Sir Peter (West Devon)

  Hickmet, Richard

  Miscampbell, Norman

  Hicks, Robert

  Moate, Roger

  Higgins, Rt Hon Terence L.

  Monro, Sir Hector

  Hill, James

  Montgomery, Sir Fergus

  Hind, Kenneth

  Moore, Rt Hon John

  Hirst, Michael

  Morrison, Hon C. (Devizes)

  Hogg, Hon Douglas (Gr'th'm)

  Morrison, Hon P. (Chester)

  Holland, Sir Philip (Gedling)

  Moynihan, Hon C.

  Holt, Richard

  Mudd, David

  Hordern, Sir Peter

  Neale, Gerrard

  Howard, Michael

  Nelson, Anthony

  Howarth, Alan (Stratf'd-on-A)

  Newton, Tony

  Howarth, Gerald (Cannock)

  Nicholls, Patrick

  Howe, Rt Hon Sir Geoffrey

  Norris, Steven

  Howell, Rt Hon D. (G'ldford)

  Onslow, Cranley

  Hubbard-Miles, Peter

  Oppenheim, Phillip

  Hunt, David (Wirral W)

  Oppenheim, Rt Hon Mrs S.

  Hunt, John (Ravensbourne)

  Osborn, Sir John

  Hunter, Andrew

  Ottaway, Richard

  Hurd, Rt Hon Douglas

  Page, Sir John (Harrow W)

  Irving, Charles

  Page, Richard (Herts SW)

  Jackson, Robert

  Parkinson, Rt Hon Cecil

  Jenkin, Rt Hon Patrick

  Patten, Christopher (Bath)

  Jessel, Toby

  Patten, J. (Oxf W & Abgdn)

  Jones, Gwilym (Cardiff N)

  Pattie, Rt Hon Geoffrey

  Jones, Robert (Herts W)

  Pawsey, James

  Joseph, Rt Hon Sir Keith

  Percival, Rt Hon Sir Ian

  Kellett-Bowman, Mrs Elaine

  Pollock, Alexander

  Kershaw, Sir Anthony

  Porter, Barry

  Key, Robert

  Portillo, Michael

  King, Roger (B'ham N'field)

  Powley, John

  King, Rt Hon Tom

  Price, Sir David

  Knight, Greg (Derby N)

  Pym, Rt Hon Francis

  Knight, Dame Jill (Edgbaston)

  Raffan, Keith

  Knowles, Michael

  Raison, Rt Hon Timothy

  Knox, David

  Rees, Rt Hon Peter (Dover)

  Lamont, Rt Hon Norman

  Rhys Williams, Sir Brandon

  Lang, Ian

  Ridley, Rt Hon Nicholas

  Latham, Michael

  Rifkind, Rt Hon Malcolm

  Lawler, Geoffrey

  Rippon, Rt Hon Geoffrey

  Lawrence, Ivan

  Roberts, Wyn (Conwy)

  Lawson, Rt Hon Nigel

  Robinson, Mark (N'port W)

  Lee, John (Pendle)

  Roe, Mrs Marion

  Leigh, Edward (Gainsbor'gh)

  Rost, Peter

  Lester, Jim

  Rowe, Andrew

  Lewis, Sir Kenneth (Stamf'd)

  Rumbold, Mrs Angela

  Lightbown, David

  Ryder, Richard

  Lilley, Peter

  Sackville, Hon Thomas

  Lloyd, Sir Ian (Havant)

  Sainsbury, Hon Timothy

  Lloyd, Peter (Fareham)

  St. John-Stevas, Rt Hon N.

  Lord, Michael

  Sayeed, Jonathan

  520

  Shaw, Sir Michael (Scarb')

  Thurnham, Peter

  Shelton, William (Streatham)

  Townend, John (Bridlington)

  Shepherd, Colin (Hereford)

  Townsend, Cyril D. (B'heath)

  Shepherd, Richard (Aldridge)

  Tracey, Richard

  Shersby, Michael

  Trotter, Neville

  Silvester, Fred

  Twinn, Dr Ian

  Skeet, Sir Trevor

  Vaughan, Sir Gerard

  Smith, Sir Dudley (Warwick)

  Viggers, Peter

  Smith, Tim (Beaconsfield)

  Waddington, Rt Hon David

  Soames, Hon Nicholas

  Wakeham, Rt Hon John

  Speller, Tony

  Waldegrave, Hon William

  Spencer, Derek

  Walden, George

  Spicer, Jim (Dorset W)

  Walker, Bill (T'side N)

  Spicer, Michael (S Worcs)

  Walker, Rt Hon P. (W'cester)

  Squire, Robin

  Walters, Dennis

  Stanbrook, Ivor

  Wardle, C. (Bexhill)

  Stanley, Rt Hon John

  Watson, John

  Steen, Anthony

  Watts, John

  Stern, Michael

  Wells, Bowen (Hertford)

  Stevens, Lewis (Nuneaton)

  Wells, Sir John (Maidstone)

  Stewart, Allan (Eastwood)

  Wheeler, John

  Stewart, Andrew (Sherwood)

  Whitfield, John

  Stokes, John

  Whitney, Raymond

  Stradling Thomas, Sir John

  Winterton, Mrs Ann

  Tapsell, Sir Peter

  Winterton, Nicholas

  Taylor, John (Solihull)

  Wolfson, Mark

  Taylor, Teddy (S'end E)

  Wood, Timothy

  Tebbit, Rt Hon Norman

  Woodcock, Michael

  Temple-Morris, Peter

  Yeo, Tim

  Terlezki, Stefan

  Young, Sir George (Acton)

  Thomas, Rt Hon Peter

  Thompson, Donald (Calder V)

  Tellers for the Ayes:

  Thompson, Patrick (N'ich N)

  Mr. Robert Boscawen and

  Thorne, Neil (Ilford S)

  Mr. Michael Neubert.

  NOES

  Abse, Leo

  Dalyell, Tam

  Alton, David

  Davies, Rt Hon Denzil (L'lli)

  Anderson, Donald

  Davies, Ronald (Caerphilly)

  Archer, Rt Hon Peter

  Davis, Terry (B'ham, H'ge H'l)

  Ashdown, Paddy

  Dewar, Donald

  Atkinson, N. (Tottenham)

  Dicks, Terry

  Bagier, Gordon A. T.

  Dixon, Donald

  Banks, Tony (Newham NW)

  Dobson, Frank

  Barnes, Mrs Rosemary

  Dormand, Jack

  Beckett, Mrs Margaret

  Douglas, Dick

  Beith, A. J.

  Dubs, Alfred

  Bell, Stuart

  Duffy, A. E. P.

  Benn, Rt Hon Tony

  Dunwoody, Hon Mrs G.

  Bennett, A. (Dent'n & Red'sh)

  Eadie, Alex

  Bermingham, Gerald

  Eastham, Ken

  Bidwell, Sydney

  Evans, John (St. Helens N)

  Blair, Anthony

  Fatchett, Derek

  Boothroyd, Miss Betty

  Field, Frank (Birkenhead)

  Boyes, Roland

  Fields, T. (L'pool Broad Gn)

  Bray, Dr Jeremy

  Fisher, Mark

  Brown, Gordon (D'f'mline E)

  Foot, Rt Hon Michael

  Brown, Hugh D. (Provan)

  Forrester, John

  Brown, N. (N'c'tle-u-Tyne E)

  Foster, Derek

  Brown, R. (N'c'tle-u-Tyne N)

  Foulkes, George

  Brown, Ron (E'burgh, Leith)

  Fraser, J. (Norwood)

  Caborn, Richard

  Freeson, Rt Hon Reginald

  Campbell, Ian

  Freud, Clement

  Campbell-Savours, Dale

  George, Bruce

  Carlile, Alexander (Montg'y)

  Gilbert, Rt Hon Dr John

  Carter-Jones, Lewis

  Godman, Dr Norman

  Clark, Dr David (S Shields)

  Golding, Mrs Llin

  Clarke, Thomas

  Gould, Bryan

  Clay, Robert

  Gourlay, Harry

  Clelland, David Gordon

  Hamilton, James (M'well N)

  Coleman, Donald

  Hamilton, W. W. (Fife Central)

  Conlan, Bernard

  Hancock, Michael

  Cook, Frank (Stockton North)

  Hardy, Peter

  Cook, Robin F. (Livingston)

  Harrison, Rt Hon Walter

  Corbett, Robin

  Hart, Rt Hon Dame Judith

  Corbyn, Jeremy

  Hattersley, Rt Hon Roy

  Craigen, J. M.

  Healey, Rt Hon Denis

  Crowther, Stan

  Heffer, Eric S.

  Cunliffe, Lawrence

  Hogg, N. (C'nauld & Kilsyth)

  Cunningham, Dr John

  Holland, Stuart (Vauxhall)

  521

  Howells, Geraint

  Miller, Dr M. S. (E Kilbride)

  Hoyle, Douglas

  Morris, Rt Hon J. (Aberavon)

  Hughes, Robert (Aberdeen N)

  Nellist, David

  Hughes, Roy (Newport East)

  Oakes, Rt Hon Gordon

  Hughes, Sean (Knowsley S)

  O'Brien, William

  Hughes, Simon (Southwark)

  O'Neill, Martin

  Janner, Hon Greville

  Orme, Rt Hon Stanley

  John, Brynmor

  Park, George

  Jones, Barry (Alyn & Deeside)

  Patchett, Terry

  Lambie, David

  Pendry, Tom

  Lamond, James

  Pike, Peter

  Lewis, Ron (Carlisle)

  Prescott, John

  Lewis, Terence (Worsley)

  Raynsford, Nick

  Litherland, Robert

  Redmond, Martin

  Livsey, Richard

  Richardson, Ms Jo

  Lloyd, Tony (Stretford)

  Roberts, Ernest (Hackney N)

  Lofthouse, Geoffrey

  Robertson, George

  Loyden, Edward

  Robinson, G. (Coventry NW)

  McCartney, Hugh

  Rooker, J. W.

  McDonald, Dr Oonagh

  Ross, Stephen (Isle of Wight)

  McKay, Allen (Penistone)

  Rowlands, Ted

  MacKenzie, Rt Hon Gregor

  Sedgemore, Brian

  McTaggart, Robert

  Sheerman, Barry

  Madden, Max

  Sheldon, Rt Hon R.

  Marek, Dr John

  Shields, Mrs Elizabeth

  Marshall, David (Shettleston)

  Shore, Rt Hon Peter

  Martin, Michael

  Short, Mrs R.(W'hampt'n NE)

  Maxton, John

  Silkin, Rt Hon J.

  Maynard, Miss Joan

  Skinner, Dennis

  Meacher, Michael

  Smith, C.(Isl'ton S & F'bury)

  Meadowcroft, Michael

  Smith, Rt Hon J. (M'ds E)

  Michie, William

  Soley, Clive

  Mikardo, Ian

  Spearing, Nigel

  Millan, Rt Hon Bruce

  Steel, Rt Hon David

  522

  Stott, Roger

  Welsh, Michael

  Strang, Gavin

  White, James

  Straw, Jack

  Wigley, Dafydd

  Taylor, Matthew

  Williams, Rt Hon A.

  Thomas, Dafydd (Merioneth)

  Winnick, David

  Thomas, Dr R. (Carmarthen)

  Young, David (Bolton SE)

  Thorne, Stan (Preston)

  Tinn, James

  Tellers for the Noes:

  Torney, Tom

  Mr. Frank Haynes and

  Wardell, Gareth (Gower)

  Mr. John McWilliam.

  Weetch, Ken

  Question accordingly agreed to.
  Resolved,
  That the Rate Support Grant Report (England) 1987–88 (House of Commons Paper No. 253) which was laid before this House on 20th March, be approved.

  Rate Support Grant

    RATE SUPPORT GRANT (ENGLAND)
    Resolved,
    That the Rate Support Grant Supplementary Report (England) (No. 3) 1985–86 (House of Commons Paper No. 259), which was laid before this House on 20th March, be approved.— [Mr. Ridley.]

    RATE SUPPORT GRANT (ENGLAND)
    Resolved,
    That the Rate Support Grant Supplementary Report (England) 1986–87 (House of Commons Paper No. 258), which was laid before this House on 20th March, be approved.— [Mr. Ridley.]

  Rate Support Grant (Wales)
  10.15 pm
  The Secretary of State for Wales (Mr. Nicholas Edwards): I beg to move,
  That the Welsh Rate Support Grant Report 1987–88 (House of Commons Paper No. 221), which was laid before this House on 19th March, be approved.
  Mr. Speaker: With this, I understand we are to consider also the motion
  That the Welsh Rate Support Grant Supplementary Report 1986–87 (House of Commons Paper No. 222), which was laid before this House on 19th March.
  Mr. Edwards: The main report for the forthcoming financial year is customarily laid in the preceding December and debated in the following month. This time, difficulties over the definition of total and relevant expenditure, recently resolved by the passage of the Local Government Finance Act 1987, meant that the normal timetable for both reports could not be met. Nevertheless, in my statement to the House on 16 December I gave full details of my firm intentions for the 1987–88 settlement and the 1986–87 supplementary report, to give councils adequate time to draw up budgets and set rates. So that they could do so with certainty, I said then that no data received subsequently would alter my intentions. That is the situation.
  The reports laid before the House last week reflect, with one minor exception concerned with inter-county education pooling, precisely my intentions announced in December. These education pooling adjustments will now be made in supplementary reports following the enactment of the Local Government Bill. Until they are made, Welsh counties will have a cash flow advantage of around £7 million. I do not intend, therefore, to spell out again the details of the 1987–88 report, but it is important to set out certain of its main features, particularly to provide a context for what I shall have to say later about the spending and rating policies of some Welsh local authorities.
  The 1986–87 settlement was a good one for Wales. The 1987–88 settlement is even better. Relevant expenditure is increased by 6·1 per cent. to £1,734 million, current expenditure by 4·8 per cent. to £1,496·5 million, aggregate Exchequer grant by 8·4 per cent. to £1,157 million and block grant by 6·1 per cent. to £901·7 million. All these increases are higher than the 4·5 per cent. forecast rate of inflation. It is also important to recognise that there is provision for extra capital spending in 1987–88. Allocations for capital investment have been increased by £47 million, or 14 per cent., to a record £369 million, following a £60 in Ilion increase in the previous year. This increases the total investment in capital projects since 1979–80 to £3·5 billion, and that does not include the multiplier effects created by urban programme and urban development grant expenditure in the private sector.
  The first supplementary report for 1986–87 distributes the full amount of block grant provided under the settlement. Provision for aggregate relevant expenditure has been increased to allow for increases in police pay, expenditure on midday supervision in schools and GCSE. Block grant has therefore been increased by £1·3 million. Specific grants are now £5·2 million higher at £174·7
  524
  million. The total of local authorities' GREs for the year has been reset in line with provision, but authorities' block grant entitlements will not be affected on this account.
  On the basis of the 1987–88 settlement, ratepayers, both business and domestic, were entitled to expect very low average rate rises, and rate reductions in some cases. I am sorry to say that too many local authorities have simply ignored the opportunity that they were given to take responsible and moderate decisions which could and should have provided their ratepayers with significant benefits. Far from exercising restraint, they have chosen to budget for very high levels of spending and therefore to set rates at a much higher level than was necessary.
  The county councils together have budgeted to increase their expenditure by 9·1 per cent. compared with an increase of 7·1 per cent. allowed for in the settlement after taking into account the effect of increasing teachers' pay. In Dyfed there has been a real terms spending increase, which I have to say I regard as disgraceful and indefensible. The county council was presented with a golden opportunity to reduce its precept substantially. By spending in line with the settlement, a 6 per cent. reduction could have been achieved. Instead, Dyfed ratepayers face an increase of 7 per cent., in part to pay for a significant increase in the number of staff employed, something that other counties in Wales do not seem to find necessary. That is an astonishing performance by a council professing to be anxious to secure better employment prospects for its area, and is not the way to attract investment and extra jobs, nor to protect the interests of domestic ratepayers. Ratepayers in Gwent are also faced with similarly damaging increases in expenditure and rates, and in every county in Wales rates have been set higher than can possibly be justified on the basis of this settlement.
  Mr. D. E. Thomas: Will the Secretary of State explain to the House why he needs to persist in attacking Dyfed county council when he has now announced his retirement as a Dyfed Member of Parliament? Will he explain why it is wrong for a local authority that requires to increase employment in its area to increase its staff? Why is it only the private sector that wins plaudits from the Secretary of State?
  Mr. Edwards: If the hon. Gentleman does not yet understand that, if one increases rates by a substantial margin, one discourages private business from setting up and generating employment, I am afraid that it is much too late to start teaching him the lesson. However, it is certain that businesses understand perfectly well and they will have taken note of the damaging and unnecessary increase by the Dyfed county council.
  District spending as a whole is set to increase broadly in line with the settlement, but while many district councils have sought to hold their rates down, some have budgeted for spending increases which they will have to justify. However, they cannot possibly justify them on the ground that the resources that they have been given under the settlement are inadequate. Of the seven districts which should have been able to reduce their rates, only one has actually done so. Three of the others have expenditure and rate rises well above the average, and in Colwyn a spending increase of 8·5 per cent.— almost double the forecast rate of inflation — results in an increase in average rate bills which is almost double that of other districts in Clwyd. I warmly congratulate Cardiff, which

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  is in the middle of major and ambitious schemes, on its good management and good sense in reducing rates. Rate bills in Cardiff will go up by 3·6 per cent., which is less than half the all-Wales average of 7·8 per cent.
  Mr. Gwilym Jones: I thank my right hon. Friend for that appropriate reference to Cardiff, but I hope that he will take the opportunity to emphasise that the reverse has been achieved by South Glamorgan county council. Its precept has gone up by 4·1 per cent., but it has not followed my right hon. Friend's advice and formula in his settlement. In fact, it is levying an extra precept on the ratepayers of Cardiff, particularly business ratepayers, of effectively a 6 per cent. increase.
  Mr. Edwards: South Glamorgan undoubtedly had an opportunity to hold its precept with virtually no increase, but it has chosen to increase it by more than is necessary. That is undoubtedly true. The action of the city council in reducing expenditure below what we had expected has had the effect of pulling the total rate bill for local ratepayers down below what it would otherwise have been. I congratulate the city on that result and on its decision.
  All the councils which have set their rates and budgets above the settlement level bear a heavy responsibility for their decisions. I am sure that their ratepayers and electors will look hard at the reasons for such behaviour and draw their own conclusions in holding them accountable. The counties should know that, as a consequence of their decisions, the aggregate budget overspend for the year amounts to £24 million. This means that they have planned to underclaim available grant by a staggering £12 million.
  Ratepayers should know that under the Rate Support Grants Act 1987 each council which reduces its spending will attract additional grant directly to itself. Many districts have, in fact, done that, and as a consequence the districts as a whole can expect to receive about £0·4 million more than allowed for under the settlement. Ratepayers should know that it is entirely the responsibility of the counties to put matters right. They can do so and avoid forfeiting £12 million in grant by spending in line with the settlement, I trust that each will do so. They have only to look at more prudent councils to see the benefits that more responsible action could bring.
  We read in the Western Mail today:
  "Shadow Welsh Secretary Mr. Barry Jones is set to launch a bitter attack on the Government's record of funding Welsh councils, in a Commons debate tonight."
  I see that the hon. Gentleman is going to challenge me to justify the more than 10 per cent. cut in rate support grant to Welsh councils since the Conservative Government took office. He plans to counter criticisms of councils' rate increases. I read that "Mr. Jones" will also protest that Government grants cuts have meant that councils have had to turn to their ratepayers to raise more revenue.
  I am all for this new convention of publishing speeches in advance. I shall answer the hon. Member for Alyn and Deeside (Mr. Jones). First, on the question of the grant reduction since 1978–79, we have reduced grants to local authorities by around 6 per cent., not 10·9 per cent. The hon. Gentleman has forgotten the £40 million increase in specific and supplementary grants. We did it deliberately because we are determined to improve accountability. [AN HON. MEMBER: "It does not."] The hon. Gentleman says that it does not. However, that is the policy of the
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  Association of District Councils which, in its response to our proposals for the reform of local government finance said that
  "their long term aim is to ensure that the aggregate revenue received locally exceeds that provided by central government".
  I am afraid that I have some way to go. Such a policy would involve a reduction from the present 66·7 per cent. to less than 50 per cent.
  Now, unfortunately for the hon. Member for Alyn and Deeside, this policy cannot possibly be taken as an excuse for increases in rates this year. The reduction took place in the period before 1985–86. The grant percentage has been kept fairly constant for the last two years. As usual the hon. Gentleman is living in the past. The interesting thing is that in the period of reduction up to 1985–86, rates rose by 7 per cent. less than the retail prices index. During the last two years when the grant percentage has been stable, rates have risen by 14 per cent. more than the RPI.
  The fact is that this year, as last, grant has not been reduced. The settlement has been generous and too many local authorities have deliberately chosen to put rates up. If the hon. Gentleman now changes tack and challenges the level of service and justifies authorities that try hard to spend more, I have to remind him that Welsh local authorities are already spending 4 per cent. more in real terms than they were in 1978–79, and on present plans will be spending about 5·5 per cent. more than they were in the harsh post-IMF days of the Labour Government.
  It is a matter for regret that some authorities have chosen to increase the burden on their ratepayers instead of making better use of the many opportunities open to them to obtain savings and to ensure better value for money. The Audit Commission, whose illuminating reports have covered most of the key areas of local authority spending has made many suggestions for achieving better use of resources. Sensible cash flow management, for example, may not attract many votes or the direct attention of ratepayers, but the savings available in this area alone could lead to significant reductions in budgeted expenditure. No one could possibly argue that that would represent an assault on services. There are many other opportunities available. In pursuing them authorities should take advantage of the substantial increase in capital allocations that I have made available for 1987–88 to achieve revenue savings. Education authorities, for example, should take steps urgently to cut the number of empty school places. I have expressly provided in the increased capital allocations for 1987–88 for the capital costs to enble them to do this. Responsibility now rests with local education authorities to pay for better quality education instead of empty desks.
  Local authorities have a major responsibility to provide effective, efficient and economic services on behalf of their communities. If they do not, they will be failing in their duty towards their domestic and commercial ratepayers, who have a right to expect a fair deal and financial prudence. Councils which have not taken the opportunity provided by the settlement to maintain services and keep rate bills down will have to answer to their electorate. The councils concerned still have an opportunity to bring their spending, which is far above what they were spending under the Labour Government, back into line with the settlement and so to attract at least the full amount of

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  grant that I have made available for next year. I urge them to do so. I commend my proposals for 1986–87 and 1987–88 to the House.
  10.31 pm
  Mr. Barry Jones: We have heard tonight one of the most unpleasant speeches of any of our debates. It was full of bluster and ill-will and was a desperate attempt to rewrite history. The Secretary of State in none of his utterances showed the House that he understood that this was a debate about matters which affect the lives of many ordinary people or showed the human face that his office requires of him.
  The Secretary of State made crude, unjustifiable attacks on Welsh councils. We know that the right hon. Gentleman is playing politics and electioneering, but the truth is that he has not given sufficient money to our councils. Now the luckless councils must pick up the pieces. Today he has tried to whip up hysteria against local authorities, but with his speech he has condemned his record of eight years in office.
  Between 1979 and 1986 there were seven Acts of Parliament on local government finance. Three further Bills appeared this year, retrospective legislation and frequent changes in reports such as these. During the 1980s the Government's incompetence has destabilised local government, particularly local government finance, in Wales. The Secretary of State has been uniquely implicated in that sorry saga.
  The House of Commons research staff has told me that the cumulative cut in rate support grant since 1978–79 is £672 million at 1986–87 prices. When we take that into account, the right hon. Gentleman's vicious attack is seen to be most unjust and reprehensible.
  Having outlined the amount that local authorities have been denied since the Secretary of State took office, I must state the problems that local authorities are having to cope with. In December 1985 there were 181,000 people unemployed in Wales, yet in December 1979 there were 78,000. In effect, in a very few years, the right hon. Gentleman had pushed unemployment up by about 131 per cent. The case that the Opposition make to the Secretary of State is that the reports that we are debating tonight are insufficient to respond to the social consequences of such tragic figures. For example, there are 32,000 people unemployed in mid-Glamorgan. Blaenau Gwent has a male unemployment rate of 23 per cent. There are 15,000 people jobless in Gwynedd, and in the Shotton travel-to-work area male unemployment hovers on 21 per cent.
  Those statistics mask despair. The reports give insufficient cash to the local authorities which must pick up the pieces. The reports do not repair the damage caused by the years that have passed since the Secretary of State and his Government have been responsible for the economy and local authority matters in Wales.
  I have established that the cuts in manpower in local government have led to a deterioration of services. For example, the number of manual employees employed in the collection and disposal of refuse has dropped by 26 per cent. The number of manual council employees in building work has gone down by 31 per cent., the local authority
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  transport provision has dropped by 12·5 per cent., and the number of ancillary staff in local authority education services has fallen by 12 per cent.
  Mr. Keith Best: Will the hon. Gentleman give way?
  Mr. Jones: The reports are oblivious to the demands made by the public upon our local authorities when they have less money and manpower to respond to the services that the public demand.
  Mr. Best: The hon. Gentleman has argued his case as persuasively as he can about the problems of unemployment in Wales. Is he contending now from the Dispatch Box that the main generator of jobs in Wales will be the local authorities, which the ratepayers will have to pay for?
  Mr. Jones: I will make my speech in my own way and the hon. Gentleman will understand my points more fully by the time that I have finished.
  I was about to give an example of one of the services that have to be provided which are now very much at risk—education. I want to quote from a letter that I have received from a parent-teacher association and a headmaster:
  "However, of late, in spite of careful spending of the School Capitation money, we find ourselves supplying such basic items as paper and stationery. Recently we have paid £600; part of £1,000 spent by the school to provide basic text books in English to the Junior Department. Is this trend likely to continue? If so, what of those schools who have no PTAs or other financial support?
  The letters then states:
  "This PTA objects strongly that they are having to provide basics in the school. Surely the right of every child is to be equipped with the basic tools for education?"
  One of the results of the way in which the Secretary of State has managed local government finance since he came to office is that the vital services across the board in Wales are not delivering at the standard that parents and recipients require because they are starved of cash. Nothing that the right hon. Gentleman has said this evening will put that right.
  I want to describe the position as the counties see it. Perhaps their greatest bone of contention is the decision to end recycling because, with negative marginal rates of grant, there is a likelihood that total grant claimed according to terms set out in the RSG report will add up to less than the total of block grant. For 1987–88, both Secretaries of State have legislated to empower them to withhold any underclaimed grant that might arise if authorities spend more than Government assumptions. They say that the proposal seems to be a return to the worst aspects of the target penalty system that the Secretary of State claimed to have abolished last year.
  We now know that, because of what the right hon. Gentleman has introduced, the counties in Wales may well lose about £11 million to £12 million, but he has launched an attack on the very counties that are to lose heavily under his new dispensation; and worse, the formula for the distribution of grant still leaves all counties on negative marginal rates of grant, rising to 94p for South Glamorgan. Under the right hon. Gentleman's system, for every extra pound spent, 94p is taken away. That is a very harsh penalty. The Association of District Councils says that some districts' negative grant rates are much more severe. So it was wrong of the right hon. Gentleman to

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  launch his attack on those local authorities when what he proposes tonight is deeply injurious to the authorities that want to provide services to our people.
  For the districts, I can best exemplify the problems faced by Swansea. The council has told me that for 1987–88 it has lost £522.000 — about a 4 per cent. reduction. It has had to put up the rates by 3p, or 7·5 per cent. Without the grant loss, its rate increase would have been just 1p, or 2·5 per cent. Surely there is the answer to the unpleasant approach that the Secretary of State adopted in his typically undignified manner in his speech.
  The council in Swansea has been able to increase expenditure in cash terms by only 1·5 per cent., which, with a predicted inflation rate of 4·5 per cent. means real terms cuts. For example, it has had to use £1·2 million of prudently accumulated reserves, cut £3 million from the draft budget and cut £120,000 from job creation schemes run in conjunction with the Manpower Services Commission. That is just one small example of the havoc that the right hon. Gentleman is playing with the budgets and objectives of our local authorities.
  The district councils tell me that the Welsh districts' block grant has virtually stood still since last year, and has been reduced by £1·2 million when account is taken of the revisions in the supplementary rate support grant report for 1986–87. Furthermore, they tell me, in some anger, this year's settlement has reduced Welsh districts' block grant by £5·3 million, or 3·5 per cent., from the provisional settlement announced by the Secretary of State in July. Not only has this been a poor settlement for Welsh districts, but it has come as a severe blow, bearing in mind the detailed statements made by the Welsh Office and the Secretary of State last July of individual Welsh districts' GREs, block grant entitlements and published district rates.
  The Secretary of State has made great play about rate increases, and has denounced them, but the districts tell me that they have managed to keep their rate increases under control only because they have made further cuts in services and costs to keep their own expenditure within the Government's stringent spending guidelines for the fifth year running and by their use of scarce and valuable reserves to reduce the cost to the ratepayer.
  Therefore, the Secretary of State is wrong to launch this attack upon our local authorities. He referred to the supplementary report. I shall too, briefly. In the report the Secretary of State confirms the implementation of the full recycling of grants for 1986–87. So why did he cause so much uncertainty by threatening not to recycle grants? As legislation has had to be introduced to stop the recycling of grants in 1987·88, the right hon. Gentleman was clearly making not just an empty threat, but an illegal threat. That was a rather shabby moment in his tenure of office.
  The districts have lost £1·3 million of block grant in the supplementary report for 1986–87. In rate poundage terms, the largest grant reductions are for Blaenau Gwent, with a block grant down by £160,000 — equivalent to a 3p rate — and Taff Ely, with a block grant down by £250,000 — equivalent to a 2·7p rate. Those are the consequences of the Secretary of State's policies.
  To sum up, this is a complicated set of proposals, the system is too volatile, the districts are upset at the decrease in their block grants, the counties have exposed the iniquities of ending grant recycling, everybody in local government finance acknowledges that the system is
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  overcomplicated, and all say that high negative marginal rates of grant create major difficulties. They are, in effect, penalties by another name.
  Our people, communities and valleys need an increase in public investment in Wales to counteract the acknowledged economic and social deprivation. The settlement fails to give Welsh local authorities the opportunity to increase investment in their communities and improve the lives and livelihoods of their inhabitants.
  We say that the settlement is no relaxation of the tough controls applied by the Government since 1981–82 on the spending of local authorities. In effect, the Secretary of State's proposal is a confidence trick and some Welsh councils may find it impossibie to use the whole of their capital spending powers in the next year, because of his system and grant losses on marginal spending.
  The Government have cut back harshly on the funding of our local authorities—by at least £672 million in real terms since 1978–79. That is the scale of the damage. At the same time, the government have been content to drive up unemployment, and thus our councils have been forced to do much more with much less. The Secretary of State has been a party to an unforgivable policy, and Wales will never forgive him for that.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Harold Walker): Order. This is a short debate and brief speeches would be appropriate.
  10.48 pm
  Sir Anthony Meyer: Wales has once again fared very well under the rate support grant settlement announced by my right hon. Friend the Secretary of State. It has fared substantially better than England, thanks to my right hon. Friend's powerful advocacy in Cabinet and, as he has said trenchantly, the settlement should result in low rate increases or rate reductions.
  There is certainly no reason why Clwyd should be raising its precept yet again, even though the extremely generous pay settlement given to the teachers—despite the appalling behaviour of most of their union leaders throughout the dispute — creates problems for the treasurer. Those problems could have been resolved if Clwyd had not dithered about closing half-empty schools.
  Within the rate support grant system the effect on districts is, as so often under an increasingly rickety system, unpredictable and sometimes seemingly unfair. The system is meant to ensure that decisions to increase spending should result in a reduction of RSG in most cases, and that a decision to reduce spending should result in considerable rating benefits. However, other factors are at work, applying grotesquely complicated formulae for assessing special elements, on top of an already complex system.
  That has led to the situation in which Colwyn, hitherto a prudent spender, has had to increase its rate by no less than 26 per cent. from 38p to 48p. If I were making party political points — which I am not — I might establish some connection with the fact that this year the Liberals have a firm grip on the council, whereas previously they were merely the largest political group on the council. As such they have systematically cushioned the rate increases by running down the balances. This year, however, there are no balances to run down.

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  Much of the explanation for the sharp rise in Colwyn's rates lies in the random effect of the various special factors determining rate support grant. [Interruption.] The borough treasurer said in a letter to me:
  "My members are totally bemused by the RSG system. They cannot understand that, for an authority which has kept to spending targets in the past, they are treated in this way. I find it difficult, if not impossible, to give a satisfactory answer. Then seem unimpressed with the explanation that the whole thing is a mathematical exercise"—
  [Interruption.]
  This debate is being rendered extremely difficult by a severe attack of verbal diarrhoea on the part of the hon. Member for Caerphilly (Mr. Davies), who has consistently been muttering. It would make things much easier if he would shut up.
  Mr. Stefan Terlezki: He is as green as Tom Jones's grass.
  Mr. Deputy Speaker: Order. There is too much sub-dialogue going on.
  Sir Anthony Meyer: The treasurer goes on to say:
  "They seem unimpressed with the explanation that the whole thing is a mathematical exercise, the formulae having been the subject of consultation with the local authorities associations. The whole thing appears to be a huge lottery, and the dice do not fall kindly for Colwyn."—
  [Interruption.]
  Colwyn has pointed out that this time the special needs element has operated rather more favourably for Rhuddlan. It should not be supposed that Rhuddlan is entirely happy. [Interruption.] It is concerned about the capital allocation for its housing improvement programme. Like every council, it would like a larger housing allocation. [Interruption.] Rhyl is suddenly becoming aware that it has a problem of alarming— [Interruption.] It really is extremely—
  Mr. Deputy Speaker: Order. I think that the hon. Member for Caerphilly (Mr. Davies) should take account of what I said earlier. I hope that he will.
  Sir Anthony Meyer: Perhaps a bucket of cold water would do the trick.
  Rhyl is suddenly becoming aware that it has an alarming problem of deteriorating housing, analogous to that in some of the city centres. It needs a crash housing action programme, especially in the west end of the town, where deteriorating housing, mostly in multi-occupation, is interacting with poor social conditions, aggravated by the influx of jobless youngsters from Mersyside. Some rather frightening results have been produced.
  This morning Colwyn council told the Select Committee on Welsh Affairs that it could use an extra £500,000 straight away. It said that it would have no problem in spending it wisely on housing improvement. No doubt Rhuddlan would like an equally ambitious expansion. of its programme. The present worry is the Treasury insistence on year-end accounting. The council says that that makes it impossible for it to spend its full allocation in any given year. It says that the receipts from council house sales come in throughout the year in random fashion and that the proportion of the money from those council house sales that it may spend is liable to arbitrary variation by the Government, with little notice.
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  Improvements grants authorised in one year may not be spent until the next. All this is a nightmare for the borough treasurer.
  I am not surprised that Rhuddlan should resent reproaches levelled at it by my hon. Friends on the Front Bench, who claim that it cannot need more money for housing as it is not spending its full allocation.
  Mr. Nicholas Edwards: I must say that Rhuddlan has had an exceptionally generous settlement, because GRE is up by 10 per cent. due to the projects for regional and national importance capital allocations. It budgeted to spend 3·6 per cent. above that exceptionally generous settlement.
  Sir Anthony Meyer: I was not maintaining that Rhuddlan had been particularly harshly treated. All I am saying is that it is extremely difficult for that council to plan ahead in view of the insistence that it must spend all its money by the end of the accounting year.
  I do not suppose that we will have many more of these RSG debates, in which those of us who speak from the Back Benches are probably talking through our hats, while Ministers clearly know what they are talking about.
  We are to have a new system. I have the gravest reservations about whether the community charge —excellent in principle—can possibly be made to bear the heavy load of expenditure that will be placed upon it. I also have grave doubts about the wisdom of eliminating domestic property tax. If a tax becomes unbearably heavy, that is not necessarily a good reason for sweeping it away altogether. It is an argument for shifting some of the burden that it creates.
  10.54 pm
  Mr. Geraint Howells: The Secretary of State told us, and I am prepared to believe him, that Wales has done marginally better than local authorities in England in the allocation of rate support grant for 1987–88. It may even be true that this settlement is an improvement on those we have had in the recent past. Many of my parliamentary colleagues may disagree with me, but I am sure that the Secretary of State is a reasonable man. He has been obliged to listen to representatives of local authorities, whose first concern is providing services and value for money. Having said that, I can only come to the sad conclusion that, although the right hon. Gentleman may have listened, he has been unable to deliver the goods to the satisfaction of the authorities, and especially not to those who expect and deserve the services provided by them.
  The overall effect is that, once again, the Government seem to be using the system as a means of curbing local authority expenditure, although the ratepayers invariably come out in favour of better, more efficient services.
  The majority of county and district councils are suffering negative marginal grant rates, which means that, as expenditure increases, their grant entitlement is reduced. Ceredigion district council, although it has one of the lowest district rate levies in Wales at 19p this year, increasing to 21p for 1987–88, faces a penal negative marginal rate of grant of 79 per cent. Any growth in its budget means that, for every £100 spent, the grant will be cut by £79. It is manifestly unfair that high and low-spending authorities alike are penalised, and there are no rewards for being careful.

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  Ratepayers will be asked to fund all additional expenditure in full, and a relatively small increase in expenditure can result in a disproportionately large increase in the rate levy. The problem for the majority of district councils is that, over many years of cuts in public expenditure, they have had to pare back to the bone, and there is little, if any, flesh left to cut. The only way in which many authorities have survived recently is by using substantial sums from their reserves, but those reserves are fast disappearing, as are many essential services.
  Many county councils are worried that, although the settlement in some measure takes account of past pay awards, it does not make enough provision to cope with pay settlements that are in the pipeline, at all levels, which are outside the authorities' control. Indeed, the restructuring of teachers' pay scales has not been catered for adequately.
  The Tory Government have no sympathy for local government, and this exercise in cheeseparing, as demonstrated by the Welsh rate support grant report, shows that they have no interest in maintaining support for local services or in encouraging the growth of local democracy. They relate matters only to central control and manipulation.
  However, the British electors have demonstrated many times during the past couple of years, and no doubt will do so again soon, that they want more local control and better and more efficient services, with vigorous local authorities directly answerable to the electorate, not controlled by puppetmasters in London.
  In my view, electors want to see school buildings better maintained and educational facilities improved. They want to see rural roads in good repair, better transport, vastly improved housing, and extended social services. They want to see local government involved in building up the economy of the area, making more opportunities available for jobs and generally reacting to the needs of inhabitants. Instead, they have to watch the morale of local authorities drain away while they wrestle with impossible restrictions imposed by central Government. They have been asked to preside over shrinking and inadequate budgets while demands on resources grow remorselessly.
  The time has come for a change in the attitude of central Government, and a realisation that local government matters and can contribute a great deal not only to the basic needs of the people it serves but to the health and democracy of the country.
  I was surprised that the Secretary of State was critical of Dyfed county council. From my experience as one of the ratepayers in the county, I am well aware that the chief executive and the councillors—never mind which party they represent—have given their best for many years as members of the Dyfed county council. It is a great shame that the Secretary of State has singled out one of the best local authorities in Wales, which cares for those who live within our community.
  11.1 pm
  Mr. Keith Raffan: I shall begin my remarks by making a general point. Wales's share of total grant for England and Wales has steadily increased under the Government. It is a great tribute to my right hon. Friend the Secretary of State for Wales, as the champion of Wales and the Welsh people, that although in the 1970s Wales's share of the total grant for England and Wales was 7·25
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  per cent., by 1981–82 it had risen to 7·4 per cent., and now in 1986–87 it stands at 8·3 per cent. In the coming year that will make a substantial difference of £142 million over comparable figures for the 1970s. Of course, there is also the increase in current expenditure of 4·8 per cent. above 1986–87 budgets in Wales—1 per cent. higher than in England. My right hon. Friend has been a doughty fighter for the Principality and its people. We shall greatly miss him when he retires.
  Even the shadow Secretary of State for Scotland, the hon. Member for Glasgow, Garscadden (Mr. Dewar), almost every time that Scottish business is moved on the Floor of the House, is inclined to grumble about how well my right hon. Friend is doing because of the way in which the differentials between Scotland and Wales are narrowing. I am sure that the one or two Scottish Members present can confirm that comment. That shows how well my right hon. Friend has done for Wales.
  Even Clwyd county council has been kind. In the words of the county treasurer, Ralph Greening:
  "This is not an unreasonable settlement. I am not unhappy about it."
  Coming from Clwyd, that is the equivalent of at least six curtain calls at Covent Garden.
  In the current year, the settlement has led to a lower than usual rate rise of 4·8 per cent. That is just as well when we remember that since 1984 county rates have risen from 148p to 198p. My right hon. Friend the Secretary of State put it succinctly to the House on 23 July last year when he said:
  "More than 50 per cent. of the rate income in Wales comes from non-domestic ratepayers. High and unpredictable rate rises are bad for business, hinder expansion and put jobs at risk." [Official Report, 23 July 1986; Vol.102, c. 341.]
  This excellent settlement gives the opportunity to local authorities not only to pass on low, or relatively low, rate increases to ratepayers, but also to maintain services. Whether that opportunity is taken depends of course on the decisions of those local authorities.
  I take Clwyd county council to task on that point. Too often empire building and castle converting have come before statutory services. I give three instances. The first is manpower. There is no single way more guaranteed to create unemployment in local industry than for local government to have a bloated staff. Just look at three departments in Clwyd county council. The Audit Commission profile for 1986–87 shows that the chief executive, legal and secretarial department is 128 per cent. larger than the average for the family of directly comparable authorities. The engineering department is 112 per cent. larger. The architectural department is 82 per cent. larger.
  The chief executive of Clywd county council, Mr. Mervyn Phillips, has described the Audit Commission profiles as "worthless", yet the Hay-MSL report on the opportunities for economy in the services and structure of Clwyd county council has confirmed that the Audit Commission is hitting the right targets in regard to overmanning at shire hall. It indicted Clwyd county council as "top heavy" with senior administratives—with too many chiefs in relation to Indians. The figures I have given highlight that indictment.
  The second instance is surplus places. The current number of surplus school places in Clwyd is absurdly large, standing at 22,300. That figure is made up of 11.700 at primary level and 10,600 at secondary level. The cost of keeping them empty is about £3·5 million a year—the

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  equivalent of 6p or 7p on the rates. Just meeting the Government target of removing two fifths of those places would produce substantial revenue savings that could be redeployed with great advantage elsewhere. They could be spent on the school library stock, which in 1984–85 was slashed from £75,000 to £15,000, on school building maintenance, which last year was cut by £11,000, and on providing further resources for the GCSE.
  Mr. Alex Carlile: Is the hon. Gentleman saying that in his view it is Government policy that village schools and small high schools should be closed, that children should be bussed over enormous distances and that the whole fabric and tradition of Welsh education should be dismembered, just to save a bit of money and justify this rotten rate support grant settlement?
  Mr. Raffan: The hon. and learned Gentleman made an exactly identical intervention during the speech of my right hon. Friend the Secretary of State for Wales in last year's debate. He was humiliated by my right hon. Friend, for the simple reason that it is hypocritical of the Liberal party to call for money to be spent on empty school places and at the same time to say that more money should be spent on library books, capitation and the GCSE. If the hon. and learned Gentleman thinks that he fools even some people some of the time, I have to tell him that he does not. It was a silly intervention. He has repeated last year's intervention when he was so effectively put down by my right hon. Friend.
  Mr. Carlile: Will the hon. Gentleman give way?
  Mr. Raffan: I shall certainly not give way.
  Mr. Carlile: Will the hon. Gentleman give way?
  Mr. Raffan: No, I shall not give way. I should have thought that one humiliation for the hon. and learned Gentleman would be enough.
  Mr. Carlile rose—
  Mr. Raffan: I have been saying for a long time that Clwyd has not been removing surplus school places fast enough. I am glad to have the support of the chairman of Clwyd's policy, finance and resources committee, Councillor Rhys Webb. Earlier this month he issued a statement in which he said:
  "It is not going as quickly as I would like."
  Thirdly, I refer to major capital projects, projects which have nothing to do with statutory obligations. I speak principally of Bodelwyddan castle. Even after having set aside the massive capital expenditure so far of £1,799,000 and the £1,350,000 that is to be spent in the current year, the revenue implications of the project are horrendous. The annual running costs now amount to a massive £545,000 a year, with offsetting income at a mere £11,000. How can such expenditure possibly be justified when, since 1984, the school library stock budget has been slashed? In 1984–85 it stood at £75,000 in Clwyd. In 1985–86 it was slashed to £15,000, and it has stood at that figure ever since. This year an additional £18,000 will be made available exclusively for the GCSE, although that figure has been whittled down from an original £60,000.
  The truth is that statutory services and obligations are suffering severely to pay for the Bodelwyddan castle project. That is wrong. Indeed, it is worse than wrong. In
  536
  the words of several anxious parents to whom I spoke yesterday, when they were lobbying me in the House, "it is wicked".
  At primary level, project-based work has been undermined because books can be borrowed for only a month rather than a full term as before. Non-fiction was bought for primary level for the first time in 18 months last month. The schools library service has had to abandon its support for the prepared reading schemes because the service is not buying fiction in sufficient quantities.
  At secondary level, a survy has shown a totally inadequate and deteriorating library stock. Indeed, many schools that I have visited cannot afford a decent newspaper, let alone a decent weekly magazine.
  In February 1986 Clwyd's Education (Schools and Special Services) Sub-committee adopted the LISC report—"School Libraries—Foundation of the Curriculum"—but only lip service has been paid to it ever since. Some 12 months on, the report to that sub-committee reported a further deterioration in the school library stock. This is the truth—
  Mr. Ron Davies: On a point of order, Mr. Deputy Speaker. Will you confirm that at the start of the debate you asked hon. Members to restrict their remarks to a reasonable time because so many hon. Members wished to speak? Will you confirm that the hon. Member for Delyn (Mr. Raffan) has spoken for eight minutes—
  Mr. Deputy Speaker: Order. I take the hon. Gentleman's point, but he is taking up valuable time. It is not a point of order, but it is a matter of concern. I hope that the hon. Member for Delyn will recognise that a number of hon. Members are seeking to take part in the debate.
  Mr. Raffan: I would have been a great deal quicker if I had not been subjected to the continual heckling of Opposition Members, and the pointless interventions of the hon. and learned Member for Montgomery (Mr. Carlile) and of the hon. Member for Caerphilly (Mr. Davies).
  There has been a scandalous neglect of statutory services to pay for the Bodelwyddan castle project, which the county cannot afford. I am glad that my concern about the county's cock-eyed priorities is shared by members of all political parties. It is a tragedy when so much fine work is being done by individual departments at Clwyd—by the education department under its director, Mr. Keith Evans, the social services department under its director Mr. Gledwyn Jones, and the finance department under the county treasurer, Mr. Ralph Greening. Such fine work and service are being given, but the ability to give a better service is being undermined by projects such a Bodelwyddan. The budget for the school library stock could be doubled, trebled, quadrupled, or more, out of the running costs of Bodelwyddan, and it should be.
  I and many others will continue to speak out as often and as loudly as we can until what we say is not only heard but acted on, until Clwyd county council not only reflects but acts upon the views of the people it purports to but does not represent.
  Lastly, I turn to the speech of the hon. Member for Alyn and Deeside (Mr. Jones). The best comment on it, on Labour's position—I shall continue to repeat that until Opposition Members listen—comes not from me but from the people of Clwyd—indeed, from the people in

  537
  the hon. Gentleman's own constituency. At county council by-elections last Thursday the Conservatives gained Hope, Penyffordd and Caergwrle from Labour. Labour sank from first to third place—and in Buckley Labour only just held on humiliatingly by the skin of its teeth. The hon. Gentleman's speech will not win any seats from us. I doubt whether it will even save his own.
  11.9 pm
  Mr. Donald Anderson: This has been a remarkable mini debate. We have had the usual froth and bluster from the hon. Member for Delyn (Mr. Raffan), and we have had the hon. Member for Clwyd, North-West (Sir. A. Meyer) rallying to the cause of the Government, which is a sure sign of the approach of an election. We have had the Secretary of State providing a remarkable swansong to these rate support grant debates. One would hope that the right hon. Gentleman would have a certain humility as he surveys the wreckage of Wales around him. As he sinks beneath the waves one would hope that there would at least been the cry from him,
  "I have sinned; I have been wrong,"
  but he is still a true monetarist, and that false dogma is shown to be wholly inappropriate to Wales.
  Many of the criticisms that we may have made of the Budget are equally applicable to the RSG settlement. In 1979 the Government claimed that they would institute a regime of tax cuts and protect the ratepayer, but there has been an increase in the burden of taxation on the ordinary family, and there has been an increase in the rate burden. This has been the direct result of Government policy. We know that the Government have reduced the percentage of relevant expenditure that is covered by the Exchequer. In 1981–82, the first year of the disaggregation of the England and Wales figures, the Exchequer provided 62·7 per cent. of expenditure. This has been reduced to 53·5 per cent. in the current settlement.
  The Welsh ratepayer pays a water rate, and by failing to tackle the high water rates in Wales the Welsh Office has failed the Welsh nation. In 1982–83 the differential in domestic rate relief that was intended to reflect the higher level of water rates in Wales was abolished. I should say that the domestic rate relief was halved from 36p to 18·5p. The increased burden fell directly on the consumer in Wales. On the best comparable basis, the Welsh water rate is about two thirds above the average of the other authorities in England and Wales. The Government have done nothing to carry over the interim settlement which the previous Labour Government bequeathed to them with their equalisation legislation. They seem content that the Welsh people should bear an excessive and unjust water rate burden.
  I shall not weary the House with the effects of the Government's policy on the Swansea council, as this has already been touched upon by my hon. Friend the Member for Alyn and Deeside (Mr. Jones). The reduction in central Government money would have meant a rate increase of 4 per cent. in cash terms. We know that positive Government policies could have led to increased potential for job creation by local authorities, but the Government have prevented the authorities from playing a full role at local level. At a time of mounting social problems of unemployment and homelessness, the Government have chosen to restrict expenditure.
  538
  Even with the greatest fantasy of the Conservative press, the Government cannot claim that they are dealing with loony authorities. Swansea council and other authorities in Wales are highly responsible and dedicated to the welfare of those whom they represent. The Secretary of State has frequently paid tribute to the Swansea city council for working closely with central Government and seeking to stimulate private investment in the marina project in the enterprise zone.
  The settlement and the constant turning of the screw upon Welsh local authorities reflect the prejudices and bombast of the Chancellor of the Exchequer and that of the Welsh Office, and the continuing trend of denying the local authorities the support that they need to do the job for which they are equipped and are anxious to carry out.
  11.18 pm
  Mr. Dafydd Wigley: We have seen worse rate support grant settlements than the one that is before us, but that says more about previous settlements than about the current one. The hon. Member for Swansea, East (Mr. Anderson) has spoken of the way in which services that are needed by our communities are being restricted, and that is the major problem.
  The humbug that we have from central Government gets up the nostrils of those who are engaged in local government more than anything else. Central Government have screwed down local government and have taken powers to the centre. They then tell local government that there should be no rate increases in their areas. The Government have told Gwynedd that, if expenditure can be held down to 4·8 per cent., there should be no rate increase. The Government knew, however, that the pressure on expenditure in the county was so high that there would be an increase in the rate of 7p to 8p on account of the teachers' settlement alone, and a 2p or 3p increase on account of road repairs. The costs of road repairs have been borne by capital account instead of revenue account because of the desperation of those who were responsible for the authority's funds. The impact of the police settlement is another element coming through, yet Gwynedd is castigated.
  In the context of Dyfed, which the Secretary of State mentioned rather than Gwynedd, he said that no manufacturing industry jobs were coming to Dyfed because we had increased the rates. Gwynedd has had the lowest rate in Wales in recent years, but no jobs are coining to Gwynedd. It is little wonder that local authorities are becoming desperate and saying that, if jobs are not coming in the private sector, we should try to create them as directly as we can, particularly in view of the pressure on services in the county.
  I draw the Secretary of State's attention to the increasing problems of maintaining the highways in rural counties. This is largely on account of the Government's decision to go for heavier axle weights on lorries. The pressure on bridges and roads is enormous and is leading to inevitable increases in expenditure on rural roads in the counties of Gwynedd, Dyfed and Powys. Of course, it has also led to increased expenditure on roads in urban areas.
  There is also increased pressure on the social services because of the mushroomlike growth of private nursing homes and private residential homes in our counties. That inevitably leads to a demand for services. Gwynedd is facing an increase of 15p in its rates this year, and that still leaves the county £1 million below its GRE. The Secretary

  539
  of State has a habit of castigating counties for spending less than the GRE because they are increasing rates in order to maintain services on which there is great pressure.
  Although this year's capital grant has been better than in previous years and has the smack of an election about it, one of the most difficult and frustrating matters is the lack of certainty about the future. It is not enough to say that 80 per cent. of a certain figure can be guaranteed next year. When the figure is worked out, it shows that, of the £10 million for capital expenditure in Gwynedd in the coming year, in practice there is a guarantee of only about £5·4 million. We need a rolling capital programme for several years and much greater certainty if we are to have a pattern for our capital expenditure.
  Finally, I should like to deal with the rate support grant formula. The Green Paper contains suggestions about further simplification. The formula for England is considerably more complex than that for Wales and, if the formula is over-simplified, there will be a danger that some of the necessary variations that are needed from area to area in Wales because of the diverse nature of our country will be lost. I hope that, when simplification is considered, the diverse nature of Wales will be taken into account, and that sensitivity will be maintained to ensure that the rural counties and the areas of great social deprivation in the valleys will be properly catered for in the rate support grant settlement.
  The Government should not play with figures to try to justify what they are doing this year compared to last. We need to look at the needs of our areas and compare those needs with the services that we get. We ought to have a radical new think on how we can improve those services, and we should get the finance to do so.
  11.24 pm
  Mr. Ian Grist: The plea by the hon. Member for Caernarfon (Mr. Wigley) precludes looking at the economy as a whole. Unless we get the economy right, we will not have the money to fund the things he wants. That is part and parcel of these rate settlements. I say that because I think that people sometimes lose sight of it.
  I congratulate my right hon. Friend the Secretary of State on the work that he is doing. I say that for what seems like the umpteenth year, and I am sure it seems like that to my right hon. Friend. As my hon. Friend the Member for Delyn (Mr. Raffan) said, we shall miss him in future rate support grant debates.
  I should like to take up a point that my right hon. Friend made about south Glamorgan. In the settlement, south Glamorgan was given a chance to reduce its rate. It did not reduce it but chose to put it up. In the six years that the Labour party has controlled that county, the rate has gone up by 80 per cent., including at one time a supplementary rate. The action of Cardiff city council has been rather different. It is a Conservative council and, despite the change from the provisional figures last year and the eventual outturn weighing against that council, it managed to reduce the rates. After four years in office, the council is still levying the same rate poundage that it levied when it came to power. That is a responsible attitude by a responsible council which is promoting the most exciting
  540
  city in the country, with major capital investment and the forward-looking Cardiff bay development just coming off the blocks.
  I regret to say that the populist approach of the Liberal party, confirming yet again that it is angling for any old vote that it can find, shows that it is clear that it will not have to operate power, and so can make promises where it will. Like all the Opposition parties, it wants higher public expenditure, although I do not know where it thinks that that will come from. It comes from taxation, rates, businesses and people's pockets. The whole point of this debate and all the similar ones is to control local authority expenditure, inflation and borrowing, and to bring down interest rates. The recent fall in interest rates will bring great advantage and benefit to local auhorities. If he can, I would like my right hon. Friend to estimate what the fall in interest rates is worth to Welsh local authorities, and the leeway that that gives our treasurers.
  Cardiff city council has managed to put down its rates while not cutting expenditure in any department, or any service, contrary to what the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) said. Promoting industry and jobs in Wales depends on keeping costs down and making our local authorities and cities and towns more attractive to incoming industry, and able to help established businesses to grow. High rates and taxes are inimical to that, and the Government and the Conservative party are doing all that they can to bring jobs and industry to Wales. They are making a first-rate job of it.
  11.26 pm
  Dr. John Marek: I cannot understand why, from the Government Benches, we have had lots of statistics and figures about how Welsh local government is doing well and spending more money than ever before, when in Wales one can see the infrastructure deteriorating in front of one's eyes. They have said that local government expenditure is going up, but they have not said that it is going up in line with central Government expenditure, because that has been increasing even more. The Secretary of State said that local government was spending more in real terms. I have not studied these matters closely over the past two or three years, but I wonder whether that is because housing benefit is included, or the Clegg award, made by the last Labour Government. I should be interested to see what local government has to say about the Secretary of State's speech.
  The hon. Member for Delyn (Mr. Raffan) said that RSG in Wales is better than that in England. That may be so, but, in a world of diminishing resources, RSG as a proportion of total spending has been cut severely. It is not enough to make a simple proportional comparison and say that the Secretary of State has done well. I suspect that council expenditure in England has been extremely severely pruned, and both Secretaries of State have done badly. I would prefer to put it in this way: the Secretary of State for Wales has done less badly than the Secretary of State for the Environment.
  Why do we have all these figures? It is simply because the facts do not bear out any justification given by Ministers. In Wales one can see that everything is deteriorating. The roads in urban areas are full of potholes, when they were not seven years ago. One can see many people with nothing to do, standing around listlessly

  541
  on pavements because they do not have a job. The social services are creaking under the strain, with old people being shunted out into the community simply because the Government want to save money.
  Housing lists in Wales are increasing. Councils cannot afford to build new houses or do up council houses. I know that, and I think that every Opposition Member knows that. The facts belie what the Government are trying to put across in their figures and misrepresentations.
  We should look at education. I agree with the hon. Member for Delyn: hon. Members should look at the report on the state of school books in Clwyd. Clwyd is a rotten council and it has got its priorities wrong. One should look at the staffing, the low morale, the lack of teachers and the extremely had service we get in education throughout the Principality because of the policies of the Government.
  Will this be the last statement we have from the present Secretary of State? I hope so. We have had centralising Government over the past seven years and it is time that we had a change.
  11.30 pm
  Mr. Roy Hughes: This is yet another debate on rate support grant. Contrary to what the Secretary of State has told us, the concern and resentment of our local authorities is as great as ever. They feel that over the years they have suffered from the diktat of central Government. Their argument now, essentially, is that the cumulative effect of decision-making by the Government has left its mark.
  Ratepayers in Wales have certainly felt the impact of the reduction in taxpayers' contribution to local government services, as my hon. Friend the Member for Alyn and Deeside (Mr. Jones) so clearly pointed out. In line with that trend, the Government have increased the proportion of specific grants as opposed to block grants. That increases central Government influence and correspondingly diminishes local control. That is a far cry from the days when the Conservative party argued that local decisions should be taken locally.
  From a constituency standpoint, Gwent county council has announced that it proposes to increase the rate in the county by 11 per cent. It blames the teachers' pay award and cuts in Government grants. I appreciate that Gwent has budgeted for the full Advisory, Conciliation and Arbitration Service pay award. It argues that ACAS provides for extra supply teachers, whereas the Secretary of State for Education and Science's package does not. Gwent has also made provision for modest improvements in services — 50 extra police officers, a bit of extra provision for the elderly, the disabled and children in need. There is also £750,000 allocated for the new GCSE examination system. That is a worthwhile and necessary provision.
  There is nothing revolutionary about Gwent's proposals; they are examples of ordinary run-of-the-mill decision-making. What is more, before any final decisions were taken, there was wide consultation, particularly with Conservative opposition. Then, in the more formal council proceedings, there was all-party support for the proposals. Surely that is a model of how local government should function. It certainly does not need the interference of junior Ministers to tell such experienced public representatives how they should carry on their business.
  542
  The district councils cannot make rhyme nor reason of the settlement—and, I should add, not without just cause. For example, relevant expenditure increased by over 8 per cent. yet the block grant to district councils has increased by less than 1 per cent. over the 1986–87 settlement level. They are concerned about the volatility that the settlement brings about. It can result in rates varying between an increase of 20 per cent. and a reduction of 10 per cent. The Welsh District Councils Association claims that the severity of the settlement makes it difficult to maintain existing service levels.
  The entire thrust of the Government's policy is to move tax from central Government to the local community. The difficulty is that in Wales there are fewer people with high incomes, so the burden on the local community is even greater. To paraphrase Professor Galbraith's famous words, we have the public squalor but not a lot of the private affluence. Meanwhile, our local authorities strive manfully to maintain services.
  The local authorities in my area have acted responsibly throughout. However, despite their efforts—our councils would be the first to admit it—Wales has become a shabby society. That is detrimental to its interests in every way. What has happened is no accident; it is directly due to the Government's doctrinaire approach to the public sector of the economy. There is now a need for a fundamental change in approach and attitude. We need a general election before we can bring about those changes.
  11.35 pm
  Mr. Nicholas Edwards: The phrase used by the hon. Member for Newport, East (Mr. Hughes) was echoed by the hon. Member for Wrexham (Dr. Marek) at greater length. However, the hon. Member for Wrexham did not say that in Wrexham there were two priority estates programmes making a major reformation of formerly rundown local authority housing, that there has been massive restructuring of old industrial premises, a huge number of new industrial projects, a large road programme going on all around Wrexham and a new hospital. He did not mention any of those striking improvements in Wrexham.
  The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) made an eloquent speech in favour of high rate burdens. In a thoroughly bad-tempered intervention the hon. and learned Member for Montgomery (Mr. Carlile) argued for educational waste and inefficiency.
  The debate started with a tear-jerking piece of charlatanism from the hon. Member for Alyn and Deeside (Mr. Jones). He said that the Government had destabilised the local government scene in Wales. That is not the view of Mr. Richard Tettenborn, the financial adviser of the Welsh Counties Committee who wrote of the absence of the extremes of political polarisation and of spending patterns.
  "it is pleasant to be able to report that consultation is alive and well and happening in Wales "
  He also said that the settlement is a significant improvement on some of its predecessors—[Interruption.] I am told that I am being selective. I accept the verdict that this is not a giveaway. I never suggested that it was. However, it is a good settlement and the hon. Member for Alyn and Deeside should acknowledge that.
  For some peculiar reason, the hon. Gentleman gave us the unemployment figures for 1985 and stopped there. I

  543
  wonder why? Clearly he did not wish to refer to the fact that, since the early part of 1986, Welsh unemployment has fallen faster than that in any other part of the United Kingdom. It has fallen for 10 out of the past 11 months, and for nine consecutive months, by a further 15,000 from its peak. The truth is that the hon. Gentleman so hates to have good news about unemployment that he has tried to stop the clock in 1985. That reveals the hypocrisy of the hon. Gentleman and the fact that he is not in the least concerned about unemployment or the welfare of the people of Wales. He is concerned only about his shallow shabby political ambition.
  Mr. Barry Jones rose—
  Mr. Edwards: No, I shall not give way. I shall not give way to a man who has revealed his contempt for the Welsh people—[Interruption.] I have no intention of giving way to the hon. Gentleman.
  Mr. Jones rose—
  Mr. Deputy Speaker: Order. The Secretary of State is clearly not giving way.
  Mr. Edwards: I have nothing but contempt for the contribution made by the hon. Member for Alyn and Deeside who wished me to give way to him. The truth is that the hon. Gentleman does not care about the unemployed; he cares only about his political skin. That truth has been revealed to the Welsh people tonight.
  Mr. Jones: Will the Secretary of State give way?
  Mr. Deputy Speaker: Order.
  Mr. Edwards: The hon. Gentleman referred to the lack of basic tools of education but failed to say that more is being spent on education in Wales than under the Labour Government, despite the substantial reduction in the number of schoolchildren. He refused to acknowledge that the failure to tackle the problem of 150,000 surplus places in schools results in a lack of resources for his priorities. That is what local government should be tackling at present.
  The hon. Gentleman referred to this as a poor settlement for the districts. It is not, which is why districts have been able to maintain their services, certainly at the level they had when the Government came to office. The increase in the rate support grant this year of 7·5 per cent., including specific grant, has allowed the districts to budget in line with the settlement and to increase average rates by less than 2p. The fact that so many districts in Wales have succeeded in reducing rate burdens and offsetting the rate increases imposed by the counties shows that it is a reasonable and a good settlement.
  My hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) attacked the present system. I remind him, as I have done on previous occasions, that he also refused to consider the proposed change in the system. It is not good enough for him to attack the present system for being unworkable, to refuse to produce an alternative and to attack the Government's proposals for reform. In an intervention, I referred to the settlement in Rhuddlan. In Colwyn, the council has chosen to increase expenditure by 8·4 per cent., or 3·8 per cent. above the settlement level. As a result, it forfeited £104,000 of block grant. Its expenditure is now 8 per cent. above GRE, so it is hardly surprising that there is a large poundage increase.
  Mr. Barry Jones: Will the Secretary of State give way?
  Mr. Edwards: No. I wish to reply to the debate and to the excellent speech from my hon. Friend the Member for Delyn (Mr. Raffan) who referred to a rate increase by Clwyd of 4·8 per cent.
  It was a poundage increase of 4·8 per cent., when on the basis of the settlement there could have been a reduction. That will produce a 5·5 per cent. increase in the poundage rate. I am glad to say that, thanks to the good performance again by the Delyn district authority, the rate burden for his constituents will be reduced, so that the increase will be only 4·9 per cent. in Delyn. That is an absolutely splendid example of an authority which is doing an outstanding job of providing services while running one of the best enterprise zones, yet can reduce the rate burden. That proves conclusively the nonsense of the argument that rate burdens must be increased to improve services.
  The hon. Member for Caernarfon (Mr. Wigley) asked for a radical new look at local government finance and said that, in considering the system of allocation, we should take particular careful—
  Mr. Barry Jones: Will the Secretary of State give way?
  Mr. Edwards: No. I shall answer the hon. Gentleman who had a serious point to make.
  Mr. Jones rose—
  Mr. Edwards: I have no intention of giving way to the hon. Gentleman—not after the speech he delivered.
  The hon. Member for Caernarfon made, as he often does, a serious point about allocations to local authorities. Obviously, we shall take careful account of the varied needs of Welsh local authorities and we shall not make a change unless it is necessary. He asked for a radical new look at local government finance. I can promise him that, in the first Session of a Parliament after a general election, the next Conservative Government will introduce a radical reform Bill to put local government finance on a sounder basis and to remove the unfair burdens that this complex system has introduced. I am happy to give that pledge to the hon. Member for Caernarfon.
  Question put:—
  The House divided: Ayes 294, Noes 157.

  Division No. 126]

  [11.45 pm

  AYES

  Adley, Robert

  Bottomley, Mrs Virginia

  Aitken, Jonathan

  Bowden, A. (Brighton K'to'n)

  Alexander, Richard

  Boyson, Dr Rhodes

  Ancram, Michael

  Brandon-Bravo, Martin

  Arnold, Tom

  Bright, Graham

  Ashby, David

  Brinton, Tim

  Aspinwall, Jack

  Brittan, Rt Hon Leon

  Atkins, Rt Hon Sir H.

  Brooke, Hon Peter

  Atkinson, David (B'm'th E)

  Brown, M. (Brigg & Cl'thpes)

  Baker, Rt Hon K. (Mole Vall'y)

  Browne, John

  Baker, Nicholas (Dorset N)

  Bruinvels, Peter

  Baldry, Tony

  Bryan, Sir Paul

  Banks, Robert (Harrogate)

  Buchanan-Smith, Rt Hon A.

  Batiste, Spencer

  Buck, Sir Antony

  Beaumont-Dark, Anthony

  Bulmer, Esmond

  Bellingham, Henry

  Burt, Alistair

  Bendall, Vivian

  Butler, Rt Hon Sir Adam

  Benyon, William

  Butterfill, John

  Best, Keith

  Carlisle, John (Luton N)

  Biffen, Rt Hon John

  Carlisle, Kenneth (Lincoln)

  Blackburn, John

  Carlisle, Rt Hon M. (W'ton S)

  Body, Sir Richard

  Carttiss, Michael

  Bonsor, Sir Nicholas

  Cash, William

  Bottomley, Peter

  Chalker, Mrs Lynda

  545

  Channon, Rt Hon Paul

  Hurd, Rt Hon Douglas

  Chope, Christopher

  Jackson, Robert

  Churchill, W. S.

  Jenkin, Rt Hon Patrick

  Clark, Hon A. (Plym'th S'n)

  Jessel, Toby

  Clark, Sir W. (Croydon S)

  Jones, Gwilym (Cardiff N)

  Cockeram, Eric

  Jones, Robert (Herts W)

  Colvin, Michael

  Jopling, Rt Hon Michael

  Conway, Derek

  Joseph, Rt Hon Sir Keith

  Coombs, Simon

  Kellett-Bowman, Mrs Elaine

  Cope, John

  Kershaw, Sir Anthony

  Couchman, James

  Key, Robert

  Critchley, Julian

  King, Roger (B'ham N'field)

  Crouch, David

  King, Rt Hon Tom

  Currie, Mrs Edwina

  Knight, Greg (Derby N)

  Dickens, Geoffrey

  Knight, Dame Jill (Edgbaston)

  Dorrell, Stephen

  Knowles, Michael

  Douglas-Hamilton, Lord J.

  Knox, David

  Dover, Den

  Lamont, Rt Hon Norman

  Dunn, Robert

  Lang, Ian

  Durant, Tony

  Latham, Michael

  Edwards, Rt Hon N. (P'broke)

  Lawler, Geoffrey

  Eggar, Tim

  Lawrence, Ivan

  Emery, Sir Peter

  Lee, John (Pendle)

  Eyre, Sir Reginald

  Leigh, Edward (Gainsbor'gh)

  Fairbairn, Nicholas

  Lester, Jim

  Fallon, Michael

  Lewis, Sir Kenneth (Stamf'd)

  Farr, Sir John

  Lightbown, David

  Favell, Anthony

  Lilley, Peter

  Fookes, Miss Janet

  Lloyd, Sir Ian (Havant)

  Forman, Nigel

  Lloyd, Peter (Fareham)

  Forsyth, Michael (Stirling)

  Lord, Michael

  Forth, Eric

  Luce, Rt Hon Richard

  Fowler, Rt Hon Norman

  Lyell, Nicholas

  Franks, Cecil

  McCurley, Mrs Anna

  Fraser, Peter (Angus East)

  Macfarlane, Neil

  Freeman, Roger

  MacGregor, Rt Hon John

  Gale, Roger

  MacKay, Andrew (Berkshire)

  Galley, Roy

  MacKay, John (Argyll & Bute)

  Gardiner, George (Reigate)

  Maclean, David John

  Glyn, Dr Alan

  McLoughlin, Patrick

  Goodlad, Alastair

  McNair-Wilson, P. (New F'st)

  Gorst, John

  McQuarrie, Albert

  Gower, Sir Raymond

  Madel, David

  Grant, Sir Anthony

  Major, John

  Greenway, Harry

  Malins, Humfrey

  Gregory, Conal

  Malone, Gerald

  Griffiths, Peter (Portsm'th N)

  Maples, John

  Grist, Ian

  Marland, Paul

  Ground, Patrick

  Mates, Michael

  Grylls, Michael

  Mather, Sir Carol

  Gummer, Rt Hon John S

  Maude, Hon Francis

  Hamilton, Hon A. (Epsom)

  Mawhinney, Dr Brian

  Hamilton, Neil (Tatton)

  Maxwell-Hyslop, Robin

  Hampson, Dr Keith

  Mellor, David

  Hanley, Jeremy

  Merchant, Piers

  Hannam, John

  Meyer, Sir Anthony

  Hargreaves, Kenneth

  Miller, Hal (B'grove)

  Harris, David

  Mills, Iain (Meriden)

  Harvey, Robert

  Miscampbell, Norman

  Hayhoe, Rt Hon Sir Barney

  Moate, Roger

  Heathcoat-Amory, David

  Monro, Sir Hector

  Heddle, John

  Montgomery, Sir Fergus

  Henderson, Barry

  Moore, Rt Hon John

  Hickmet, Richard

  Morrison, Hon P. (Chester)

  Hicks, Robert

  Moynihan, Hon C.

  Higgins, Rt Hon Terence L.

  Mudd, David

  Hill, James

  Neale, Gerrard

  Hind, Kenneth

  Nelson, Anthony

  Hirst, Michael

  Newton, Tony

  Hogg, Hon Douglas (Gr'th'm)

  Nicholls, Patrick

  Holland, Sir Philip (Gedling)

  Norris, Steven

  Holt, Richard

  Onslow, Cranley

  Hordern, Sir Peter

  Oppenheim, Phillip

  Howard, Michael

  Oppenheim, Rt Hon Mrs S.

  Howarth, Alan (Stratf'd-on-A)

  Osborn, Sir John

  Howarth, Gerald (Cannock)

  Ottaway, Richard

  Howell, Rt Hon D. (G'ldford)

  Page, Sir John (Harrow W)

  Hubbard-Miles, Peter

  Page, Richard (Herts SW)

  Hunt, David (Wirral W)

  Parkinson, Rt Hon Cecil

  Hunt, John (Ravensbourne)

  Patten, Christopher (Bath)

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  Pattie, Rt Hon Geoffrey

  Stewart, Allan (Eastwood)

  Pawsey, James

  Stewart, Andrew (Sherwood)

  Percival, Rt Hon Sir Ian

  Stokes, John

  Pollock, Alexander

  Stradling Thomas, Sir John

  Porter, Barry

  Tapsell, Sir Peter

  Portillo, Michael

  Taylor, John (Solihull)

  Powley, John

  Tebbit, Rt Hon Norman

  Price, Sir David

  Terlezki, Stefan

  Pym, Rt Hon Francis

  Thomas, Rt Hon Peter

  Raffan, Keith

  Thompson, Patrick (N'ich N)

  Raison, Rt Hon Timothy

  Thorne, Neil (Ilford S)

  Rhodes James, Robert

  Thurnham, Peter

  Rhys Williams, Sir Brandon

  Townend, John (Bridlington)

  Ridley, Rt Hon Nicholas

  Townsend, Cyril D. (B'heath)

  Rifkind, Rt Hon Malcolm

  Tracey, Richard

  Roberts, Wyn (Conwy)

  Trotter, Neville

  Robinson, Mark (N'port W)

  Twinn, Dr Ian

  Roe, Mrs Marion

  Vaughan, Sir Gerard

  Rost, Peter

  Viggers, Peter

  Rowe, Andrew

  Waddington, Rt Hon David

  Rumbold, Mrs Angela

  Wakeham, Rt Hon John

  Ryder, Richard

  Waldegrave, Hon William

  Sackville, Hon Thomas

  Walden, George

  Sainsbury, Hon Timothy

  Walker, Bill (T'side N)

  Sayeed, Jonathan

  Waller, Gary

  Shaw, Sir Michael (Scarb')

  Walters, Dennis

  Shelton, William (Streatham)

  Wardle, C. (Bexhill)

  Shepherd, Colin (Hereford)

  Watson, John

  Shepherd, Richard (Aldridge)

  Watts, John

  Shersby, Michael

  Wells, Bowen (Hertford)

  Silvester, Fred

  Wells, Sir John (Maidstone)

  Skeet, Sir Trevor

  Wheeler, John

  Smith, Sir Dudley (Warwick)

  Whitfield, John

  Smith, Tim (Beaconsfield)

  Whitney, Raymond

  Soames, Hon Nicholas

  Winterton, Mrs Ann

  Speller, Tony

  Winterton, Nicholas

  Spencer, Derek

  Wolfson, Mark

  Spicer, Jim (Dorset W)

  Wood, Timothy

  Spicer, Michael (S Worcs)

  Woodcock, Michael

  Squire, Robin

  Yeo, Tim

  Stanbrook, Ivor

  Young, Sir George (Acton)

  Stanley, Rt Hon John

  Steen, Anthony

  Tellers for the Ayes:

  Stern, Michael

  Mr. Michael Neubert and

  Stevens, Lewis (Nuneaton)

  Mr. Robert Boscawen.

  NOES

  Anderson, Donald

  Cook, Frank (Stockton North)

  Archer, Rt Hon Peter

  Cook, Robin F. (Livingston)

  Ashdown, Paddy

  Corbett, Robin

  Ashton, Joe

  Corbyn, Jeremy

  Atkinson, N. (Tottenham)

  Craigen, J. M.

  Bagier, Gordon A. T.

  Crowther, Stan

  Banks, Tony (Newham NW)

  Cunliffe, Lawrence

  Beckett, Mrs Margaret

  Cunningham, Dr John

  Beith, A. J.

  Dalyell, Tam

  Bell, Stuart

  Davies, Rt Hon Denzil (L'lli)

  Benn, Rt Hon Tony

  Davies, Ronald (Caerphilly)

  Bennett, A. (Dent'n & Red'sh)

  Davis, Terry (B'ham, H'ge H'l)

  Bermingham, Gerald

  Dewar, Donald

  Bidwell, Sydney

  Dixon, Donald

  Blair, Anthony

  Dobson, Frank

  Boothroyd, Miss Betty

  Dormand, Jack

  Boyes, Roland

  Douglas, Dick

  Bray, Dr Jeremy

  Dubs, Alfred

  Brown, Gordon (D'f'mline E)

  Duffy, A. E. P.

  Brown, Hugh D. (Provan)

  Dunwoody, Hon Mrs G.

  Brown, N. (N'c'tle-u-Tyne E)

  Eadie, Alex

  Brown, R. (N'c'tle-u-Tyne N)

  Eastham, Ken

  Brown, Ron (E'burgh, Leith)

  Evans, John (St. Helens N)

  Caborn, Richard

  Fatchett, Derek

  Campbell-Savours, Dale

  Field, Frank (Birkenhead)

  Carlile, Alexander (Montg'y)

  Fields, T. (L'pool Broad Gn)

  Carter-Jones, Lewis

  Fisher, Mark

  Clark, Dr David (S Shields)

  Foot, Rt Hon Michael

  Clarke, Thomas

  Forrester, John

  Clay, Robert

  Foster, Derek

  Clelland, David Gordon

  Foulkes, George

  Coleman, Donald

  Fraser, J. (Norwood)

  Conlan, Bernard

  Freeson, Rt Hon Reginald

  547

  Freud, Clement

  Morris, Rt Hon J. (Aberavon)

  George, Bruce

  Nellist, David

  Gilbert, Rt Hon Dr John

  Oakes, Rt Hon Gordon

  Godman, Dr Norman

  O'Brien, William

  Golding, Mrs Llin

  O'Neill, Martin

  Gould, Bryan

  Orme, Rt Hon Stanley

  Hamilton, James (M'well N)

  Park, George

  Hancock, Michael

  Patchett, Terry

  Hardy, Peter

  Pendry, Tom

  Harrison, Rt Hon Walter

  Pike, Peter

  Hart, Rt Hon Dame Judith

  Raynsford, Nick

  Haynes, Frank

  Redmond, Martin

  Heffer, Eric S.

  Richardson, Ms Jo

  Hogg, N. (C'nauld & Kilsyth)

  Robertson, George

  Holland, Stuart (Vauxhall)

  Robinson, G. (Coventry NW)

  Home Robertson, John

  Rooker, J. W.

  Howells, Geraint

  Rowlands, Ted

  Hoyle, Douglas

  Sedgemore, Brian

  Hughes, Robert (Aberdeen N)

  Sheerman, Barry

  Hughes, Roy (Newport East)

  Sheldon, Rt Hon R.

  Hughes, Sean (Knowsley S)

  Shields, Mrs Elizabeth

  Hughes, Simon (Southwark)

  Shore, Rt Hon Peter

  Janner, Hon Greville

  Short, Mrs R.(Whampt'n NE)

  John, Brynmor

  Silkin, Rt Hon J.

  Jones, Barry (Alyn & Deeside)

  Skinner, Dennis

  Lambie, David

  Smith, C.(Isl'ton S & F'bury)

  Lamond, James

  Smith, Rt Hon J. (M'ds E)

  Lewis, Terence (Worsley)

  Soley, Clive

  Litherland, Robert

  Spearing, Nigel

  Livsey, Richard

  Stott, Roger

  Lloyd, Tony (Stretford)

  Strang, Gavin

  Lofthouse, Geoffrey

  Straw, Jack

  Loyden, Edward

  Taylor, Matthew

  McDonald, Dr Oonagh

  Thomas, Dafydd (Merioneth)

  MacKenzie, Rt Hon Gregor

  Thomas, Dr R. (Carmarthen)

  McTaggart, Robert

  Thorne, Stan (Preston)

  Madden, Max

  Tinn, James

  Marek, Dr John

  Wardell, Gareth (Gower)

  Marshall, David (Shettleston)

  Welsh, Michael

  Martin, Michael

  Wigley, Dafydd

  Maxton, John

  Williams, Rt Hon A.

  Maynard, Miss Joan

  Winnick, David

  Meacher, Michael

  Young, David (Bolton SE)

  Meadowcroft, Michael

  Michie, William

  Tellers for the Noes:

  Mikardo, Ian

  Mr. Allen McKay and

  Millan, Rt Hon Bruce

  Mr. John McWilliam.

  Miller, Dr M. S. (E Kilbride)

  Question accordingly agreed to.
  Resolved,
  That the Welsh Rate Support Grant Report 1987–88 (House of Commons Paper No. 221), which was laid before this House on 19th March, be approved.

  Rate Support Grant (Wales)

    RATE SUPPORT GRANT (WALES)
    Resolved,
    That the Welsh Rate Support Grant Supplementary Report 1986–87 (House of Commons Paper No. 222), which was laid before this House on 19th March, be approved.—[Mr. Sainsbury.]

Orders of the Day

  Criminal Justice (Scotland) Bill [Lords]
  Order for Second Reading read.
  Ordered,
  That the Bill be committed to a Scottish Standing Committee.—[Mr. Sainsbury.]

  Leicester Royal Infirmary
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
  11.58 pm
  Mr. Derek Spencer: On 4 December last my hon. Friend the Member for Harborough (Sir J. Farr) and I had the pleasure of detaining our hon. Friend the Under-Secretary of State for Health and Social Security on a debate on the Trent regional health authority. Tonight my topic is much more specific—the funding of the Leicester royal infirmary in my constituency. Like everyone else in Leicester, I shall refer to it as the Royal.
  My plea is for more money to secure the upgrading of some archaic wards which have the reputation as being among the worst in the country. My plea is backed by my hon. Friends in the city and county. I am pleased to see that I have their support in massed ranks and that my hon. Friends the Members for Harborough, for Rutland and Melton (Mr. Latham), for Loughborough (Mr. Dorrell) and for Leicester, East (Mr. Bruinvels) are present. I am grateful for their support.
  My plea is also supported by the physicians' group at the Royal and by the "Fair share for health" campaign of the Leicester Mercury, which, under the executive editor, Laurie Simpkin, has done such a splendid service in highlighting the deficiencies in these wards.
  The problem that I wish to draw to the attention of the House is within limited bounds. It involves five acute medical wards and, to put the matter shortly, there is not enough money to bring those five wards up to the modern standards that are exhibited in the rest of the hospital. These wards represent a small minority of the hospital, but the high standards elsewhere throw them into stark relief. I have had the opportunity of seeing what the conditions in those wards are like, because on Friday 13 February I was shown round by Dr. Frank Nichol, chairman of the Royal's physicians group, and his colleagues, to whom I express my thanks. To put it in a nutshell, the wards present a dismal sight. There are insufficient bathrooms, too few lavatories, inadequate space and poor access. One ward has a wooden mobile ramp for access, which has to be moved.
  It is especially sad to me, with a daughter who has worked as a nurse for a number of years in the National Health Service, to see how her colleagues must care for patients in what can only be described as squalid Victorian conditions. I believe that my opinion of those wards is shared by my hon. Friends who are in the Chamber. They have taken the opportunity to see the conditions for themselves.
  I shall flesh out my remarks with a few details about the five wards in question. St. Agnes ward has one lavatory and an old sink. Where I come from it is called a slopstone. I thought that they had passed into history, but apparently one or two have been preserved for posterity. In St. Margaret's ward there is a tiny lavatory and an old bath. Both those wards appear to have had no work done on them for a long time. The three other wards have had some recent cosmetic improvements made to them, but they are still well below par. Oliver ward has only three lavatories for a considerable number of patients. Marriott ward—it will loom large in my speech—has two toilets for 34 men. The modest improvements that have been carried out

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  recently have been paid for by a trust fund that was set up for the benefit of patients, not for the purpose of structural repairs. Fielding Johnson ward has 34 patients—there should only be 28—and a day room is being used for beds. Those five acute medical wards are desperately in need of further upgrading.
  The problem must be seen in context—our wretched inheritance from the Labour Government and their policy of hospital building cuts. In 1974 those wards were unacceptable, and they were even more unacceptable when the Labour Government left office in 1979. It is sheer cant, humbug and hypocrisy on the part of the Opposition parties, aided and abetted by their friends in the trade union movement, to complain about Government policies or the National Health Service. Those parties, acting together, did much to damage the NHS. If they had any sensitivity, they would maintain a shamefaced silence.
  In the city and the county we are being subjected to the cynical cry of cuts in services, but in truth there has been an unprecedented growth in the Leicestershire health authority and especially the Royal. That growth has taken place since we took office in 1979. The funding of the Royal has gone up from £11·5 million in 1977–78 to £39 million in 1985–86. The Leicestershire health authority has experienced a real growth in revenue funding of 34 per cent. from 1978–79 to 1986–87.
  I shall say a few words about the history of the hospital. The Royal is an ancient and important hospital. It was founded in 1771. It is by far the largest hospital in the county, and it is an important teaching hospital for the university medical school—a school of increasing repute. Leicestershire health authority is the largest authority in the country, serving an area with a population of about 800,000, some of whom receive treatment at the Royal. The scale of the operation was brought home to me in striking detail when I visited the headquarters of the ambulance service at Carlton Hayes and saw the computerised service and the logistical problems and complexities that must be confronted by a health authority of that size and diversity.
  May I pencil in some of the more recent background. It is a cause for pride, not for grumbling. My hon. Friend the Minister had the opportunity of seeing Glenfield hospital. A hospice has been opened by LOROS. Both facilities set fine examples for others to follow, and the Royal has also had great success. Between 1980 and 1986, in-patient work load increased by 22 per cent., day cases by 50 per cent., out-patients by 14 per cent. and maternity services by 8 per cent. Using a slightly different time scale, there has been an increase from 29,000 in-patients in 1977–78 to 45,000 in 1985–86. That has been accompanied by an increase in medical staff.
  Those increased services have been delivered with more efficiency. The cost per case throws up interesting comparisons with the region and with national criteria. At the Royal the cost per case is £618. In the Trent region the average cost is £686, and the national average is £724. Inpatient throughput based on annual discharge per bed shows the same favourable picture. In the Royal it is 54, in the Trent region it is only 50, and nationally it is only 47. We have had very cost-effective growth at the Royal. It is a busy, efficient hospital, and there has been good housekeeping. I am sure that my hon. Friends who represent the city and county agree that we should pay tribute to the doctors, nurses and staff at all levels. The people of the city and county are profoundly grateful to
  550
  them. A price has had to be paid for that success, just as successful businesses sometimes have to pay a price and require additional injections of cash to cope with and promote their success.
  Having sketched in some of the recent background, .I should look to the foreground before considering the specific problem of the five wards. We expect that in the not too distant future phase 4 will be completed. When it is, it will provide a considerable increase in the number of acute beds, and we all welcome it. At least £18 million will be spent on it. Formal approval was given for the project on 22 March 1985, and it is estimated that work will begin on the site in September this year. On an optimistic estimate, it will be open in the spring of 1991. It will provide 360 general acute beds and 96 acute geriatric beds. But a blind spot has occurred between planning in the recent past and planning in the near future. This has caused the unfortunate situation in regard to the five acute medical wards of which I have spoken.
  I draw the attention of my hon. Friend the Minister to the chronology of the events that relate to the five wards. As long ago as 1982 there were plans to upgrade the Marriott ward. They were delayed through lack of funds and put back to the mid-summer of 1983. In mid-summer 1983 they were postponed again, but in January 1984, as a result of savings from the re-siting of the children's wards, it appeared that funds would be available and hopes were raised. In June 1984 the district management team agreed that £100,000 could be spent on upgrading Marriott ward and said that work would he likely to start in 1985–86. In March 1985 the news was even better. The sum that was apparently to be available was £250,000, and that was apparently confirmed by the unit administrator. Consultant architects were brought in and plans were drawn up, and in September 1985 the plans were agreed.
  In October 1985, however, a bitter blow fell. The new unit general manager informed the physicians group that, sadly, the money that was thought to be available was not available. All that has happened since then is that some minor cosmetic improvements have been carried out to Marriott ward, and something similar will be done to Spreece ward. The promised upgrading of the wards, which looked likely to come to fruition not long after 1982, has progressively retreated like a mirror. There has been promise and there has been retraction. That state of affairs, understandably, has not only undermined the morale of the staff, but has dismayed the public at large and caused widespread disappointment, which we, as hon. Members for the city and county, strongly share.
  With that background of facts, I come to the argument itself. Looking on the bright side, it will be about four years before phase 4 comes into operation. In view of the history of delay of phase 4 and of other projects at the Royal, it is feared that the additional beds will not be available in the spring of 1991, as is now being promised. The reason for that fear is that phase 4 has not yet even been put out to tender. Therefore, it is thought to be unlikely that, with such a large scheme, work can begin on site in September of this year as had originally been envisaged.
  Even when phase 4 is completed, because of the ever-increasing demands upon the facilities at the Royal, it is likely that the wards will still be needed. Therefore, the argument that they have a short life in front of them and

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  all that is required is some temporary tarting up to eke out the remainder of their existence seems not likely to be borne out by events.
  How pleased we would be if these wards were to follow into history the great string of other unsuitable premises that we inherited from the last Labour Government. We take pride in having closed them and replaced them with modern and much more suitable facilities. However, that will happen only if sufficient funds are made available. These buildings are sound and, with appropriate upgrading, could provide facilities well into the next century. But more cash is required if those urgent, long-term improvements are to be made.
  I turn to the real burden of my request to my hon. Friend the Minister. It is also made on behalf of my hon. Friends with neighbouring constituencies who are here tonight. The Royal has been a victim of its own success. It faces other problems, which I could have dwelt on tonight, but as time is limited I have limited my remarks to these five acute wards. They are a sample of a somewhat wider problem. We are convinced that, although the present level of funding, based on the resource allocation working party, has been vastly increased, it is not good enough. We are aware that RAWP is being re-examined, but some people fear that the shrill battalions from London and the home counties will succeed in persuading the Government that they should have a greater share. We shall resist that attempt most strenuously. We are not prepared to see that happen. The Royal is suffering from underfunding, and I am here tonight to ask my hon. Friend, on behalf of the Government, urgently to do something to put it right.
  12.17 am
  The Parliamentary Under-Secretary of State for Health and Social Security (Mrs. Edwina Currie): In the 10 minutes that are left to me I shall endeavour to answer some of the detailed points that have been made by my hon. and learned Friend the Member for Leicester, South (Mr. Spencer). I congratulate him on his success in Mr. Speaker's ballot for this Adjournment debate. This is the twentieth time, so far, that I have responded to an Adjournment debate, and it is the second occasion on which I have faced the formidable ordeal of addressing those of my hon. Friends representing Leicestershire constituencies, who are ranked behind me in considerable numbers. It is such a pity that the hon. and learned Member for Leicester, West (Mr. Janner) has seen fit to find something else to do tonight, despite his occasional professed interest in the health of his constituents.
  Health funding in Leicester has undoubtedly been a matter of considerable local interest for many years. I join my hon. and learned Friend in congratulating the Leicester Mercury on its campaign over many years, for the result has been a change in the whole system of funding and in a reallocation of resources throughout the country, as my hon. and learned Friend described. The efforts of the Leicester Mercury and of my hon. Friends in Leicestershire have led to a dramatic improvement in health services, particularly during the lifetime of this Government.
  The Trent region is a major growth region. It also serves my constituency of Derbyshire, South. Spending in Trent has risen by 27 per cent., compared with the average for
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  England of about 19 per cent., between 1978–79 and 1986–87. That is the highest increase in the country. In 1978–79 the Trent region was 8 per cent. below its target. Now it is about 3 per cent. below its target. That shows the Government's commitments to the hitherto rather less well funded regions. The benefits are then passed on to the districts.
  As for capital, of the 14 regions, Trent has received the third highest capital allocation in England, after the west midlands and the north-west. Some £58·7 million will be spent on capital projects in 1987–88. That has increased Trent's share of the capital programme substantially.
  I have taken the points that my hon. and learned Friend made about London, and it is worth reflecting that London still has twice as many acute beds for its population as does the rest of the country.
  A large number of new building projects are under way. In Trent, £80 million of new building projects are due to be started in the current year, while 21 large projects at a total cost of £125 million are under construction or have recently been completed. On 4 April I shall be visiting one of the most recent of those, the new development at the Derby city hospital in Mickleover, which is mainly staffed by my constituents, who are serving it very well.
  Money has been spent in Trent region on a 32 per cent. increase in doctors and dentists in 1985 compared with 1978. That is nearly 900 more doctors and dentists. Our constituents were neglected by the last Labour Government. That is one of the most substantial increases that has been reported around the country.
  The Leicestershire health authority, which is responsible for Leicester royal infirmary, is a major teaching district. Its funding in 1982–83, when its boundaries were first established, was £118 million. This year we will be spending £154 million, and as a result it is within 4 per cent. of RAWP. In real terms it has experienced a growth of 34 per cent. since the Government took office. Ten years ago it was perhaps 20 per cent. below what we now call the RAWP target, but it is on schedule to meet its target by 1994. Therefore, the result is much improved health care for the constituents of my hon. and learned Friend and his colleagues from Leicestershire.
  Leicester royal infirmary is one of the oldest hospitals outside London, although the buildings that we are talking about do not necessarily date from 1771. The original cost of the hospital was £2,762, which shows what happens when we have inflation.
  I take the point that my hon. and learned Friend made about wards. Five medical wards are under criticism and it has been recognised that they are unsatisfactory. Dr. Ian Pye, the chairman of the physicians group, called them old-fashioned, but the Leicester Mercury, in its edition of 20 February 1987, said:
  "Despite their problems, the wards continue efficiently, with patients being treated and discharged at a higher rate than at comparable hospitals."
  There is no question of the wards being dangerous, but they are open and crowded wards that Miss Nightingale would have recognised. However, three of those wards have been upgraded and £100,000 is to be spent on the other two. That activity is quite separate from the rebuilding that has been described. The DHA has decided not to spend further money upgrading the wards as they will be completely replaced in phase 4 of the overall development programme for Leicester royal infirmary.

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  The Leicester Mercury called the new development an antidote, which was uncharacteristically ungenerous of it. An antidote it will not be, but a full replacement it will.
  Phase 4 is due to start in September of this year, will be completed in 1990 and will be open to the first patients almost exactly four years from now in the spring of 1991. It takes some time to ensure that everything is working. I hope that they do not practise on patients. It will cost £18 million altogether.
  My hon. and learned Friend has complained about the state of some of the wards, even after some money has been spent on them. One must ask whether it makes sense to spend even more—I understand that £300,000 would be required for two wards—when they will be completely replaced shortly. The decision whether to upgrade or wait until the new facilities are ready must be a matter for the district health authority. While I recognise the force of my hon. and learned Friend's feelings, I would take issue with him when he says that the increase in demand on the LRI will mean that these wards will still be needed. Surely that is both an increase in service that would need to be argued for, and indeed which might well perpetuate the use of facilities that have now been roundly condemned.
  There are other developments under way. The bone marrow transplant unit has been brought into operation at the hospital, which will mean that up to 20 people a year will not have to travel to other centres. New monitoring equipment will be bought for intensive therapy, coronary care and theatres at the infirmary. Funding will be made available for extra nurses for cancer patients. There will be £226,000 spent on the purchase of new or replacement medical equipment in response to concern which has been expressed elsewhere about equipment, and £94,000 additional revenue will be made available for improving services for drug misusers, on top of about £360,000 that has been allocated under the drugs central funding initiative for a three-year period.
  Mr. Peter Bruinvels: Will my hon. Friend consider visiting Leicester to see the Leicester royal
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  infirmary, the wards and the bone marrow unit? The unit is in receipt of funds, but those responsible for it are keen to obtain additional moneys. There was £190,000 for the first year, and it is unfortunate that not enough space is available.
  Mrs. Currie: I understand that the unit was allocated an extra £115,000 for a full year, and extra services start half way through the year. There will be about £55,000 this year, and so on.
  As for the invitation to visit, I should like to emphasise the Health Service for the future, that we are building. I would prefer to go when the first sods are cut, then when the first foundations are laid for phase 4 or I may have the opportunity to see phases 1, 2 and 3 of the existing development.
  We want to build a Health Service for the future. We are concerned to build a service for our children and our grandchildren, and I am certain that that will happen as a result of what is being proposed. The day will come when the old wards will be phased out. That day will not be long coming, and I am sure that it cannot come quickly enough—
  Mr. Michael Latham: May I place on record the fact that Leicestershire Members are grateful to my hon. Friend the Under-Secretary of State and to my hon. Friend the Minister for Health for attending the debate?
  Mrs. Currie: It is entirely right and proper that we should be here. We have both visited Leicester recently and been enormously impressed by the efforts made by the consituents of all my hon. Friends who represent constituencies in Leicestershire to ensure that the Health Service in Leicester uses the money with which it is well supplied in the interests of all concerned.
  Question put and agreed to.
  Adjourned accordingly at twenty-six minutes past Twelve o'clock.