Rate Support Grant

HC Deb 19 January 1989 vol 145 cc497-579

4.9 pm

The Minister for Local Government (Mr. John Gummer)

I beg to move, That the Rate Support Grant Report (England) 1989–90 (House of Commons Paper No. 75), a copy of which was laid before this House on 19th December, be approved.

I understand that it will be convenient to discuss also the four related motions on the Order Paper: That the Rate Support Grant Supplementary Report (England) 1989–90 (House of Commons Paper No. 14), a copy of which was laid before this House on 19th December, be approved. That the Rate Support Grant Supplementary Report (England) (No. 2) 1987–88 (House of Commons Paper No. 13), a copy of which was laid before this House on 19th December, be approved. That the Rate Support Grant Supplementary Report (England) (No. 4) 1986–87 (House of Commons Paper No. 12), a copy of which was laid before this House on 19th December, be approved. That the Rate Support Grant Supplementary Report (England) (No. 4) 1985–86 (House of Commons Paper No. 11), a copy of which was laid before this House on 19th December, be approved.

In December, following consultation, I announced to the House decisions on next year's rate support grant settlement and on the outstanding supplementary reports for the remaining years of the present system. Right hon. and hon. Members will therefore be familiar with the contents of those reports. It was suggested that I should say that, but I am not sure that it is true, although this year we have tried to give as much detail as possible to those wanting it. We have also tried to produce the reports in a comprehensible form, though I admit that the present system is not easy to follow.

I remind the House that next year aggregate Exchequer grant, which is central Government's contribution to local expenditure, will be £13,575 million. When using percentages, it is important to make clear what the underlying figures are. The increase in Exchequer grant is 9 per cent. more than the amount of grant to be paid to authorities this year, representing a cash increase of £1,100 million. The amount of local authority expenditure in the Government's spending plans increased by 8.6 per cent., which is £2,300 million above the level previously planned for this year. That will allow local authorities to increase their current expenditure broadly in line with the gross domestic product deflator.

Those decisions on grant and expenditure together provide a generous settlement for local government. If local authorities spend in line with the Government's spending plans, next year's average rate increases will be about 2 per cent. or 5p in the pound. Even if authorities increase spending by 2 per cent. in real terms, rates need only rise by about the rate of inflation. I hope that local authorities will not increase expenditure but if they do—

Mr. Tony Banks (Newham, North-West)

Will the right hon. Gentleman give way?

Mr. Gummer

I have hardly started, but I will give way to the hon. Gentleman shortly.

If local authorities keep their rates down, they will be able to spend more because they will make a number of the savings that have already been identified. That will be to the benefit of their ratepayers.

Mr. Harry Greenway (Ealing, North)

rose—

Mr. Gummer

I give way to my hon. Friend.

Mr. Greenway

I apologise for intervening so early in my right hon. Friend's speech, but I hope that it will take account of the direction of spending in the London borough of Ealing. Is he aware that that Labour-controlled borough is proposing a 35 per cent. increase in rates this year, having increased them by 65 per cent. only two years ago? At the same time, the borough intends to reduce important services such as refuse collection and street cleaning, while increasing staff in the gay and lesbian unit, and so on. Is my right hon. Friend aware of my constituents' extreme rage and suffering as a result of that disgraceful situation?

Mr. Gummer

Despite what my hon. Friend says about the London borough of Ealing—and I live in it—it may be better to live there than in Fulham and Hammersmith, as the hon. Member for Hammersmith (Mr. Soley) does. When the cost of having a Labour council in Ealing was a mere 72 per cent. rates rise, Hammersmith ratepayers suffered a 126 per cent. increase in one year. From the outset, we are in the business of telling local councils that they can keep their spending down. Ealing did so when it was rate-capped, and it does not need to increase spending now.

Mr. Clive Soley (Hammersmith)

The Minister is off to a bad start, and I shall deal shortly with some of the sillier examples he and the hon. Member for Ealing, North (Mr. Greenway) gave. As I know that we disagree on the basics, I put to the Minister the views of an independent expert, writing in the Local Government Chronicle. With regard to the 2 per cent. figure for average rate increases to which the Minister refers, the independent expert comments: Such an outcome is most unlikely. First, to achieve this rate rise figure, authorities would have to keep year-on-year cost increases to just over 3 per cent. Second, authorities are certain to rate up in 1989–90 to build up their reserves for the first year of community charge. If that is an independent expert's view, what makes the Minister think that he is right?

Mr. Gummer

What argument can there be for building up reserves for the first year of the community charge? If that is the independence of the independent expert, it suggests that his independence is in one direction. It is not true that such reserves will be necessary. The community charge will lay the burden of rates on all the people instead of some of them. The 40 per cent. of people living in above average rated property and having below average incomes will be relieved of the unfair rate burden. The hon. Gentleman makes a very bad point. If it is typical of the points that he will be making in his speech, we look forward to it with considerable interest.

The Rate Support Grants Act 1988, which the House passed last November, will ensure that the full amount of grants of £13,575 million will be paid out. The independent expert to whom the hon. Gentleman refers may like to remember that. All the grant will be paid out, and nothing will be left over because of overspending authorities. During our debates on the Rate Support Grants Bill, several hon. Members expressed disappointment that local authorities would no longer receive additional grant for any shortfall on their expenditure. But when the Act is viewed alongside the very generous settlement being debated today—under which the grant in London, for example, is increased by 11 per cent.—it must be seen as fair and reasonable. If Ealing proposes a rates increase of 35 per cent. when the London grant is rising by 11 per cent., some of us living in shire counties—where the grant increase is much less and where rates will not increase by anything like the level that Ealing proposes—may consider applying the word "incompetence" to Ealing council.

To those who argue that local authorities need to spend more, I say that there is plenty of scope for savings, which could be used either to benefit ratepayers or to allow a modest expansion in the provision of services. The Audit Commission, which certainly is an independent body, has identified short-term savings of about £500 million annually which can be achieved now. A large number of areas where savings can be made have been identified, and I shall refer to them later.

The Local Government Act 1988 introduced competition into a number of local authority services. Substantial savings can be made by opening up a number of services to competition. Suffolk county council will not mind my saying that it did not think that introducing competition would be satisfactory. It felt that its system of running services was very good, as indeed it was. Nevertheless, Suffolk has discovered that competition and the ability to make wider choices provide an extra spur and it now expects the new arrangement to work extremely well. I say that of an authority that was not among those falling over themselves to accept the rationale of going out to tender. When services are subject to competition, savings of up to 20 per cent. have been achieved. The services subject to competition currently cost authorities £2,500 million to £3,000 million annually, so there are potential savings to be made of several hundered million pounds per year. Ratepayers will expect local authorities to take advantage of those opportunities as soon as possible.

Inevitably, the system and the settlement do not please everyone, although I am surprised that Opposition Members are among those not pleased. It is galling for a well-run authority to see a neighbouring high-spending and wasteful authority receive more grant. It is perfectly possible for people living in an authority to have high needs, even when the council is badly run. That is a real issue, and it must be faced. The Government have a responsibility to measure the needs not only of local authority tenants but also of the generality of ratepayers and others living in the authority's area. It is very often found that councils serving people having considerable needs may not be using the money they have as efficiently as they could. It is galling for a neighbouring authority, whose needs may be less but whose efficiency may be considerably greater, to find that its efficiency is not receiving the recognition that it should, because the needs of a neighbouring council must be met.

Mr. David Blunkett (Sheffield, Brightside)

Under the clawback system, it was the so-called "overspenders" who lost grant, which was redistributed to authorities that "underspent" and followed Government guidelines. That is the opposite of the case that the Minister makes. Far from money going to high-spending authorities, all that will happen—and I welcome this—is that the absurd penalty system will disappear and the block grant will work, at least for the coming year, as a block grant.

Mr. Gummer

I am sure that the hon. Gentleman brings considerable knowledge to the subject, but on this occasion he is wrong for two reasons. First, the present redistribution system means that people living in areas of high rateable value, even if they are poor, subsidise those living in areas of low rateable value even though those people may be rich. Poor people living in Solihull, for instance, subsidise rich people who happen to live in a neighbouring area, irrespective of their means.

Mr. Blunkett

rose—

Mr. Gummer

The hon. Gentleman must allow me to finish my answer to his point.

Secondly, the amount of grant being offered to authorities is at present based on a complicated formula. Needs are an important part of that formula; in future they will be the only part. Authorities are given the opportunity to receive the grant that they need, but some authorities such as Camden refuse Government grant because they overspend when savings could so easily be made. Southwark is another example—it does not even both to collect its rents, and 30 per cent of its annual rent and rates roll is outstanding. We cannot ask for even more money to be poured into an authority like that.

Mr. David Howell (Guildford)

My right hon. Friend made an excellent point when he said that it was galling for efficient authorities to find their grant being taken away. Is he aware that that feeling reaches a peak in my district authority, Guildford, where no grant at all is being provided this year although it is massively below GREA and its rates have risen at one fifth of the inflation rate over the past eight years?

I realise that this is a whimsical system with colossally wide variations in distribution, but is it really necessary to provide no grant at all for a borough that has performed so well? Will my right hon. Friend ensure that the new arrangements will remedy the vast spread of distribution and unfairness that results from the present system?

Mr. Gummer

I am glad that my right hon. Friend has raised that. Only yesterday I saw a delegation from the county which contains Guildford, and we examined exactly those points. My right hon. Friend's constituents should be told that the new system is designed to provide grant where the need lies and to stop the subsidising of some people by others unconnected with their needs, regardless of their ability to pay. Under the new system Guildford will at least be involved in a sensible relationship with other authorities and will receive grant according to its needs and its ability to raise income. Its grant will not be diverted by a system that is clearly unfair, and very hard on those who happen to be poor but live in an area with generally high rateable values.

I wish to place it on record that sensibly run local authorities are the norm in local government. I have been very impressed by the way in which the majority of local government officers run their affairs, and by their independence of mind. Local government is so often characterised by incompetent authorities which are caricatures of what a properly run authority should be.

An example of a well-run authority is Solihull, which gets on with the job of providing good local services and meeting the needs of its ratepayers. It finds that because its local resources—that is, the total of rateable values in the area—are rising faster than its needs, it actually receives less grant. The same is true of a number of other authorities such as Eastleigh, Harborough, and Tonbridge and Malling. Because their local ability to raise income continues to rise faster than the average they receive less grant, however efficient they are.

I understand the sense of frustration felt by such authorities. The present system treats areas like Solihull unfairly, because it requires them to subsidise other parts of the country with low rateable values. That unfairness will come to an end when the community charge system is brought in. Then all the taxpayers will subsidise those in need, rather than just people who happen to live in an area with high rateable values.

I must admit to the hon. Member for Hammersmith that before I became Minister for Local Government I used to take press accounts of some of the sillier antics of certain local authorities with a considerable pinch of salt. I thought that they made good stories, but I did not believe in the context. But the more that I have observed such authorities since I started doing this job, the more I fear that what happens in some of them is understated rather than overstated. I am not talking about the activities on the extremist fringe, although we all enjoy such party political arguments; I am talking about the sheer incompetence of some authorities. That incompetence often means not only that the people are inconvenienced, but that they are put at risk. The weakest and most vulnerable people need local authority services more than anyone else.

Mr. Patrick McLoughlin (Derbyshire, West)

Does my right hon. Friend acknowledge that such authorities exist outside the London boroughs? It is wrong to believe that such incompetence is restricted to London. Some shire councils in counties such as Derbyshire are well on the way to being equally loony in some of their practices.

Mr. Gummer

My hon. Friend must have been reading my mind. I was going to take Derbyshire—which is not far from his home—as an example. I did not intend to refer to Mr. Bookbinder's statement that Derbyshire would have enough money to provide £20 million for any buy-out of BREL, although that is an interesting comment on the council's ability. I was going to say that in October-November last year Derbyshire issued a leaflet inviting ratepayers' views about libraries entitled "Do You Want a Tax on Knowledge?"

It would be possible for me to criticise that document on the ground that what it says is untrue. I could also criticise it on the ground that it contains tendentious party political statements paid for by the ratepayer. I prefer, however, to base my criticism on incompetence. The document set out to suggest to the people of Derbyshire that they could write in and explain to the local council how to answer the Government's discussion paper on libraries, but the closing date for consultation was 31 July—three months before Derbyshire's leaflet was published. That shows once again that Derbyshire is not only on the fringes of sense, but is unable to use the money that it receives from ratepayers effectively. It is not surprising that it has such a high rate poundage.

Just before Christmas I announced that we had redetermined expenditure levels for certain rate-limited authorities. In doing so, we set a number of conditions related to certain aspects of their expenditure and financial management. I felt it right to try to bring back into the argument not the party politics of extremism versus moderation, but the sensible argument about competence versus incompetence. In Southwark rent and rate arrears total £53 million—£318 per adult in the borough. That approaches 30 per cent. of the borough's rent and rates roll. Clearly, that must be reduced, but it can be reduced only if the authority sets an example and is competent to do so. When we hear that the London borough of Brent does not even know who its tenants are, it is not surprising that it does not collect their rents. In Lambeth, I understand that a councillor who is vice-chairman of the housing committee and a member of the panel which reviews rent arrears has arrears of about £2,000 dating back several years. How can she expect people to pay their rent if she does not do so herself? How could officers in the London borough of Brent expect to be supported by the elected councillors if those councillors, including the leader of the council, were in considerable rent arrears?

Mr. Tony Banks

rose—

Mr. Blunkett

That is trivial.

Mr. Gummer

The hon. Gentleman must not tell me that it is trivial that someone who is elected to represent a borough should owe that borough rates and rent yet ask other people to pay. If that is trivial, it is a curious triviality.

Mr. Soley

The Minister is getting such a response from the Opposition because his comments are not worthy of a journalist from The Sun. The Minister is picking out one individual about whom he knows very little. I could do the same with Conservative councillors. Conservative councillors in Sheffield are trying to persuade people to sell estates to companies in which they have an interest There are many such examples. I am not in the business of knocking councillors who, whether they are Labour, Tory, Liberal or anything else, generally do a damned good job for this country at no great cost to the community. It is about time that the Minister had the courage to stand up for local government instead of attacking it, undermining it and demoralising it.

Mr. Gummer

I will condemn unreservedly any occurrence such as that mentioned by the hon. Gentleman. Will he condemn the leaders and members of local councils who do not pay their rents? I give him the chance to answer that.

Mr. Soley

My answer is quite simply no—because, like the Minister, I do not know the facts. When I know the facts I will decide on my moral position. The Minister must not ask me or any other hon. Member to judge people before there has been a fair tribunal. The Government are very fond of saying that the rule of law should apply, so we should let it apply. Let us make sure that a person is guilty before we condemn him.

Mr. Gummer

I invited the hon. Gentleman to condemn a councillor who does not pay his rent and who is in considerable rent arrears over long periods of lime. I invited him to do that, not to judge any individual case. The hon. Gentleman refused to do so. I have condemned any situation in which a councillor uses his position to forward his own personal interests. I do so unreservedly. I note that the hon. Gentleman does not do the same.

Mr. Soley

The word "wilful" is missing from the Minister's comments. I would condemn a wilful intention to avoid paying rent. Let us suppose that the person concerned had suffered severe illness which had affected his functioning. I have no idea whether that explanation would apply to the Minister's example, but if that were the case, would he condemn such a person?

Mr. Gummer

We have a most generous system of helping people with their rents if they cannot pay them. The case I mentioned involved someone who has claimed very large sums of money, amounting to £28,000. I challenged the hon. Gentleman to condemn a situation in which those who sought to lead the community were not examples to that community. If he will not do that, I fear for the future of local government.

Mr. Tony Banks

rose—

Mr. Eric S. Heffer (Liverpool, Walton)

Will the Minister condemn the leader of Westminster city council for her conduct in relation to the cemeteries which was an absolute disgrace? Will he condemn her and her comrades? I am not supporting the individual the Minister mentioned because I do not know much about that person, but I know what the leader of Westminster city council did because I am a Westminster ratepayer. Will the right hon. Gentleman condemn her?

Mr. Gummer

I am already on record as wholly supporting the comments which were made by the local government ombudsman in that case. The matter has been fully investigated and I fully support the independent judicial body.

The hon. Member for Hammersmith, in the stance that he has adopted today, has supported one Labour council against another. The Labour council in Salford has rent arrears of about 5 per cent. of their rent roll because it sets an example and collects the rent. That means that they are able to make sure that people who pay their rent are not put at a disadvantage by people who do not pay their rent. I commend such local councils. The hon. Gentleman asked me to stand up for local councils. I have done so ever since I took on my present job. I began my speech by saying that local councils such as Lambeth and Brent are not characteristic of local authorities. They are extreme examples, but they spend a great deal of taxpayers' money and fail to produce the services that the weakest and poorest in their community most need.

Mr. Soley

rose—

Mr. Tony Banks

rose—

Mr. Gummer

I give way to the hon. Member for Newham, North-West (Mr. Banks) who has tried three times to intervene.

Mr. Banks

Perhaps the Minister could return to the rate support grant instead of indulging in an unseemly tirade against alleged debtors. If we were to talk in those terms, we might wish to chuck into the arena the names of some Members of Parliament who are not particularly prompt at paying their debts. I would not want to do that, and I am sure that the Minister would not want me to do that. As for the level of rent arrears in inner city areas, the Minister must understand that the population movement in many inner city boroughs makes it a complex and bewildering task to keep track of the various tenants. Secondly, does the Minister accept that since the £600 million cut in housing benefit there has been an average 37 per cent. increase in rent arrears in all local authorities in London and outside? The Minister must address that point.

Mr. Gummer

I would accept what the hon. Gentleman said if it were not the case that local authorities seem able to collect rent in Salford but not in Brent. Why is it so much more difficult in Lambeth than in Wandsworth? When we compare like with like, it is clear that it is not more difficult.

I must make it clear to the hon. Member for Sheffield, Brightside (Mr. Blunkett), for whom I have a great deal of respect, that this is not a trivial matter because a councillor who does not believe in the system cannot support his officers in seeking to collect the rents. Those Labour-controlled authorities which believe in the collection of rents and set an example find that their officers are able to achieve what is, as the hon. Member for Newham, North-West said, a difficult task. However, if councils such as Brent do not keep a list of tenants, it is very difficult indeed.

Mr. Soley

The Minister is leading the debate into a discussion about which local authority and which councillor is worst. A number of Conservative-controlled local authorities are guilty of, to put it mildly, some pretty gross errors of judgment. My hon. Friend the Member for Newham, North-West (Mr. Banks) is right in saying that it is only a matter of time before we start dragging up the individual behaviour of Members of Parliament. If we do that, we shall start undermining democracy in this country. It would be useful if the Minister, who I understand has strong connections with the Church, would bear in mind that it is not a good idea to condemn people in that way as it prejudges and undermines the very democracy in which most of us believe.

Mr. Gummer

I am concerned about the situation in some of our big cities where people who need help do not receive it because others do not pay their way. I am suggesting that it is not easy to ask people to pay their rents if the individuals doing the asking do not pay their rents. That does not seem unreasonable. [HON. MEMBERS: "What about tax evasion?"] I condemn tax evasion as well. However, the hon. Member for Hammersmith does not condemn such behaviour. I fear that that is dangerous.

Several Hon. Members

rose—

Mr. Gummer

I must get on, but I have promised to allow the hon. Member for Sheffield, Brightside (Mr. Blunkett) to intervene.

Mr. Blunkett

I accept that the Minister has made a very useful political knock-about point, and I place it on record that all Opposition Members would want people to set an example and to pay their way, whether that involves tax or rent. However, does the Minister accept that regardless of a moral or political judgment the amount of rent not collected because of the accountancy system being used does not affect the rents of other tenants, nor does it affect the rate account, so it does not affect this debate one iota?

Mr. Gummer

The hon. Gentleman is not correct. If a local authority thinks that it will get a large sum in rents and does not get it, it does not have that money to spend on other services. Further, the fact that it does not get that money but keeps the figure in the accounts as though it will distorts not only the accounts but the authority's ability to gain grant. So the local authority finds itself in a less proper position to deal with the problems.

Mr. Paul Boateng (Brent, South)

rose—

Mr. Gummer

I have already given way a great deal. The hon. Gentleman has not been in his place for the whole of the debate. I hope that he will find an opportunity to speak.

The least that local people should expect from their local authority is that it should be competently managed. When the local government and housing Bill is introduced, the House will see that we are concerned to strengthen the role of local government officers. I am determined to give local government officers the considerable independence that they should have and support them in every way because we owe a great deal to them. We need to encourage and develop their undoubted professionalism and reduce the polictical interference which leads to incompetence.

How much rates will rise next year will depend on how much local authorities choose to spend, As I said, if they budget sensibly in line with the realistic spending provisions which we have made available, rates on average—I emphasise that it is on average—need rise by only about 2 per cent., substantially less than the GDP deflator.

The subject of rates is a touchy issue for the Opposition Front Bench. That is why they tried—unsuccessfully I believe—to pre-empt this debate by asking a carefully contrived parliamentary question about percentage rate increases. I pointed out earlier that when looking at percentages one must also consider the underlying figures.

The hon. Member for Copeland (Dr. Cunningham) is not at present in his place but he will not object to my referring to a statement that he made recently in which he drew attention to rate increases by percentage. I was interested to note that my council of Suffolk Coastal did rather badly on that figure, and as I often have arguments with that council I thought that I should look into the matter.

The hon. Member for Copeland talked about percentages without talking about the total rate poundage. That led me to take another look at the figures. I then discovered that, on that basis, Suffolk Coastal was 46th among shire districts, as opposed to second in terms of rates in the pound. I also discovered that the hon. Member for Copeland did not draw attention to the fact that the five shire districts with the highest rate poundages are all Labour controlled and that there are no Conservative authorities in the top 25. So again we find that an attempt to pre-empt the figures by a little selective choice has failed.

Mr. Soley

Selective choice?

Mr. Gummer

Yes, and I remind the hon. Gentleman that he is known in his constituency as "126 per cent. Soley." His constituents remember the past. That is what the local council did for him and I will not let him forget that.

Mr. Soley

I was re-elected.

Mr. Gummer

Yes, but the hon. Gentleman's neighbour in Battersea lost his seat and a Conservative win was recorded.

It is not surprising that the county with the highest rate poundage is our old friend Derbyshire, with 297.5p. Of the 10 counties with the highest rate poundages, none is Conservative controlled. Nationally, the picture is the same. Rate poundages in Labour areas are on average 35 to 50 per cent. higher than in Conservative areas. That is the position despite the unfair system which taxes people living in high rateable value areas to support those in low rateable value areas. That is why I said recently that if we had had the community charge the cost of living in a Labour area would on average be £100 per person per year.

In addition to the RSG report for 1989–90, we are today considering four supplementary reports for the years 1985–86 to 1988–89. Supplementary reports are one feature of this system that we are looking forward to getting rid of because they go on and on and we are still trying to unweave things going back years. That is why we believe that the new system is necessary. The system on which we have built year by year under Labour and Conservative Administrations was designed for a wholly different circumstance. The new system will be a considerable improvement on the present arrangements in a number of its key features. I intend to ensure that so far as possible in local government finance the new system is comprehensible, not just to the cognoscenti and the councillors but to the ordinary people who pay the bills.

Much of the disquiet about previous rate support grant settlements has stemmed from the fact that the system is virtually impossible to explain in simple terms. That has been the case for as long as most hon. Members can recall. I remember it in operation under Labour and Conservative Administrations. It is difficult to encourage local accountability and to draw a clear link between local spending decisions and local taxation when the linkage is vastly complicated by resource equalisation, a penalty system, inexplicable changes in GREs and the many other facets of the present arrangements.

Few people will be unhappy to see the end of the present rate support grant system. Rates will become a thing of the past. Few will regret the passing of rates, except perhaps those Labour Members who would like to retain rates based on capital values and then to add to it a system of local income tax—[Interruption.] The hon. Member for Hammersmith had better see what the result of such a system would be for his constituents. I hope that he will ask a few questions on that subject, because I can give him a few answers. It would mean two taxes in place of one.

A major advantage of the new system is that grant will in future be influenced only by a local authority's need to spend. This underlines clearly the Government's commitment to provide grant to meet real local needs. The criterion will be to each according to his needs. Just as with the community charge, the rebate system is designed to ask from each according to his ability.

Mr. Michael Carttiss (Great Yarmouth)

One is treading on dangerous ground when taking up points that my right hon. Friend has been making about next year. In terms of what he said about the whole system being much fairer, may I ask him to re-examine the question of leaving out of needs assessment for next year's revenue support grant the cost of coastal protection and of being a holiday resort? That will adversely affect my constituency according to figures now available to us.

Mr. Gummer

In terms of deciding need, the Government are at present discussing that measurement with the various associations. No doubt my hon. Friend will bring to the notice of the association concerned the points that he wishes to be considered. We must remember that the various associations have differing views, even among people of the same political persuasion, because there are different pressures in different parts of the country. We must get the best balance between those pressures. That is what I am seeking to do and what the discussions are now about. I cannot tell my hon. Friend how that will come out because those discussions will have serious effects on the decisions that are made. But at the conclusion of them I shall be happy to discuss with my hon. Friend how matters affect his constituency of Great Yarmouth.

The grant will now depend not on a whole series of factors, nor indeed on a curious arrangement involving rateable values and comparative rateable values. It will depend on the needs of the local area. One of the great difficulties of the present system, which I find hard to explain, is why an area which is expanding in terms both of population and of business may end up getting less grant, although its needs have increased. It must be more sensible to have a system based on need.

I accept the point made by the hon. Member for Brightside, who makes such points with great care, that it depends on how one measures need. But one does not solve the problem by saying that because someone will have to decide what the need is we should not try at all. We are seeking a simple and clear way of doing it, and we are discussing with those most concerned—the local authorities—how best to achieve that.

The most important advantage of the new system, with the exception of the needs grant, is the community charge, which will spread the cost of paying for local services more widely and fairly. It will give voters a direct financial interest in the decisions of their councils. That is for the future, but for next year we have provided a generous settlement and I commend the reports to the House.

4.49 pm

Mr. Clive Soley (Hammersmith)

We have just heard a squalid and disgraceful attack on local democracy, regardless of whether it be controlled by the Labour party, the Conservative party, or the Social and Liberal Democratic party.

We are supposed to be debating the last rate support grant under the old system. In future, we shall have a debate on revenue support grant. The move from one to the other is a move from disaster to catastrophe. The Government admit that the present system is bad, and they are right. It was designed and built by them and they have administered it. It is inefficiient, unfair and must go. They have replaced the old system with an inefficent and grossly unfair one. We must remember that the poll tax will be two taxes—if the business tax is taken into account—and will be unpopular and unfair.

Mr. McLoughlin

What is the alternative?

Mr. Soley

The alternative is much fairer. Almost every other western democracy uses models similar to those that we are proposing. Our proposals have been recommended by people who know, believe in and love local government. We are riding on the crest of a wave on that issue and only time will tell. People know that the poll tax is grossly unfair and that it will hit hard many on low incomes.

The Minister spoke of the needy being hurt. How can he justify the fact that under the poll tax two pensioners living in a flat will be paying more than a millionaire living in a mansion? As Conservative Members know, there is no justification.

Whenever we have these debates—and, sadly, many other debates—we must bear in mind that Government statistics should carry a health warning, preferably from the late but not much lamented former Parliamentary Under-Secretary of State for Health, the hon. Member for Derbyshire, South (Mrs. Currie). For many years, the Minister and his predecessors have thrown out misleading rate support grant figures. The Minister made something of misleading information being put out by local authorities, which he claimed was political. The Minister for Housing, Environment and Countryside has refused my challenge to submit the Government's leaflet—tens of thousands of which were put out by them at the taxpayers' expense and is known to be grossly misleading and highly political—to the independent judgment of the National Consumers Council, which is chaired by a former Conservative Member of Parliament, or the Institute of Housing, which I will accept as independent bodies. That is one of a number of issues that the Government are pedlling as information, but which are political propaganda. They are doing so at the taxpayers' expense, but when a council tries to put out information it is jumped on by the Government, who prevent it from doing so. That is the worst form of authoritarian centralism.

Mr. Jacques Arnold (Gravesham)

The hon. Gentleman is talking about misleading information, but is it not relevant to mention the 9 million people who will be covered by community charge rebates? Is it not highly likely that the poor pensioners to whom the hon. Gentleman is referring will be covered by those rebates?

Mr. Soley

Much will depend on their circumstances, but nobody is suggesting that the rates of a millionaire will be increased. Taxation is normally progressive. The reason why everyone dislikes the poll tax is that for the first time this country wil have a tax that is not progressive.

Mr. McLoughlin

I ask the hon. Gentleman a simple question that was acknowledged by the hon. Member for Copeland (Dr. Cunningham). Does he believe that the present rating system reflects the ability to pay?

Mr. Soley

No, of course it does not, because the Government have consistently cut rate support grant, which has driven up rates. The rating system was never truly progressive, but it was much fairer and rates were more equitably distributed before the Government began slashing rate support grant.

Mr. Eric S. Heffer (Liverpool, Walton)

My wife and I will pay less under the poll tax then we pay at present, but poor constituents of mine will pay more than me. What is just about that? I am prepared to pay more rates than I do at present, as long as poor people get a fair deal, but they will not.

Mr. Soley

My hon. Friend is right, but one must also take into account the quality of service.

The Government present themselves as the party that cuts taxes, but that is not so. The most recent figures show that the taxation burden of a man on average wages with two children increased from 35.1 per cent. of gross earnings in 1978–79—the last year of office of the Labour Government—to 37.3 per cent. this year.

Although the Government have cut income tax—especially for those who are highly paid—rates, national insurance, VAT and indirect taxes have increased dramatically. The tax burden of the average man with two children has increased by about 2 per cent. Affluent people have had a dramatic cut in their tax base, which gives the lie to the Minister's protestations that he is concerned about the effects of rates on low-income people.

There is no evidence that any Minister is concerned about what happens to people on low incomes. If they were, they would not have voted against the uprating of child benefit. If they were, they would not have given massive tax handouts to the rich. I notice an unpleasant or embarrassed silence among Conservative Members. This subject is the Achilles' heel of the Conservative party, because in the long run no society can claim to be just, equitable and fair if it hands out to the rich when at the same time—for the first time in my memory—men, women and children are begging in the streets and sleeping rough. How can anyone who advances a Christian morality, as does the Minister, justify that? How can he speak of condemning people yet do nothing about the problem? It has led people to comment that London is beginning to look like a third world city.

Mr. Harry Greenway

The hon. Gentleman is putting his heart on his sleeve. We all care about disadvantaged people. Perhaps he would like to note that many of my pensioner constituents, and those who are disabled, are having to go without food to pay the rates that have been levied by Labour-controlled Ealing council, which wilfully wastes that money.

Mr. Soley

The hon. Gentleman is wrong to say that it wilfully wastes money. His constituents, who neighbour mine and are not radically different, are going without food because housing benefit has been cut eight times, because social security has been cut, and because the cuts are funded on a midnight army of low-paid people who are paying about 7 per cent. more tax.

The Government whom the hon. Gentleman chooses to support have cut the rate support grant and when a Labour administration took over from a Tory one in Ealing and Hammersmith and Fulham and tried to improve services, it also took over a rate rise which was in the pipeline. In Hammersmith and Fulham that rise was about 30 per cent. and would have taken place even if a Conservative administration had been elected, which of course it was not.

Mr. Boateng

Does the hon. Member for Ealing, North (Mr. Greenway) accept that in some respects the problem is worse here than in a so-called third world country? At least in a third world country there is an extended family system that is capable of nurturing and caring for those who are disadvantaged by virtue of age or ill-health. The poll tax discriminates against the extended family and will make it more difficult for people who want to look after their young, unemployed sons or daughters or elderly relatives.

In his speech—I regret that I did not hear it all because I was in Committee on the Water Bill—the Minister was less than fair to my borough of Brent in its attempts to collect overdue rents. He will recognise that the borough has only recently introduced a new system of rent collection that uses external agents who seek to step up the rate of rent collection. They are taking efficient steps to match the concerns he has mentioned. His colleagues in the Department of the Environment praised Brent housing department for its innovation.

Mr. Soley

My hon. Friend the Member for Brent, South (Mr. Boateng) is right. Brent council is seeking to do something about its problems. It would help local authorities if the Government showed confidence in them, regardless of their political complexion, and helped them when they ran into problems, instead of trying to trip them up and put the boot in. They act like political bovver boys who destroy, undermine and devalue local democracy, whether in the form of councillors or council officers. Why are so many council officers, not just councillors, demoralised about their role? Why is it becoming increasingly difficult to get members of any party to stand for local authorities? Is it not because the Government are taking away their powers, circumscribing their activities and taking from the local electorate that which, in the past, both Conservative and Labour Governments have felt was its proper job?

I was talking about the way in which the Government manipulated the statistics. The most important fact to bear in mind during debates on the rate support grant is that there was a massive cut in it. I am sure that the Minister will not deny that the cut took place between 1980 and 1988. It was the Government's policy. The Conservative party's 1979 election manifesto said that a Conservative Government would cut public expenditure in order to transfer the money saved into tax rebates and thus regenerate the economy. That did not happen. North sea oil was used to finance the economy in the south while the plug was pulled on manufacturing industry in the north. One can continue selling the family silver for as long as one likes, but when it has all been sold, people must be asked to pay.

Rate support grant as a percentage of relevant expenditure—the aggregate Exchequer grant—has fallen from 46.2 per cent. in 1988–89 to 43.3 per cent. in 1989–90. In 1979–80, the last year of the Labour Government, it was 61 per cent. The Government's philosophy on public expenditure has been to say to local authorities, "Do not do as we do, but as we tell you." They made local authorities cut their expenditure and, at the same time, particularly in the early 1980s the Government increased public expenditure. It was increasing, not just in re& terms but in percentage terms, because the Government were financing mass unemployment from a sinking industrial base.

Mr. Irvine Patnick (Sheffield, Hallam)

The Department of the Environment's circular 88/75, called, "Local Authority Expenditure 1976–77—forward Planning", says: The Secretary of State for the Environment said in reply to a Parliamentary question on 5th August, 'there will have to be a standstill next year'. That was a Labour Minister speaking to the House.

Mr. Soley

There is no problem about that. The hon. Member for Sheffield, Hallam (Mr. Patnick) is trying to skate around his party's philosophy—broadcast loud and clear in the 1979 election—to cut public expenditure. The Government failed to do so but they forced local authorities to cut and do what they could not. The Labour Government tried to bring about a standstill in public expenditure when they did not have the benefit of North sea oil. The hon. Gentleman failed to take into account the fact that since 1980, as North sea oil has come ashore, combined with the selling of the state silver—as the late Harold Macmillan described it—the Government have channelled large sums into the south of Britain at the expense of the north and have allowed manufacturing industry to collapse.

If one examines the regional distribution of wealth through the European Commission, the tragedy for this country is that the south, one of its most prosperous regions, is still well behind many of the regions in Europe. The poorer regions in the United Kingdom are way behind the European average. That is a measure of how far the Government have misused our oil wealth.

The cumulative loss, in real terms, of the rate support grant from 1981–82 and 1988–89 is £27.7 billion. If the hon. Member for Hallam and the Government had stuck to the Labour Government's policy, even accepting that there was a standstill at that time, local authorities would have had an additional £27 billion to spend. Of the 20 local authorities that levied the sharpest rate rises in the 1980s—the Minister tried to dodge round the parliamentary question tabled by my hon. Friend the Member for Copeland (Dr. Cunningham) who, sadly, cannot be here—half were in Tory-controlled areas. Six of those which levied the sharpest rate rises were Labour authorities, two are hung councils run by Labour. Eight of them are run by Tories or Tories plus independents and four are run by the SLD, the SDP or hung—what we might call also-rans. At the other end of the scale, 21 councils have cut the rate, of which nine are Labour, and only one was rate-capped.

Evidence of the unfairness of the Government's cuts on local authorities is shown by the figures behind the percentages, and the percentages. They show that there is no link between rate rises and increased spending. That is why the council of the hon. Member for Ealing, North (Mr. Greenway) is in difficulty. The reason for the figures is the irrational grant system devised, developed and enhanced by this Government. They are also due to the individual needs and different procedures in local authority areas.

The Minister's constituency of Suffolk, Coastal has shown the second largest rate rise over seven years, 218 per cent. Spending has increased by only 132 per cent. So his local authority has been clobbered by its own Government. If I was a ratepayer in the Suffolk, Coastal constituency I would be asking questions not only about coastal defence, which the Minister is right to do, but about why on earth I was voting for a Tory Minister who was cheerfully increasing the rate burden on his constituents while public expenditure was being cut.

Mr. Gummer

Will the hon. Member for Hammersmith (Mr. Soley) explain what he would say to my constituents when they find out that they are 46th among districts in the poundage they pay, and that those who pay the most come under Labour councils? We are changing the system to get rid of the very thing he has been complaining about. We are changing the system and he is not supporting it.

Mr. Soley

The Minister cannot wriggle out of it like that. The question for ratepayers in his area is why it is that their rates have risen far more than spending. Fundamentally, the reason—as everyone knows—is the rate support grant cuts made by this Government. There may be other reasons of needs and procedures for all local authorities, but the central reason is the RSG. The Minister cannot explain that to his constituents and he will have no way of softening the burden for them, although he will try, because the Government have tried, through this rate support grant, to bridge the gap between rates and the poll tax. They were embarrassed by the figures that were put out by the Labour party which showed how severe the poll tax would be. To try to soften the blow, the Government have spent rather more this year than in previous years—not much more, but a bit more. If they are to survive the argument politically, they must make the rates and the poll tax more in line than they would have been had the figures been left as they were in the previous year. At the same time, they try to put the blame for increasing the poll tax on to local authorities.

I give the Government full credit—if that is the word—for their incredible skill at deception, which I consider to be immoral. This Government, more than any other that I have experienced, have managed to blame other people for matters for which they are responsible. They do that whether they are talking about law and order, homelessness, rates or taxes. It is always somebody else's fault—usually the fault of someone who is in a weaker position than the Government. That shows the moral bankruptcy of this Government.

As a result of the £22.7 billion cut, in real terms, local authorities of all complexions have had to cope with a devastating and unpredictable financial regime. I cannot emphasise that enough. The Conservative party tells us that it is the party of efficiency in business. What efficient business would try to plan expenditure on the basis that it often did not know how much it would receive from a regular grant-making body—often until a few weeks before the grant was made? Yet that is what the Government have imposed on local authorities, whether they are Labour, Tory, Liberal or whatever. It is gross to put local authorities in that position.

The introduction of the poll tax imposes additional financial burdens this year. I have two questions for the Minister on that, if I may have his attention, or perhaps the Parliamentary Under-Secretary will answer them in her winding-up speech. First, will there be an increase in the Government contribution if the poll tax preparation costs are higher than forecast? I have asked that question because the basis on which the Government have calculated those costs is considerably lower than that being forecast now, as the Government seem to be acknowledging. If that turns out to be the case, local authorities will have to find that money and Mr. Rentaquote, the hon. Member for Ealing, North, will stand up in the House and talk about wicked local authorities. However, those local authorities will have had to put up rates to pay for the administration of a poll tax that almost all local authorities think is unfair and irrational. Will the Minister tell us whether, if the costs are higher than forecast, the Government will fund those increased costs?

Secondly, I want to ask the Minister, or the Parliamentary Under-Secretary, about inflation. He used a figure of 2 per cent. and I told him what the independent view was. I shall now give my view. The rate support grant that we are discussing today is based on 4 per cent. inflation in 1989–90. Does anybody believe that inflation will be only 4 per cent. in 1989–90? Does the Chancellor of the Exchequer believe that? No, he says that there will be a bleep—[HON. MEMBERS: "A blip."] The blip will push inflation up to at least 6 per cent. and most observers of the economy believe that inflation will be at least 7 per cent. and, possibly, even 8 per cent.

Mr. John Battle (Leeds, West)

My hon. Friend may be aware that in the Electricity Bill, which is in Committee at present, the Government have estimated that inflation will be 8 per cent.

Mr. Soley

I am grateful to my hon. Friend, who is a member of the Committee, for keeping us informed of the latest moves in the Chancellor's ever-moving strategy. Let us assume that inflation will be 7 or 8 per cent. 1 want to know—either now or at the end of the debate—whether, if inflation turns out to be 7 or 8 per cent., the Government will uprate the present rate support grant to meet that. The Minister can simply answer yes or no. It the Government do not do that, every local authority—whether Labour, Tory or Liberal—will know who to blame. There is no doubt that inflation will increase the rate burden on people. If the Minister is so desperately concerned—as he tried to tell us he was—about the effect of rate increases on the people and if his prediction of 2 per cent. is wildly wrong—as we all know it will be because of inflation, if nothing else—will his concern extend to telling the Secretary of State that he must uprate the rate support grant to take account of the full costs of inflation? If he does not do so, let him never come to the House again and tell us that he is concerned about the poor ratepayers who have to pick up the bill when it comes through their letter boxes. Those bills will have risen because of his Government's behaviour.

The 2 per cent. mark is well below what is expected, so the costs will hit people in their pockets. But it will also hit people in their services. The Government have suddenly discovered nursery education. They want good nursery education because the Prime Minister has suddenly discovered that it is popular. The top 24 providers of education in nursery schools for three and four-year-olds are all Labour authorities. On the other hand, the bottom 19 are all Tory authorities—or Social and Liberal Democratic authorities in a couple of cases. Yet the Government have said that nursery education is a good thing and they have apparently discovered that we are light years behind the rest of western Europe in the provision of nursery education. The Government have said nothing, but they must have discovered that Labour local authorities are doing the most for nursery education. What did the Government do to some of those authorities? They rate-capped them. So much for the concern about nursery education. If the Government had any concern about nursery education, they would not be talking about setting up committees to consider it and to make recommendations. They would do what the Labour party did in office and what Governments in Europe have been doing for far longer than us. They would allow local authorities—which are properly elected, democratic local authorities—to spend their money on nursery education.

We know that children who receive nursery education do better at school, in their social behaviour, in training for skills and in employment-seeking and functioning. But the Government did not care about that. They were quite happy to rate-cap local authorities that provided good nursery education. It was not their kids, was it? Those authorities could be clobbered. I see that the Minister has again sunk his chin into his shirt—which is, perhaps, the best place to keep it. He has done so to avoid not only the Government's embarrassment over their lack of support for the poor, but to avoid putting their money where their mouth is on education.

Mr. Jacques Arnold

The hon. Gentleman would give us comparative figures if he were to put back in them the voluntary playgroups that are provided inside county council education premises in and near primary schools.

Mr. Soley

Who provided the premises and the heating but the ratepayer? Who tells us over and over again that nursery education must be well funded? The Government tell us. The hon. Gentleman said that nursery education must be provided on a voluntary basis. Why does he not tell the Prime Minister? She says she wants to put money into nursery education. Let us not talk about voluntary efforts. I admire the voluntary contribution, but nobody in his right mind—certainly nobody on the other side of the English channel, from where so much of our competition will come in the future—believes for one moment that the voluntary sector can provide all nursery education. It is a pretty desperate state of affairs if the hon. Gentleman has to fall back on that to defend his party.

Mr. Derek Fatchett (Leeds, Central)

My hon. Friend may be interested to know that it is not just the Labour local authorities that make up the top 24 in the league table that have an impressive record on nursery education. In the period 1975–80, under the last Labour Government, the pace of nursery provision—both in nursery schools and in rising-fives places in primary schools—was much quicker and sharper than at any time in the lifetime of this Government.

Mr. Richard Caborn (Sheffield, Central)

rose—

Mr. Soley

I shall give way for the last time, to my hon. Friend the Member for Sheffield, Central (Mr. Caborn).

Mr. Caborn

Do not the Government realise that the removal of the community programme has been one of the major factors contributing to cuts in nursery education—particularly for the under-fives and in the inner cities? That has had a devastating effect. Although the local authorities have provided buildings, heating and so on, I he real service has come through the community programme and a considerable number of places are now to go as a result of the Government's attitude to it.

Mr. Soley

I am grateful to my hon. Friend for reminding me of that point, which had momentarily escaped me. We know that that is having a dramatic effect.

The Under-Secretary of State will know that her own area, West Sussex, is bottom of the league in providing nursery education. [HON. MEMBERS: "Surrey, South-West!"] I do not mind being wrong about the Minister's constituency; that is not the problem. West Sussex, the neighbouring area to it, is bottom of the league. In the south one does not have to look far to find some pretty bad Conservative local authorities. For example, in Horsham an empty council house was given over for use as an office by none other than the Horsham Conservative party. The authority had to provide the local Conservative party with an alternative office because of redevelopment—that was quite right—but it did not have to give it an empty council house at a time when there are homeless people in the streets. We should not merely condemn such authorities. We should ensure that they make good use of their properties to house the homeless.

It seems that the Minister wants to pick on individual local authorities, but it would be far better if instead the Government addressed themselves to the drastic decline in the provision of low-cost accommodation for rent or sale, particularly in the south. For many people, there is no alternative to that, which is why men, women and children have to sleep in the streets—not just in London but now in many of our towns and villages. That is what is so wicked. If the Government are so concerned about these things, why do they not put more money into housing, education and care in the community? We have heard all this talk about the closure of long-stay psychiatric hospitals and support in the community, but where will that support come from if the councils cannot provide it?

Some years ago the Government embarked on a profoundly dangerous course. They have not only damaged the morale and confidence of council workers and councillors, who do their job voluntarily; they have increased centralised control in Britain. The Minister should bear in mind the development of local authorities in Europe. After the disaster of world war 2 one of the first acts of the countries that had experienced dictatorship was to devolve powers to local authorities. They made sure that local electors could decide who was doing a good job. They did not rely on papers like The Sun or The Evening Standard or on Ministers to say that such and such an authority was of the loony Left or the loony Right and should be got rid of. They left it to the electors to decide. I would rather do the same, even in Horsham and West Sussex. I would not say that we should undermine those councils or chuck them out. That is up to the local electorate to decide.

When Franco went, the first thing that the newly elected democratic Government did in Spain was to devolve power to local authorities, because they knew that pluralism is essential to democracy, and pluralism means good local government. One cannot have good local government unless one encourages people to stand for office, supports them when they do so, and ensures that they have genuine powers to use. If we move towards some form of united Europe, Ministers will not like it if Brussels starts treating them as they are treating local authorities. Perhaps that is why some of them are getting increasingly worried about the prospect, although that has wider implications. If, like the Opposition, the Government believe in local democracy, let them fund it properly and allow it to get on with the job, and allow the local electorate to decide whether that job is being done properly.

5.26 pm

Sir David Price (Eastleigh)

I shall resist the temptation to try to answer in detail a number of questions asked by the hon. Member for Hammersmith (Mr. Soley). I would take the House back a long way to the days of the royal commissions. I remember pointing out then that discussing the reform of local government in terms of geography and function without discussing taxation and finance was like putting on Hamlet without the Prince of Denmark. The failure to do that has haunted us ever since and we are at last beginning painfully to address ourselves to it.

A new element with which I am closely involved is loosely called care in the community—the hon. Member for Hammersmith touched on it briefly— and I await with great interest the Government's response to the Griffiths report and look forward to hearing how the Government intend to handle care in the community, and, above all, to finance it. I think that the good Sir Roy Griffiths dodged all the main issues, and wrote a rather general injunction to those who went along with his organisational proposition that he who wills the end must will the means. That was nice shorthand but it does not help the House by telling us how we ought to finance care in the community.

Having made that general point, I do not apologise for coming right down to the particular. It is a good idea to see how those complicated matters work in the particular. It will not surprise the House that in this case the particular is the borough of Eastleigh. We are very unhappy at the manner we are being treated by my right hon. Friend the Secretary of State in his proposed rate support grant settlement for 1989–90. Under that settlement, we in Eastleigh are to suffer a loss of more than 36 per cent. We appear to have been selected by my right hon. Friend for particularly harsh treatment.

If we look at how our neighbours in the other districts of Hampshire have been treated—equity is not unimportant in these matters—we find that a number have been given a percentage increase, while the vast majority are to suffer only a modest reduction. Portsmouth is to get an increase of 6.66 per cent., Gosport an increase of 6.25 per cent. and Havant an increase of 5.71 per cent. Southampton is to get an increase of 5.48 per cent., and I can hardly complain about that as I also represent part of Southampton. My right hon. Friend gets brownie points for that. In East Hampshire and Hart, there is no change, and no authority is to suffer a reduction of more than just over 8 per cent.—in the case of Test Valley—yet Eastleigh is to suffer a reduction of 36.27 per cent.

Naturally, we have taken up the matter with my right hon. Friend, and he can congratulate his civil servants on producing a reply that would do justice to any episode of "Yes, Minister". That letter alone would justify at least two programmes. In an idle moment, if my right hon. Friend has one, he will be good for two programmes.

My right hon. Friend described the adverse treatment which is selected for Eastleigh in his letter thus: The reason for Eastleigh's particular position is that its rateable value is increasing faster than the average, while our assessment of its need to spend shows an increase only in line with the average, so that each year your authority receives more from the rates, even without increasing the rate poundage".

If we compare Eastleigh with our neighbours in the Test valley, we find broad comparability, both of population and of rateable value. Our populations differ by the enormous amount of 0.5 per cent. When we look at the rateable value, the difference between us just makes 2 per cent. On that basis, how can a difference between a reduction of about 8 per cent. and one of more than 36 per cent. be justified? I could show even more of an inequity with Winchester, where the reduction is only 3.26 per cent. I hope that I have made my point; I will not labour it any further.

Eastleigh borough council also tells me: Whilst it is true that our rateable values have increased, the resultant increase in rate income is only some £120,000, compared with our grant loss of £162,000. That acknowledged loss of £162,000 is a comparison with the revised grant settlement for the current year. Compared with the original settlement, the loss is over £200,000.

As we all know, the mathematics of the rate support grant is byzantine in the extreme. Nevertheless, I had hoped that the basic "Axioms" of Euclid could be accepted and applied by the statisticians in my right hon. Friend's Department. Perhaps I am wrong and it was the augurer to the Department rather than the statistician who produced the RSG. No doubt a mythical wyvern was disembowelled in Marsham street to see which way its liver went; hence, Eastleigh got hammered. Hon. Members will recall the "Axioms" of Euclid, which stated: Things equal to the same thing, are equal. If equals are added to equals, the sums are equal. If equals are subtracted from equals, the remainders are equal. Things which coincide with one another are equal to one another. On the basis of Euclid, I suggest that Eastleigh should receive the same treatment as the Test Valley borough council and the city of Winchester.

We must now revise the "Axioms" of Euclid and at the end of each axiom write: Things equal to the same thing are equal, except in the case of Eastleigh and so down through the axioms—always excepting Eastleigh.

Doubtless the Department prefers a different branch of mathematics—more up to date than Euclid—which is the mathematics of topology. I do not know how familiar right hon. and hon. Members are with the mathematics of topology, but it is described as the mathematics of distortion. We presented these distortions—this topological argument—to my right hon. Friend and gave him an opportunity to restore some equity into his proposals for Eastleigh. He will know that there is another branch of mathematics called network analysis in which it is possible to find one's way out of a maze by use of an especially complex set of equations. I am told that it is even more complicated than the maze itself, which again would do justice to the mathematics of the rate support grant. However, he scorned our advances. He said in his letter: We decided that we should not amend the settlement in a way which would give Eastleigh more grant. Therefore, he had his chance. That was not pure determinism but an act of free will, which I know my right hon. Friend practises and believes in.

I have not dwelt on the needs and expenditure side of the equation, because that would be to try to describe that which is inexplicable. I invite hon. Members to look, for instance, at appendix 2 to annex J, entitled "Definitions of GRE Indicators". As an example, let us look at C9, which states: Residents—effects of area's social conditions. That is an object with which we would all agree Need should include social background and the problems in inner cities. We read in the appendix: The resident population of the area multiplied by the sum expressed to two decimal places, of the factors below: Ten factors are then listed. I shall give the House the relish of those factors. The first one is a constant of minus 41.82. I ask the House, why minus 41.82? Why not 40? Why not 39? Why not 50? Why this curious accuracy of 41.82? Obviously, some statistician has made the elegant point that it is not 41.0 but 41.82. I must confess that the reason for that escapes me.

We come to (b), which is interesting: indicator B3a(i) divided by population (Al), multiplied by 0.21233a". I will give the top prize for topology to anyone who can tell me the basis upon which that has been worked out.

Mr. Gummer

Could I claim my hon. Friend's prize? So impossible to explain is it that we have kicked the entire thing over. We shall not do it again on this system. He is entirely right—it is absolutely unacceptable.

Sir David Price

That is well established. On the subject of local government, I am sure that the House can now understand why those wise city fathers of Florence at the end of the 13th century passed laws against—I translate from Italian—the then "upstart" decimal numerals. They were needed to protect honest citizens from the easy changes which forgers of bank drafts could ring on the numbers 0, 6 and 9. I would just say "è sempre vero".

The GRE formulae remind me of the Schleswig-Holstein situation, which taxed the diplomats and politicians of Europe through the 19th century. It was said that it was so complex that there were only three people who knew the answer to the question—the first was dead, the second had gone mad and the third had forgotten the answer. I have a feeling that that is what has happened over GRE and its remarkably complex rate support grant formula.

My right hon. Friend, in intervening, has saved me from quoting his letter, where he declared complete dissatisfaction with the rate support grant system, which share with him. He says that that is the reason why the Government will be abolishing it and replacing it with a needs grant in future years. When that happy day comes, my right hon. Friend will have my enthusiastic support. However, for the present settlement he cannot in conscience expect my acquiescence in this harsh treatment that he is meting out uniquely to Eastleigh in Hampshire. An especially masochistic twist of that treatment is that Eastleigh loses grant because of the way in which the safety net operates. I say: some safety net!

5.38 pm

Mr. Matthew Taylor (Truro)

I found the speech of the hon. Member for Eastleigh (Sir D. Price) most entertaining, but I hope he will forgive me if I do not respond to the points he made about Eastleigh but make a rather broader speech. I hope, too, that he will find that what I have to say will in some measure support the case he so eloquently made to the Minister.

The first problem is that the Government have grossly inadequately estimated the amount that local authorities should spend. I hope that the hon. Member for Eastleigh will agree that that is the starting point; I hope the Minister can be convinced of it as well. Time and again, three reasons have been put to the Minister why this is so. He may feel that he has answered them, but few others do.

First, the Government's expenditure estimates are under-estimates. According to their own officials' figures, as set out by the grant working group—the expenditure steering group of local and central government—the Government have undercut local authorities by £400 million. So even on Government officials' estimates, the sum has been reduced. This same working group anticipates a sum of £180 million, which the Association of County Councils believes will no longer be met.

As we have already heard, the forecast of inflation at 4 per cent. in the expenditure provision for 1989–90 is inaccurate. In July, the Secretary of State for the Environment could say that the increase of 4.7 per cent. was above the expected rate of inflation. The Chancellor wants to take mortgage interest rates out of his calculation of inflation. He should look around the corner at the Secretary of State for the Environment, who appears to have done that already—and more! If the increased provision for poll tax costs of £110 million is removed—that in itself is inadequate—the increase is only 4.3 per cent. Although the rate of inflation was 4.8 per cent. in July, it has dramatically increased since, and now stands at 6.4 per cent. The forecasts are that it will continue to rise.

I raised this matter during the brief debate on the Rate Support Grants Act 1988. I asked the Government then to introduce some flexibility to cater for rising inflation. Now I ask the Minister again to do that.

Secondly, and in addition to this small rise, the Government have imposed pay increases higher than 4 per cent. on local authorities. They have asked the board to investigate the possibility of an increase of 5.1 per cent. for teachers. There are rumours that more will be needed to ensure adequate recruitment. That is all very well—I believe that teachers deserve these rises and I am sure the Minister does, too—but if central Government imposed these increases, why will they not fund them? Why are local authorities to be penalised for Government decisions?

These are not the only wage increases above 4 per cent. Local authorities will not be able to tell their workers that at a time of inflation of more than 6 per cent. they should get only 4 per cent. Local authorities are expected to pick up the tab, when the person who claims to be responsible for tackling inflation and for economic miracles—the Chancellor—has messed up and let inflation go over the odds. That is the Government's, not local authorities', responsibility.

Finally, it was assumed that local authorities which controlled education would be able to make savings by closing down schools because of falling rolls. But the Government's opting-out provision has effectively put a semi-permanent moratorium on local authorities closing down schools, because that provision does not allow them to close down schools that try to opt out. Almost by definition, schools trying to opt out are the ones facing closure. So the savings written into the rate support grant cannot be realised by local authorities, or at least not in the coming year—

Mr. Fatchett

I agree with what the hon. Gentleman said about surplus places and the dangers of the opt-out provisions, but why do his Liberal colleagues in Liverpool campaign for schools to opt out of the local education authority?

Mr. Taylor

I will certainly not tell our councillors in Liverpool or anywhere else what to do. I am sure they know Liverpool better than I do—I hope the hon. Gentleman at least accepts that—but I am sure of this: there are good reasons on occasions for closing down schools, and, on others, for resisting closure—

Mr. McLoughlin

Will the hon. Gentleman give way?

Mr. Tony Banks

Give him a chance: he is too busy wriggling out of my hon. Friend's question.

Mr. Taylor

I do not know about Liverpool, but one of the problems in my area is how to maintain adequate provision for small village and local schools when the Government will not allow the necessary cash to be spent. That forces the choice between maintaining them with less than adequate facilities for the sake of the local community, and combining them at the cost of local roots and connections. Each case must be judged on its own merits—

Mr. McLoughlin

The hon. Gentleman said that he did not know all the circumstances in Liverpool, and of course we accept that. He then said there might be good reasons for schools to opt out. Why then did he vote against the Education Reform Act 1988, which allows them to do so?

Mr. Taylor

That is easily answered. The hon. Gentleman misheard me: I said there could be good reasons for closing schools, not for opting out.

Mr. Gummer

It may be difficult to ask the hon. Gentleman a specific question about Liverpool, whose particular problems we do not know. However, can he answer a general question about county councils that used to be Conservative-controlled but which, for the past four years, have been dominated by the Liberals or the SLD? Why, of those eight authorities, have seven become higher rate demanders, moving up towards the top of the rate league? Is it part of SLD policy to increase rates disproportionately compared with other authorities, all of which suffer the disadvantages that the hon. Gentleman has mentioned? That has nothing to do with the Government; it is a matter of comparison.

Mr. Taylor

There are two answers to that—[H0N. MEMBERS: "Yes and No."] Average rate rises in councils run by us and in those in which we are the leading group have been lower than rises in Conservative and Labour-controlled authorities.

Secondly, I offer an example from Cornwall of why more money is being spent. Again, it concerns schools. In the past, so little was spent on capital expenditure for schools—on maintaining and rebuilding them—that 70 or 80 schools still have outside toilets. There are schools with leaking roofs, schools that have to close classrooms in high winds for fear that they will be blown down, and schools in which books and teaching provision are inadequate. Some schools have been kept open only by dint of sharing music teachers, and so on.

Therefore, before we led these councils, they had ducked spending and not invested as they should have. Now we have to increase investment. Even after all that, we are not in a position to meet the targets that the Government want for schools—they will not allow us to spend enough to do that.

Mr. Gummer

I wonder whether that explanation would stand up in Cambridgeshire, which has, under different authorities, had a good reputation for education. When it was controlled by the Conservatives, it was 34th in the list. Since the Liberals became dominant, it has moved up to 25th. The same applies to Essex, Hertfordshire, Oxfordshire, Somerset, Wiltshire and Devon. That seems a little beyond an accident. It seems that, when people chose to be dominated by the Liberals, their rates are consistently pushed up out of proportion. Quite rightly, the hon. Gentleman has not commented on any one council. Is that on the directions of SLD headquarters? Is that the policy of the SLD or is it the accidental conjunction of many local SLD councillors always coming to the same conclusion that they ought to increase rates?

Mr. Taylor

The one consistent point in the Minister's intervention was contained in the examples of councils that he gave the House, because the previous Conservative administrations were not providing an adequate level of service, and we have been moving in the right direction by increasing services. He mentioned Cambridge. I think he would accept that under us it has pioneered many educational changes and the Government have followed us. One such change is in local financial control.

Mr. Deputy Speaker (Mr. Harold Walker)

Order. Hon. Members should not pass between the Chair and the Member who is addressing the House.

Mr. Taylor

Perhaps I should return to the essence of my speech.

Mr. Fatchett

rose—

Mr. Deputy Speaker

Order. The hon. Gentleman is not giving way.

Mr. Taylor

Thank you, Mr. Deputy Speaker. Far be it from me to try to get round you even for the sake of hon. Members sitting behind me.

A relevant part of these figures is that the aggregate Exchequer grant has fallen from 46.2 per cent. in 1988–89 to 43.3 per cent. in 1989–90. That cut is partly as a result of the transfer of the funding of polytechnics. However, even after that adjustment, central Government support to ratepayers continues to decrease from the 1979–80 level of 61 per cent. That is another reason for many of the higher-than-inflation rate increases that the Minister likes to mention.

According to local authority representatives on the joint local authorities-central Government expenditure groups, the Government expenditure provision is inadequate by about £1 billion, and that figure is merely to maintain current levels of service, not to improve them. Sadly, as a result local authorities will be forced to increase rates and the Minister will attack them for doing so. The truth is that the responsibility for such rises falls directly on the Minister.

Earlier, I spoke about the costs of introducing the poll tax and said that, by sleight of hand, the 4.8 per cent. increase that local authorities are meant to get included direct provision for the introduction of the poll tax. Since the commencement of that implementation, it has become clear that insufficient finance has been set aside for it. I understand that, in Scotland, £18 million was granted for the introduction of the poll tax, and that costs are now running at about £28 million.

Many councils will have to increase their levels of new technology to meet the poll tax requirements. Birmingham estimates that the hardware will cost £4 million and that the community charge will cost £15 million a year to collect compared with the present figure of £6 million for the collection of rates.

Another example is Harborough district council in Leicestershire. In 1989, its rate support grant was cut by 40 per cent. The Government have contributed £71,000 to setting up a poll tax department, but the council thinks that it will cost an extra £262,000. One of our councils, Adur, has been severely penalised by the arbitrary system of the rate support grant. The leader of that council wrote to the Secretary of State on 10 January. He said: Grant for 1989–90 is now set at £59,000 compared with £95,000 for 1988–89. Your promise that Pell Tax implementation costs would be met through the BSG system does not seem to apply to this Council despite a specific grant of £60,000 for 1989–90. The costs of implementation which are likely to easily exceed a quarter of a million pounds will very regrettably have to be passed on to the ratepayer. Could I remind you that in 1983–84 my Council received approximately one million pounds in Block Grants and if any form of fairness were to prevail, then this Council is owed at least five million pounds since that time?

That shows the inequality in the grant system because Adur council's neighbours, Hove and Worthing—councils of a different political complexion—are to receive grants of £8.131 million and £3..874 million respectively for next year. Adur spends £81 per head, while Hove spends £99, and the figure for Worthing is £77. In effect, £12 million is dished out to Adur's neighbours while Adur is forced to increase its rates to maintain the current level of services. The point that was correctly made by the hon. Member for Eastleigh applies equally in this case. He said that the Government have not acted to help some councils through a difficult time that has arisen because of the Government's policies.

I shall now deal with the supplementary reports for 1985–86 to 1988–89. The announcement on 6 July 1988 to freeze grant entitlements for the years 1985–86 to 1988–89 demonstrates the arbitrary nature of the procedure. I do not want to say any more than that, because I have spoken about this matter before. I plead with the Minister to reconsider. He should set the figures from the time that those councils were asked to report, and not from a time a few weeks before, which none of them could have anticipated.

We should also look at the question of block grants versus specific grants. The Minister has said that bad councils are a rare exception, a caricature rather than characteristic. However, time after time the Government have consistently moved from block grant to specific grant. They are saying that they do not trust local government or councillors. That means that they do not trust local people to make decisions affecting their own areas. Whatever the specific grant may be for—perhaps for introducing the poll tax—it should be given to the local authority, which should be allowed to set its priorities. Local people should be allowed to say what they want to see, and things should not be imposed on them. The Government will not do that because they do not believe in local government but merely in local administration which, given the current restraints that are in force, could be carried out as well by civil servants as by councils.

5.57 pm

Sir George Young (Ealing, Acton)

I am sure that all hon. Members would wish to congratulate my hon. Friend the Member for Eastleigh (Sir D. Price) on his speech which made local government both interesting and funny. If it is any consolation to him, Eastleigh's loss of grant is Ealing's gain. Against the background of a generous settlement, the decision by the council to increase by 35 per cent. its domestic rates is almost inexplicable. I shall return to that.

The rate support grant settlement is generous. When my right hon. Friend the Minister started his speech there were just three Opposition Members in the House, so the Benches were hardly seething with indignation about the lack of generosity by the Government. I should like to quote from the article that the hon. Member for Hammersmith (Mr. Soley) prayed in aid when he sought to portray this settlement as unreasonable. It is a quote from an article by Tony Travers in the Local Government Chronicle of 13 January. It says: The Government has, both in terms of expenditure and grant, ended the 1980s in a far more generous mood than it started.

Talking about inflation, Mr. Travers says: If authorities budget for 7% inflation, with no change in balances, average rate increases would be closer to 6%-7%. That is a long way adrift of the 35 per cent. that my constituents are facing on the assumptions put forward by Mr. Travers. I hope that the hon. Member for Hammersmith will not try to defend the rate rise in Ealing.

Mr. Bernie Grant (Tottenham)

rose—

Sir George Young

I shall develop my argument a little and then I shall give way.

For two reasons it is important to have a fair settlement. First, it enables central Government to look local government squarely in the eye and say, "We have provided a realistic settlement in the interests of sensible rate increases. Will you now please play your part?" Of course such a posture is less credible if the settlement is ungenerous or unrealistic.

Secondly, I hope that this settlement marks the beginning of a better relationship between local government and central Government. Pressure has been put on that relationship during the past ten years. The responsibility rests mainly on a small number of local authorities which broke through unilaterally the conventions that had governed local government for many decades. As with the trade union movement, there is now an outbreak of realism and a new mood within local government. Central Government can now respond to that new mood and try to build bridges. The appointment of both my right hon. Friend the Minister of State and my hon. Friend the Under-Secretary of State has been warmly welcomed within local government and I hope that that marks the beginning of an improvement in relationships with local government generally.

May I now turn to the specific position of Ealing and quote from the article to which I referred earlier in which Tony Travers said: A significant shift of grant from the counties to London, particularly to the non central inner boroughs, will be seen in 1989–90. This pattern is a repeat of earlier years. Ealing is a non-inner London borough. In 1989–90, Ealing will receive £72.9 million of block grant, an increase of £8 million or 11 per cent. over 1987–88, after taking account of the adjustment for polytechnics. The GREA increases for Ealing are 9.7 per cent., so a greater proportion of local needs will be met in grant next year than in the current year. Ealing is also receiving an extra £2.8 million from the supplementary reports.

Against that background, it has been reliably estimated that Ealing needs only increase its local rate by about 3 per cent. next year, following a reduction of almost 25 per cent. this year as a result of rate capping. That is why my constituents are astonished at the initial decision of the policy committee to increase the rates by 35 per cent. Two years ago, Ealing won the cup for the highest rate increase, 66 per cent. There are slight differences according to the basis that one takes, but, at that time, it was generally recognised that Ealing had the largest rate increase in the country. Its attempt to win the trophy for a second year running was rightly frustrated by the Government's decision to rate-cap it and rescue my constituents. This year, we have a 25 per cent. reduction. It has now crept under the rate-capping wire and has started the rate-making season this year with a figure of 35 per cent. which remains to be confirmed at the council meeting.

The creative accountant has run out of work to do. The accounts in Ealing are as creative as a sandcastle built on the edge of an incoming tide. If we consider the figures for the current year, we see that expenditure was buoyed up by £14 million from balances and £17 million from what are called "Funds" of uncertain pedigree. Even with that, Ealing has overspent by £7 million which means that it approaches next year £38 million short. It was warned last year by the director of finance that it had adopted a high-risk strategy, but it paid no attention.

One might have expected that, with a high level of spending, we would enjoy good services in Ealing. In the light of what was said in the consultation paper on rate support grant settlement, I want to ask my right hon. Friend whether he is satisfied that the Government money that we are voting tonight is securing a good level of services. Paragraph 13 of that document states: The Secretary of State considers that these control totals are sufficient for the level of service and efficiency which he considers is appropriate in respect of each service.

One important duty of local authorities is building control to ensure public safety in the construction of new buildings. Building control is self-financing. The fees that one pays to have one's building inspected cover the cost. My constituent, Mr. Morton, of 13 Arlington Road, wants to do some work to his house. He sent off a cheque and asked for building regulation approval and a surveyor to come round. He received a letter from the chief building surveyor, dated 12 December, which stated: Due to staff shortage"— there are now 1,500 more staff than there were when the Tories left office— the Council's Building Surveyors are unable to inspect your work. What is Mr. Morton to do? He cannot run the risk of doing work in breach of the regulations when he has been warned by the council. The chief building surveyor went on to say: In the event of a specific contravention being brought to my notice, appropriate action would be taken. The council is not carrying out its obligations so far as building regulations are concerned and is in effect telling people that they cannot build an extension to their homes.

Mr. Soley

I understand the hon. Gentleman taking the opportunity to knock Ealing council. He is from a different political party and is entitled to do so. However, he should give a fair analysis of the situation. I am glad that he recognises that the decision about rate increases has not yet been made. More importantly, he is now talking about the local authority using money efficiently. He knows that the Government have not answered the question about the use of bed and breakfast accommodation in Ealing and about allowing housing associations to use it profitably for one year. I understand that he supported the decision of Ealing council to try to do a deal with the private sector to provide extra housing. That deal was cancelled by the Government. Let us have both sides of the picture.

Sir George Young

I note that the hon. Gentleman did not seek to defend the action of Ealing council in not carrying out its obligations under building control regulations. I am being asked tonight to vote for rate support grant to fund services in Ealing that are not being provided.

Mr. Gummer

The real issue in Ealing is the competent use of money; it is not a party political issue. If Ealing has this money, why cannot it provide the services that other authorities with less money are able to provide? Is some of that money being used for things which are not necessary and which the ratepayers in Ealing do not wish to fund, particularly if it means that they have to forgo ordinary services? There are few who would wish to fund an investigation into the deprivation of Irish women in Ealing. Most would prefer to see that the building control surveyors did their job.

Sir George Young

My right hon. Friend is right. The Labour party does itself no credit by seeking to defend the indefensible with regard to incompetent Labour authorities. It would do far better if it said, "It is no part of our manifesto to stand behind authorities like Ealing. We wish to see them perform slightly better."

One way in which the council could have saved money is by not writing to my constituent Mrs. Miller. She is a pensioner who does not enjoy good health. She received a final notice and a summons for her rates last November, but she was convinced that she did not owe the money. None the less, she was frightened and borrowed the money and paid. I made some inquiries and, on 13 January, the director of finance wrote to Mrs. Miller. He said: You were initially sent a Final Notice and Summons as the Housing Benefit Department made an error in their calculation of rebate which they have subsequently rectified. This means that you are now in credit by £129.04 which will be refunded to you as soon as possible. I apologise for the inconvenience caused in this matter. Mrs. Miller had a miserable Christmas.

The council is not replying to letters as efficiently as my right hon. Friend no doubt wants. I wrote about Ms. Wright, of 26 Carisbrooke court. I received an answer dated 10 January which stated: I apologize for the delay in replying to your enquiry regarding Ms. Wright's application for transfer. I wrote on 9 September.

The local authority has responsibility for housing benefit. Last year, we introduced transitional help for people who missed out on housing benefit. One of my constituents, Mrs Keating, of 48 Cheriton close, applied to the unit in Glasgow for help; nothing happened. I have here a letter from my hon. Friend the Under-Secretary of State for Social Security, dated 13 January, which states: The Transitional Payment Unit received Mrs. Coating's application on 9 August and on 11 August sent an enquiry form to Ealing District Council requesting Housing Benefit details pre and post April 1988. To date the form has not been returned but to avoid further delay the Unit obtained the relevant information by telephone and calculated Mrs. Coating's entitlement.

Mr. Dennis Turner (Wolverhampton, South-East)

The hon. Gentleman does his case great harm by quoting these examples when he knows very well that the Government are responsible for the situation. The amendments to the social security legislation in April last year caused untold problems for local government in trying to deal with the backlog of applications. If there are delays, the fault rests fairly and squarely with the Government who made the changes. We urged the Government to face up to the situation in the Social Security Act 1986, but they did not do so and were forced to introduce wholesale amendments in April. It is the Government's fault.

Sir George Young

I have some respect for the hon. Gentleman. However, I hope that he is not defending the action of the London borough of Ealing in not replying to requests from a Department which wants to help a constituent who has had trouble finding rent. We are voting Ealing money tonight to carry out services. It is not carrying out those services and it should be doing that.

The planning department is meant to respond to applications for planning permission within 13 weeks. On 8 December 1988 my hon. Friend the Parliamentary Under-Secretary of State for the Environment published a league table of London boroughs which processed planning applications within 13 weeks. The Labour-controlled borough of Barking and Dagenham processed 90 per cent. within 13 weeks. Good luck to it. Bromley did even better and processed 92 per cent. However, Ealing is right at the bottom of the table. It processed only 9 per cent. of planning applications within the statutory period.

Many of my constituents are trying to buy their homes from the London borough of Ealing. Mrs. Tobin a 92 St.Dunstan's avenue applied to purchase her home last February. Her property was valued in April, but she still has not been told its value. Many of my constituents have found the same problem and cannot buy their homes within the statutory period under legislation passed by this House.

Ealing is taking Mr. William Smith to court. He is 95 years old and house-bound. Everyone has tried to stop Ealing doing that, including Mr. Smith's homehelp, a chief superintendent of police and myself. However, he is still being taken to court although he is completely incapable of leaving the house.

Refuse collection in Ealing over Christmas was an absolute disaster.The Leader on 13 January reported: Town hall staff were flooded with angry calls when dustmen took a 10-day holiday over Christmas and New Year. Council officers apologised for the mess outside homes caused by uncollected black sacks and promised to sort out the backlog.

When the Tories left office in Ealing I understand there were about 88 families in bed-and-breakfast accommodation. There are now 1,223. Part of the reason for the increase is Ealing's more generous approach to applications for homelessness. To its credit, it has changed its policy and made it slightly tighter. However, that increased figure poses real problems in terms of planning as more hostels receive planning permission within the borough. Expenditure on bed and breakfast could be reduced sharply if the large number of voids in my constituency were filled.

By citing those examples today, I want to try to explain why people in my constituency are not receiving the service to which they are entitled. I hope that Opposition Members would not defend the level of services in Ealing. I am being asked to vote this evening for another £9 million of taxpayers' money. Obviously my constituents and I would like an assurance that if that increase in money is approved this evening, we will get better services than we have received so far.

Two years ago there was a 66 per cent. rate increase in Ealing. That caused damage within the borough. Employers were less able to invest or pay wage increases because of the higher rates. People had less money to spend in the shops because they had higher rates to pay. People who were thinking of moving to the borough changed their minds. That damage was contained for two reasons. First, at roughly the same time as the rate increase the Budget reduced taxes and to some extent counterbalanced the higher local taxes. Secondly, the Government intervened very promptly in July and announced that for the following year Ealing would be rate capped. People then realised that their problem would be relatively short-lived and they could see some light at the end of the tunnel.

When my hon. Friend the Minister replies, will she tell us what is the timescale for announcements about rate capping or poll tax capping for next year? What are the criteria likely to be? Can my constituents expect some help from the Government so that when the Labour-controlled council—as I fear Labour will still control the council in a year's time—fixes the rates, we will not be exposed to yet another rate increase like this year's and some help will be forthcoming from the Government? When my hon. Friend the Minister replies, I hope that she can shine that ray of hope on my constituents.

6.14 pm

Mr. John Battle (Leeds, West)

When the hon. Member for Ealing, Acton (Sir G. Young) opened his remarks, he referred to the Minister's bridge-building task. I support the hon. Gentleman's call for the Minister to adopt a constructive approach to local government.

When I listened to the Minister for Local Government today I got the impression that he is fixed in the oppositional mode in the way that he challenged the policies of the Social and Liberal Democrats and the Labour party. He still seems to be fighting the last general election, if not the one before that.

In his introduction the Minister referred to sensibly run local government as the norm for local authorities. However, his comments seemed to be in the context of a tirade based on the bad practices of some authorities, but aimed generally at all local government. He had a tone of malice in his voice which developed into a regular rant against local government. When the Parliamentary Under-Secretary of State replies I urge her to assure us that, instead of continuing their assault on local government, the Government are really interested in solidly supporting it.

Although the Minister said that sensibly run local government is the norm for local authorities, after this rate support grant settlement, what will happen to the sensibly run local authorities which constitute the norm? There might be some surprises. For example, Leeds has never been rate-capped and the Minister might call it a model of a sensibly run local authority. At this point I would like to pay a brief tribute to the council's retired leader, Councillor George Mudie, who led the city council for the past 10 years. His grasp of local government arithmetic was second to none. I wish his successor, Councillor Jon Trickett, well and congratulate him on reaching that post. However, he is up against it because the Government are stacking the odds against that sensibly run city council.

Deficit financing is an issue which has come before this House within the past 12 months since I have been a Member of this House. By making prudent provision for those proposals, Leeds was caught by the retrospective rules for the financial year 1984–85. Due to a minor technicality in the earmarking of reserves for the financial year 1985–86, the council was again caught by the retrospective rules in that year. All the council did was to transfer £7 million from the general fund to a specific fund. If we consider the transfer of higher education funding, it is clear that within the settlement the grant has been reduced by the full amount of expenditure on the polytechnic in Leeds although Leeds had only received 41 per cent. of that amount in grant.

The figures show clearly that Leeds fares badly in comparison with other local authorities in west Yorkshire and elsewhere. Despite repeated representations to the Department of Education and Science about the unfairness of that matter, the ratepayers of Leeds are being penalised to the tune of £4 million. Reference has been made to metropolitan districts whose spending is equal to or below grant-related expenditure in 1988–89. Solihull was referred to and its spending is 96 per cent. of GREA. Leeds is equal to GREA. In other words, it spends at the Government guidelines. Obviously the council has well interpreted all the tables which the hon. Member for Eastleigh (Sir D. Price) referred us to earlier. It has matched up to the figures it is expected to reach. However, its grant has been reduced from 43 per cent. in 1987–88 to 41 per cent. in 1988–89. In other words, its grant will fall by £7.3 million in 1988–89 even though its rates are the lowest in west Yorkshire.

There must be a deeper strategy behind the Government's policy. It seems that the Government are deliberately forcing up the rates in Leeds because they cannot offer or sell their poll tax proposals as a palliative to high rates because the poll tax will be higher than the rates. In order to disguise the fact that the poll tax will massively increase people's bills, the Government are deliberately forcing up rates. That is a strategy to cushion the introduction of the poll tax. The present cost of living in Leeds under a Labour-controlled authority is much lower than it will be once the poll tax is introduced. Even the Conservative councillors of Leeds know that and are relieved that there will be no local elections this year in which that view can be challenged.

The Prime Minister took an incredibly backward stance in an interview last year in the Financial Times, entitled "Vision 2000". She referred to the great Victorian merchants as models for local authorities. Her vision of local government is that it should go back to the days of the local burghers—centrally selected, power personalities who run local authorities and businesses, who will simply host one dinner a year at which they sit down and share out the tenders for the services that are left, such as sweeping the city streets.

But the Prime Minister's strategy is more vicious than simply handing local authorities over to the burghers and rubbing out locally elected members. The strategy seems to imply an appalling twist for the poor who live in inner cities throughout Britain. If, as the Minister for Local Government says, local taxation depends upon spending according to local needs, local authorities will not be able to compare their circumstances with their neighbours—something to which the hon. Member for Eastleigh referred—because each local authority will have to stand on its own feet, independent of neighbours and the Government. We shall not be able to make real comparisons.

Those areas in which the poor are concentrated will not be able to raise the revenue to support the services that their people need. Are we saying that, because people do not have sufficient income or a part in the booming economy which is so often talked of, they do not deserve basic services such as street cleaning, education for their children and housing? I hope that the Government are not pushing us down that road. It is still worth reflecting upon the fact that 2.5 million people are unemployed and there are high rates of unemployment in many northern towns and cities and in some areas of London. When the Government decide how to change the system and assess local needs, those facts need to be taken into account.

My area has a low-wage economy. Wage rates in west Yorkshire are lower than elsewhere. It is well known that 9.4 million people—40 per cent. of the working population—are on low wages. Conservative Members often suggest that the average wage of £254 per week is a national minimum. I remind them that those on low wages earn well below half that average wage. Therefore, their circumstances need supporting with local services.

Behind the myth of average computation, whether it be of wages or rates, the Government are hiding a policy that reduces local government's ability to respond. I urge the Government not to hide behind the myth of the national average. If they do, the poor will be penalised because local authorities will not be able to raise the revenue for the services that are required.

When local authorities are left to their own resources, local elections will be about whether the people are prepared to finance and support the poor in their areas. "Will you subsidise the poor?" is a question that we can see now appearing on election leaflets. That is a particularly divisive and invidious question which could arise in some areas. I hope that that is not a direction in which the Government are going.

I hope that the Minister can assure us that the Government are not taking the poor in our inner cities out of the national budget so that they no longer figure in the national budget and pushing them back on the local authority, forcing them back on the local parish as seemed to be the suggestion in the interview with the Prime Minister to which I referred earlier. I hope that the local authorities will not be left to sort out whether the poor receive services.

The Government have already laid down in legislation that everybody, regardless of their income or means, must pay at least 20 per cent. of the poll tax. That will hit families on low incomes, pensions and low wages particularly hard. I hope that we are not heading back in the direction of parish relief and ghetto politics.

I seem to recall that on election night the Prime Minister said about the inner cities, "We must get them next time." That hardly came over as a friendly overture. It did not seem to be a statement about rebuilding local communities and local economies. It seemed to be more about mugging local government. The Minister's tone this evening seems to reflect the Prime Minister's real intentions—if she does not like something she will abolish and replace it. That is a far remove from local democracy.

I am sure that the Minister is aware of what Lord Salisbury said in defence of the introduction of local government, because the Widdecombe report on local government sets out why local government was introduced in the first place. Lord Salisbury emphasised that we need strong local government, supported and defended as an essential check to central power. It should be supported in the House publicly by the Minister.

6.27 pm

Mr. Michael Carttiss (Great Yarmouth)

I am sure that the hon. Member for Leeds, West (Mr. Battle) will forgive me if I do not follow him down the path towards parish relief and ghetto politics. Equally, I shall not follow my hon. Friend the Member for Ealing, Acton (Sir G. Young) in the interesting details that he has given of one local authority which clearly does not administer its affairs in the interests of the people that it is supposed to serve.

Although my right hon. Friend the Minister for Local Government in his robust opening of the debate talked about good local authorities being the norm, much of what the Government say and do about local authorities tends to lead to the suspicion that they regard the Ealings, Brents and Derbyshires as much more common than they really are. Therefore, I welcome my right hon. Friend's assurance that he knows that the vast majority of councils operate effectively and with good intent.

My right hon. Friend said that the rate support system is not easy to follow. My hon. Friend the Member for Eastleigh (Sir D. Price), in his elegant and witty contribution, surely knocked the last nail in the coffin of the rate support grant.

Unfortunately, right hon. and hon. Friends who have successively occupied the Government Front Bench in the five years that I have been a Member have similarly asserted that the rate support system is unfair and incomprehensible, but it has taken a long time to arrive at a new arrangement. I do not share my right hon. Friend's confidence that next year's revenue support grant will prove to be a much better system. As the interchange between the two Front Benches has indicated, it will still be necessary to identify needs and to measure them.

In my intervention, I drew attention to the current lack of provision in the revenue support grant for meeting the problems of authorities in seaside resorts that have a coastal protection responsibility. It is no use my right hon. Friend saying that that is a matter for the local authority associations to overcome. I acknowledge that there needs to be greater awareness of the problem. As a member representing a seaside resort, it is a matter of concern to me that the Association of District Councils does not have on its committee examining the new system anyone from a seaside resort. However, I take the point made by my right hon. Friend, in his determination to ensure that all such matters will be carefully examined when the time comes.

When I first spoke in the rates support grants debate five years ago, I drew attention to the system's unfair application to Norfolk county council and its budget. I have been drawing attention to unfairnesses ever since. I have served on delegations to the Department of the Environment, together with other hon. Members and with East Anglia local authority leaders, in trying to secure recognition of the problems of East Anglia's rural shire counties.

Even when I was a county councillor, and my right hon. Friend the Member for Henley (Mr. Heseltine) occupied the hot seat at the Department of the Environment, I was assured that everything would work out eventually. We are hearing the same story from the Government Front Bench today. I look forward to the fresh new approach that my hon. Friend the Under-Secretary of State for the Environment will undoubtedly bring to her Department, and to receiving from her the reassurance I have received before—but I hope that, this time, it will mean something.

The fact that individual authorities' block grant entitlement is no longer linked to expenditure, and that therefore, like every other authority, Norfolk will not lose £1 for every £1 it spends above the Government's figure, is welcome. However, the spending assumptions underlying this year's RSG are inadequate, and give rise to unrealistic expectations about rate increases. It is one thing to appear to penalise low-spending authorities, but it is another to keep ramming down their throats that if they do not keep their rate rises down to an average of 2 per cent., and certainly below 5 per cent., they are in some way guilty of mismanagement and of failing to adopt proper measures, such as competitive tendering.

As loyal Tories, we can put up with some of the Department of the Environment's current aberrations under my right hon. Friends, but when we are told, having been offered an inadequate rate support grant, that we should keep our rates down to an average of 2 per cent., that is really galling, and I can tell my right hon. and hon. Friends that it goes down very badly.

Nationally, total local government expenditure provision of £27,669 million is only 3.2 per cent. above local authority budgets for 1988–89. My right hon. Friend wrote to Norfolk county council on 9 January, and I know that he has written to others in a similar vein. In his letter he comments: I know Norfolk has a good record as a low spending authority, and I am sure ratepayers appreciate their rates being held down. If Norfolk spends in line with the settlement provision the county precept need rise by no more than about 5 per cent.

The hon. Member for Truro (Mr. Taylor) pointed out that the Government's figure does not take into account various other matters. I refer, for example, to the settlement for council manual workers of about 5 or 6 per cent. The hon. Member for Truro pointed out also that my right hon. Friend the Secretary of State for Education and Science intimated to the teachers' pay advisory committee that it ought to work to a figure of 5.1 per cent. Teachers' salaries represent a significant proportion of county council expenditure. There is also an argument about what inflation will prove to be.

When my right hon. Friend the Minister for Local Government wrote to Norfolk county council saying it should not need to increase rates by more than 5 per cent., he failed to take account of one further factor. My hon. Friend the Under-Secretary of State for the Environment will be familiar with the case of Cakebread v. Severn-Trent water authority which, on appeal, changed the rating of sewage works. That affected many local authorities, and its impact on Norfolk county council was to add £2 million to this year's budget—a 1 per cent. increase in the precept without any changes being made in the level of service. My right hon. Friend totally ignores such considerations when he says that average rate increases should not exceed 5 per cent. in Norfolk.

If Norfolk county council is to observe a 5 per cent. limit, it will have to cut back on services. When I was its deputy leader, my colleagues and I were widely and, on reflection, perhaps justifiably, criticised for being parsimonious. That may be why the SDP made such advances in the elections four years ago—which, despite the rate support grant settlement, we shall soon reverse.

Mr. Matthew Taylor

I shall not dispute with the hon. Gentleman the election's outcome, because the electorate will decide that in May. However, I agree with him about the difficulties encountered by councils that have been sensible and low spending over a long period. I raised with the Minister the question of Cornwall's education spending, which was held down because that is what Cornwall was told to do. However, now that Cornwall needs to invest in capital and other expenditure, it is not permitted to do so, and is attacked for increasing rates to cover the extra costs.

Mr. Carttiss

I take the hon. Gentleman's point. Norfolk county council, with a precept for 1988–89 of 190.9 pence, is the lowest rated authority in England, other than Hereford and Worcestershire. We heard earlier that Derbyshire's precept is 297.5p. Only one other English county has a precept lower than Norfolk's figure of 190.9p, yet my right hon. Friend, in writing to Norfolk county council, tells it to keep its rate rise to below 5 per cent. That just is not realistic.

Grant entitlements are no longer linked to expenditure and that is welcomed, but we now have the famous "relevant spending" figure. The Government have said what they think a county council's relevant expenditure should be, and the figure for Norfolk is £300 million—£34 million below the old grant-related expenditure.

I wish to make two general points, applicable to all local government, about an issue mentioned by the hon. Member for Leeds, West with particular reference to Leeds. Instead of reducing relevant expenditure by the cost of advanced further education, which has now been transferred from local government expenditure, the Secretary of State has reduced the block grant by the gross cost.

That has two major implications. First, overall rate poundages will be unaffected by the transfer; ratepayers, however, will still, in effect, be funding AFE, despite having no responsibility for that expenditure. So much for local accountability, by which my right hon. Friend the Secretary of State has set such store, particularly when arguing for the community charge as a replacement for the rating system. Local authority associations have rightly argued that ratepayers should see the financial benefits of the transfer of services away from local authority responsibility.

The second implication of the transfer of AFE is this. Some education authorities receive no block grant at all. I am open to correction, but 1 believe that—besides ILEA—that is true of Hertfordshire, Oxfordshire and Surrey, the county of my hon. Friend the Under-Secretary. That means that, to extract from local government generally the full cost of AFE, £91 million must be taken from local education authorities that receive block grant—which again hits Norfolk.

There has been a further 1 per cent. fall in the county council's share of grant while, ironically, they are contributing £166 million towards safety nets to limit the loss of grant to others. That figure represents 4.7p of Norfolk county council's precept. Again, the proportion of rate support grant taken up by specific and supplementary grants has increased. Not only do such grants, based solely on expenditure, disadvantage prudent authorities, but as they reduce the amount of block grant available for distribution, authorities' choice of priorities is further restricted.

There are four new grants for 1989–90. Specific and supplementary grants now represent 29.4 per cent. of the total Government RSG, compared with 25.9 per cent. of the total in 1988–89. In 1981–82 the proportion of RSG covered by specific and supplementary grant was 13.3 per cent.

The burden of my complaint on behalf of Norfolk ratepayers is that—as has already been recognised many times—the system is not only capricious, but positively works against prudent authorities such as Eastleigh which just happen to be under Conservative control. My hon. Friend the Member for Ealing, Acton pointed out that Opposition Members were not seething: that is because they have not done too badly out of the system.

Of course my right hon. Friend is quite impartial about whom he penalises. Perhaps one of the worst-hit authorities in Norfolk is represented by my right hon. Friend the Minister of Agriculture, Fisheries and Food. South Norfolk district council has suffered far more than any other Norfolk authority. I mention that not on behalf of my right hon. Friend or the constituents whom he has represented so effectively and efficiently for so many years, but to illustrate the way in which low-spending authorities are penalised by the system. The neighbouring authority—high-spending, overwhelmingly Socialist-controlled Norwich city council—benefits, but South Norfolk district council's grant has gone down by £134,000, or 13.5 per cent. In other Norfolk districts the RSG has produced results ranging from gains of nearly 16 per cent. to losses of about 7.5 per cent.

In the period from 1985–86 to 1989–90, Norwich's RSG gain has been some 18 per cent.; South Norfolk's loss in the same period has been some 30 per cent. Broadland, represented by my hon. Friend the Member for Norwich, North (Mr. Thompson) and my hon. Friend the Member for Mid-Norfolk (Mr. Ryder)—Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food—has had a cut: it will receive £993,000 in grant this year, and my hon. Friends have both expressed concern about that. As the two constituencies were once part of the Great Yarmouth constituency, I too know something about them.

My right hon. Friend the Minister for Local Government told the Broadland authority that, although its settlement was not as good as it might have been—he acknowledged that it was disappointing— The 1989–90 settlement concentrates on provision for key services such as police. This benefits counties rather than districts. Let us hope that Norfolk county council's request for 50 extra policemen will receive a better reception at the Home Office than it has received before, given that—apart from the Thames Valley—it has the lowest number of police officers per thousand members of the population.

The Minister went on: In addition, there have been substantial increases in local authorities' assessed need to spend. Grant is distributed on the basis of common principles and this change benefits areas with higher assessed needs, such as Norwich, to a greater extent than those with lower needs. That is fair enough. My right hon. Friend the Minister believes that the settlement does not deliberately favour high-spending authorities. He says that block grant is distributed on the basis of needs, and high-spending authorities may nevertheless have high needs. I recognise the validity of his point. However, low-spending, rural shire counties also have needs.

The notion that only those who live in major urban conurbations have needs that the Government must recognise and that there is no such thing as rural deprivation can be believed only in Whitehall. It takes a long time to get through to Whitehall. I am surprised that my right hon. Friend the Minister for Local Government has not recognised that. Although he represents a fairly wealthy part of Suffolk, he must know that some rural areas have different needs but still demand Government and local authority attention. Although higher-spending authorities, which often turn out to be Labour-controlled, have higher needs that the Government rightly recognise, those needs should not be met at the expense of lower-spending rural authorities.

I have raised matters referring to a number of districts with which I am not directly involved to illustrate the continued unfair application of the system and to strike the note that I remain to be convinced that next year 1 shall be able to make a different speech from the one I have just made.

Finally, in my constituency of Great Yarmouth, the Conservative party kept the borough council rate at the same level for five years. The reward for the effective management of local affairs by the Conservatives was that in 1987–88 the rate support grant for the current year was cut by 12.13 per cent. I do not expect my right hon. Friend to defend the fact that in 1987–88 a Conservative administration received a cut of 12.13 per cent. Not surprisingly, last May the Conservatives lost control of the council. This year my right hon. Friend the Secretary of State, in the 1989–90 settlement, rewarded them with a 16 per cent. increase in rate support grant. I am grateful to the Government for finally recognising the needs of Great Yarmouth to the extent of increasing the RSG from last year's figure of £2,635 million to £3,059 million for 1989–90. As it has taken a local election and a change of control to bring about that result, I wonder what message my right hon. Friend wants to give the constituents whom I represent. If we win back control in a year's time, will there be a cut in our rate support grant?

I am most grateful to my right hon. Friend for increasing the borough council RSG this year, regardless of what party is in power, because it helps the ratepayers. Unfortunately, although the borough rate is 25p in the pound, the county rate is 190p in the pound. The second lowest-spending county council needs greater support within the RSG settlement than my right hon. Friend has been able to deliver.

6.56 pm

Mr. Tony Banks (Newham, North-West)

I enjoyed the speech of the hon. Member for Great Yarmouth (Mr. Carttiss) in which he defended his local authority. I was glad to hear a Conservative Member defending a local authority that is not controlled by his own party. I only wish that a few other Conservative Members were as ready to defend their Labour-controlled local authorities as the hon. Gentleman has just done. I have heard the hon. Gentleman speak on this subject before. Once again he has underlined the lunacies of Government policy on local authority finance.

Before I talk about the rate support grant settlement as it affects London boroughs, I must say something directly to the Minister. Frankly, I much regretted his personal attack on an elected Lambeth councillor concerning rent arrears. I do not know who that councillor is, and I do not particularly wish to hear the details. The attack was snide and vulgar and it was not fitting for a Minister of the Crown to make such an attack from the Dispatch Box. It is difficult enough being an elected local councillor these days whichever party one represents, but to have one's personal affairs dragged through the House of Commons serves no purpose whatsoever other than to lower the Minister in the eyes of the House, and certainly in the opinion of the Opposition. We could have mentioned the names of Conservative councillors who, for various reasons, have got themselves into difficulties over loans, rate arrears with their local authorities or far more serious matters involving criminal proceedings. However, we consider ourselves to be honourable, and although we could join in that particular dirty little battle, we do not intend to do so. If the Minister wants to call my bluff with regard to names, I shall be happy to speak to him outside and tell him precisely to whom I am referring. It ill behoves Ministers to question the financial probity of other elected representatives. That is a dangerous game which could involve hon. Members.

Mr. Gummer

I am sure that the hon. Gentleman is perfectly justified and right to condemn any personal attack. I repeat that I sought to suggest that it is important for all local councillors to be concerned with collecting rents. When there are very large rent arrears in a number of London boroughs but there are no large rent arrears in many Labour-controlled councils elsewhere, it seems reasonable to ask why the Opposition were not prepared to support my call for leadership by local councillors in making sure that they did not have rent arrears. I noted that the Opposition refused to say that they were opposed to that situation, but I was happy wholly to condemn any improper behaviour of the sort that the hon. Gentleman outlined. That is the difference between the two sides of the House. I condemn such behaviour by either side, but the Opposition refuse to do that.

Mr. Banks

I do not accept that. In principle, of course we agree with the Minister, but the Minister did not leave the matter in general terms. The Minister was very particular. He all but named a councillor. It would not take a great deal of sleuthing around to work out to whom the Minister was referring. He mentioned the position that that councillor held and the particular local authority. The Minister mentioned a particular case. We cannot go along with personal attacks of that nature, although in broad terms of course we agree that councillors should take the lead and ensure that their own positions are beyond reproach. That should also be true for hon. Members, although we know that some hon. Members fall rather short of those standards. It is wrong to use individual cases.

I do not know the personal circumstances of the councillor to whom the Minister referred, nor I suspect does the Minister. It is quite wrong for one to drag an individual's personal affairs through this place unless one possesses the facts, which I do not, and I am damned sure that the Minister does not either. That is why we object so strongly to the Minister's approach.

As chairman of the London group of Labour Members, I have pushed my local authority, the London borough of Newham, in an endeavour to make sure that it does something about the level of rent arrears. We are as enthusiastic to make sure that the affairs of Labour local authorities are well run as the Minister wants us to be. Indeed, we may be more enthusiastic because we do not want the Minister to have at his disposal cheap debating points on occasions such as this.

The problems of inner London boroughs are like those of no other borough in this country. This is the capital city. That makes it different, and the amount of population turnover is a factor which only hon. Members who represent London constituencies can fully appreciate.

London local authorities achieved in the last financial year a welcome reduction in rent arrears. The Minister knows that and he has acknowledged the fact. But all that work was undone at a stroke when the Government changed the regime on housing benefit. By cutting £650 million from housing benefit, about one million people were taken out of the system. It is not surprising now that the most recent survey by the Association of Municipal Authorities showed that the average increase in rent arrears in council properties had gone up by 37.5 per cent. since April. That is the direct responsibility of the Government because of the change in the housing benefit regime and the requirement that everyone shall pay 20 per cent. of the rate.

We are talking about some of the poorest people in Britain. It is not surprising that the incidence of rent arrears within that population is high, and a little more understanding on the part of Conservative Members and a little less willingness to jump in with two boots would be greatly appreciated on that score.

I come to the rate support grant settlement for 1989–90 as we see it affecting Labour local authorities in London. We believe that the RSG settlement shows that the Government have failed to recognise the pressing demands facing local authorities in the capital city and the financial constraints and difficulties that they face, some of which I have mentioned.

The Government's apparent objective of stability in the settlement must be constrasted with the increasingly difficult task confonting London local authorities to provide a satisfactory level of service to some of the most deprived communities in the country. I remind the House that the three most deprived local authority areas in England and Wales happen to be the three East End boroughs of Hackney, Newham and Tower Hamlets.

The Association of London Authorities recognises that the settlement is the result of the Government's desire to close down the present discredited rate support grant system. But responsibility for the unfairness and inadequacies of the system must be laid directly at the door of the Government. Through constant change in the basic rules of the system, the use of grant-related expenditure assessments as prescriptive spending levels rather than as a means to distribute grant, spending targets and rate-capping to control in detail local expenditure decisions, and the withdrawal of huge sums of grant, the Government have attempted to thwart the aspirations of democratically elected local councils to provide good quality, responsive services for the communities they serve.

The settlement fails to take any serious account of the particular difficulties facing many local authorities in London. These include, first, the economic and social problems in inner-city areas resulting from deprivation and poverty; secondly, an infrastructure requiring immense sums for rehabilitation and renewal; thirdly, the difficulties of coping with the consequences of legislation such as poll tax implementation, the transfer of education in inner London, privatisation, housing changes and care in the community; fourthly, the difficulties of recruiting and retaining staff; and, fifthly, the inadequate resources of local authorities following cuts in grant and the use of rate-capping.

The 1989–90 settlement is based on current expenditure by local authorities of £29.14 billion. The Association of London Authorities believes that this level of provision is completely inadequate. Although it sounds, and is, a great deal of money, the Government have claimed—I heard the Minister say it—that it represents an increase of 4.8 per cent. on 1988–89 budgets. But the increase allowed is well below the level of inflation in the economy as a whole and the likely rise in local authority costs.

The best indication of the level of spending required in 1988–90 to maintain services comes from the expenditure working groups, which are composed of civil servants and local authority officials. They suggest that expenditure of about £30.2 billion is necessary, though it should be noted that these estimates were based on inflation forecasts calculated in March 1988.

The expenditure provision in the consultation paper implies cuts of 3.5 per cent. compared with the assessment of the expenditure groups. So the basis of the proposed settlement rests on flawed foundations. Again, those local authorities which are not the subject of rate-capping will face difficult choices between rate increases above inflation or cuts in essential local services.

The level of grant for 1989–90 is also completely inadequate. Although no doubt the Government will present the settlement as resulting in an increase in grant in excess of £1 billion, this is due not to any generosity on the part of the Government but to the decision to close down the rate support grant system, which means an end to grant holdback.

The proposed level of grant represents yet a further cut in the proportion of local spending met by grant—from 46.2 per cent. in the 1988–89 settlement to 43.3 per cent. in this settlement. If the grant proportion had remained at the 1988–89 settlement level, the grant total would be about £897 million higher than the Government propose. Comparisons with the levels of grant which applied in 1978–79 show that the shortfall in 1989–90 will be in excess of £5 billion and that the cumulative shortfall is over £28 billion.

If one wants a reason for the increases in rates that led us to rate-capping, one need only consider the amount of clawback that the Government have imposed on rate support rant settlements. That is the key. One does not have to be a philosopher or even understand the nuts and bolts of local authority finance to realise that. If the Government keep taking money away from local government, that imposes more burdens on local ratepayers if the elected local authority wants to sustain, let alone enhance, the level of services to the local community.

That is where the crisis in local government originated. That crisis was engineered by the Government and, as is often the case, they engineer a crisis and later say that they have the solution—and the solution is to impose draconian financial measures on elected local authorities. That is why we are so annoyed, angry, distrustful and disturbed about the way in which the Government still attack and approach local authorities—as though they were the enemies within. It is about time that the House, including Conservative Members—and there are a few of them—stood up and defended the system of elected local authorities in Britain, instead of continually denigrating authorities and treating them as though they were aliens from outer space with no part to play in the democratic system.

A major concern to the ALA and London local authorities is the Government's decision to continue with rate-capping in 1989–90. Again, London authorities will bear the brunt of rate limitation. Of the eight authorities designated for rate limitation next year, all but one are in London. They are Camden, Greenwich, Hackney, Lewisham, Southwark, Tower Hamlets and the Inner London education authority. The concentration of rate limitation on London authorities is a consequence of the inadequacies of grant-related expenditure assessments for London authorities and a continuing failure by the Government to realise the unique problems of the capital city and of the local authorities in that city.

The Minister must recognise that. I appreciate that he is new to the job. Unfortunately, the Government are continually changing the faces of Department of the Environment Ministers at the Dispatch Box. That enables them and Conservative Members generally to continue to blame somebody else, as did the hon. Member for Great Yarmouth. They say, "I appreciate that this is not the responsibility of the new Minister, because it was begun by the Minister who went before."

The Government keep changing them round. They are like ducks at the fairground. We stand there and they keep coming round and no matter how much we pop them down, more keep popping up. They keep changing the names and trying to transfer the blame, but this is a collective decision and the present Minister is as responsible for the policies that he has inherited as he will be for the mistakes that he will undoubtedly make.

Mr. Gummer

I thank the hon. Gentleman for allowing me to pop up; no doubt he will attempt to shoot me down. I was previously the hon. Member for Lewisham, West and had considerable respect for the idea that he is advancing. Do features of London authorities give credence to what the hon. Gentleman says? Until I considered the matter carefully I did not understand that the problem with most London authorities is that they are unbelieveably more incompetent than most authorities elsewhere. They must become more competent before the hon. Gentleman's suggestion can be taken more seriously. I beg him to try to encourage his friends to run their affairs more sensibly so that those of us who are on their side can find more money for them. Unless the hon. Gentleman is able to do that, more money will not be given to people who cannot run their show properly.

Mr. Banks

The Minister has missed the point about the unique problems of London. I should like to know how close his association with Lewisham has been over the years. One needs to understand the problems of London, which have become worse. The Government's social and economic problems have exacerbated the problems of inner-city areas. The problems of unemployment, social deprivation and others are concentrated in London as in no other area.

I assure the Minister that Labour Members are devoted to the idea of efficient local government—especially efficient Labour-controlled local government. I say to my colleagues who run London authorities that unless we can show that a Socialist-controlled authority is better at running the affairs of the local community we cannot expect people to vote for us; they will vote for the Tory party. I therefore do not need any lessons or encouragement from the Minister. He must accept that we are doing our best, given the scale of the problems.

Mr. Soley

My hon. Friend is right, but the matter must be put into perspective. The Minister and his hon. Friends were making great play of Ealing council. I have done some checking and discovered that Ealing's rates are lower than some Conservative-controlled authorities, including Harrow, Enfield and Barnet. Perhaps the Government should look more carefully at their own efficiency.

Mr. Gummer

That is because of rate-capping.

Mr. Soley

No, it is not because of rate-capping.

Mr. Banks

We must also consider the level and quality of services being provided. Conservative Members are too willing to accept that efficiency equals running down services to the point where, as a charge on revenue, they almost disappear. One must try to balance the optimum level of efficiency of services with a charge acceptable to ratepayers. To demand high rates for the sake of it is ridiculous, but to say that rates have no relationship to the level of services for which they are supposed to pay misses the central argument. The task of local authorities is to provide efficient services for their communities, compatible with a reasonable charge for rates.

The level of rates is largely determined by Government policy. If the Government keep removing rate support grant—they have taken a cumulative £28 billion of rate support grant from local authorities—it is not surprising that in trying to defend and enhance services, Labour-controlled and some Conservative-controlled local authorities have increased rates. We should speak of not only rate levels but the efficiency of services.

Mr. Gummer

This is an important argument, and it is a matter about which the hon. Gentleman and I care very much. My hon. Friend the Member for Ealing, North (Mr. Greenway) said that, although I have significantly increased Ealing council's grant, it wants to increase its rates more than independent people suggest is necessary. I wax loud about Brent because it is so inefficient and because the people who most need its help suffer. We should be concerned about that problem, which is why I want the hon. Gentleman to persuade Brent to be competent. When it is, it will deserve help from all of us.

Mr. Banks

The Minister will receive as much assistance from me as he requires to make local government in London as efficient as possible. I expect him to give sympathetic consideration to the problems of boroughs such as Brent and Lambeth. The racial mix in those boroughs is different from that in the majority of Conservative Members' constituencies. Until the Government understand that, they will not begin to understand the problems of Brent and Lambeth.

I give the Minister an open invitation. I will go with him to Brent and we will sit down with its officers, elected councillors and Labour party local government spokesmen—[Interruption] I am happy to go with my hon. Friend the Member for Hammersmith (Mr. Soley). We shall try to forge a partnership that recognises the problems of Brent and, so far as is possible, the constraints of Government policy to see how we can make progress. We have constantly said that we are prepared to sit down even with the devil—the Secretary of State for the Environment—provided that he will approach the problems of local authorities in London constructively and in a conciliatory fashion and not attack them, as the Minister did in his speech. Conservative Members attack local authorities in London as though they were put there by an alien civilisation. We object to that and it is the reason for much confrontation in local government in London.

There have been many Environment Ministers, but we at the London borough of Newham have always asked whether they would like to come and see how our borough operates. We should be delighted to see the Minister, and we shall listen to him provided he listens to us. That is the prescription for progress in local government.

7.17 pm

Mr. Patrick McLoughlin (Derbyshire, West)

It is always interesting to follow the hon. Member for Newham, North-West (Mr. Banks). I thought that he was on shaky ground because in one part of his speech he was obviously reading verbatim from a prepared text. Had it not been for interventions, his speech would have been much shorter. He is usually one of the wittier speakers, but the prize for that in this debate should go to my hon. Friend the Member for Eastleigh (Sir D. Price).

When debating rates and rate support levels, the argument tends to be polarised on London boroughs, as though everything happens there and there are no bad councils outside London. I can give numerous stories about percentage increases. One of the funniest letters that I received last year was from a parish councillor who demanded that I call on the Secretary of State to rate-cap the parish council because it was about to increase its rate by 100 per cent. I thought that that was a slight exaggeration. The council intended to increase its rates from 1 p to 2p, so I decided not to take the matter any further.

I wish to speak of the Derbyshire Dales district council—which covers the area that I represent—and Derbyshire county council. Last year, the district council and I made representations to my right hon. Friend the Minister about the settlement for Derbyshire Dales district council—and I did so again this year. I am glad to see that in the revised figures we have come off slightly better and that the points made by myself and the district council were eventually taken up by the Minister. We must remember that of the total rate levied in a county the district council levies only a small amount. In Derbyshire, over the past year, the amount has been getting smaller. In 1981–82, the district rate was 11 per cent. of the total rate bill. This year it is 8 per cent. One reason for that is the way in which the county council rate has increased so drastically.

The same is true in another part of my constituency—Amber Valley—which, for the first time, has a Conservative-controlled council. We enjoyed exceptionally good results in this year's local elections in Derbyshire. We won control of Derby city council for the first time in about eight years and we won Amber Valley district council for the first time. That augurs well for the future. I wish to talk about the record of rate rises since the Labour party took control of Derbyshire county council. We should draw some conclusions from this interesting set of figures.

Labour's first rate rise was in 1982–83, with an increase of 25.2 per cent. In 1983–84 it increased the rate by 12.2 per cent. and in 1984.85 it increased by 13.1 per cent. However, in 1985–86 it increased the rate by just 4.8 per cent. Only the most cynical would say that that had anything to do with the fact that the council was standing for election that year. I should not be so cynical as that.

In 1986–87, after the election, the council got back on track and increased the rate by the largest amount ever—25.9 per cent. It increased the rate by 48p to make up for the previous year. In 1987–88 it increased the rate by 12.4 per cent. Last year it increased the rate by 13.5 per cent., which does not sound too bad in the context of Labour authorities. It is not bad if it is 13.5 per cent. of 5p or 6p. However, 13.5 per cent. of 262p means a rate increase for my constituents and all those in Derbyshire of 35.5p in the pound.

Mr. Soley

I wish to help the hon. Member for Derbyshire, West (Mr. McLoughlin) with his argument. During the period of Conservative control in his local authority there was an increase in the rate of 168 per cent. However—this is the interesting point—expenditure rose by only 78 per cent. Does not the hon. Gentleman want to take the Minister to task? His local authority increased expenditure by only 78 per cent. over seven or eight years of both Labour and Conservative control. Yet suddenly he is whacked with this enormous 168 per cent. Increase— most of which came from Conservative, not Labour councils—because of his Minister's rate support grant distribution.

Mr. McLoughlin

I am interested in what the hon. Member for Hammersmith (Mr. Soley) has to say. I am surprised that he has come armed with facts about Derbyshire county council. Perhaps he feels vulnerable. I shall deal with the point that he raised.

Since the Labour party has controlled the council—it set its first budget in 1982—we have seen an increase of 186.5p in the rate, that is, 168 per cent. Derbyshire county council is now the highest-rated county in the country, in figures only. Not many people who live in Derbyshire consider the council to be number one. It is important to put that into context. Why have Derbyshire's rates increased by so much? We should look at neighbouring local authorities. I know a little about Staffordshire because I served for some time on Staffordshire county council. The Conservatives on Staffordshire county council want to make a few changes when they win the election in May. In 1981 Staffordshire and Derbyshire were controlled by the Conservatives. Staffordshire has a population of just over 1 million and an area of 271,000 hectares. Derbyshire has a population of 916,000 and an area of 263,000 hectares. They both have cities—Derby and Stoke-on-Trent—so they make good comparisons. They also appear together in the Audit Commission cluster.

In 1981–82 Derbyshire county council's rate was 111p and Staffordshire county council's rate was 112.5p. Staffordshire county council's rate today is 215p, yet Derbyshire county council's rate is a staggering 297p.

Mr. Soley

rose—

Mr. McLoughlin

I must get on because there is much that I want to say. I am sure that the hon. Gentleman will have a chance to make further points later.

One of the difficulties of the present system is that it is difficult to explain to people how the figures reflect the money in their pocket. For the average house in Derbyshire with a rateable value of £150 the rates I would be £446.25. In Staffordshire the rates for a similar house would be £325.50-a difference of £120.75. A house with a rateable value of £200 would have to pay rates of £595 in Derbyshire and £430 in Staffordshire—a difference of £160 or £3 a week. I am a little fed up with the Labour party telling me about the poor, the neglected and those who cannot cope when it continues to support local authorities which levy high rates and have high spending.

Mr. Bernie Grant (Tottenham)

rose—

Mr. McLoughlin

I must make some progress.

In 1981–82 Derbyshire was 30th out of 39 shire counties in its rate level. Today it is first. It levies the highest rates in the country.

Mr. Grant

Does the hon. Gentleman know the amount of rate support grant withheld from Derbyshire and Staffordshire by the Government? We want to get the figures right.

Mr. McLoughlin

Perhaps my right hon. Friend the Minister will help on that. The Labour party might complain about the way in which local authorities have been treated, but they have all been treated in the same way. If that is not so, perhaps my right hon. Friend the Minister will tell me whether a special Act of Parliament has been rushed through without anyone knowing about it. It would probably he called the Rate Support Grant (Derbyshire) Act, but I do not know of such an Act. I have checked with the Library and I understand that Derbyshire county council has been treated in the same way as every other county council in the country. If the hon. Member for Hammersmith is saying that it has been treated unfairly, the same must apply to every other county council.

Mr. Gummer

My hon. Friend is making perfectly reasonable comparisons. He is doing precisely what he has been asked to do. He is being polite about some of the marginally better Labour councils and comparing them with his council, which is one of the worst. He has the disadvantage of seeing all that is bad about Labour councils within his own council. It ill behoves the hon. Member for Tottenham (Mr. Grant) to interrupt my hon. Friend when he is merely comparing Derbyshire with other councils, all of which have been subject to the same system. The difficulty with the present system is that the Government cannot say, "We will do a little better with that council because it is a good council". One cannot make such distinctions. Mr. Bookbinder in Derbyshire runs a thoroughly bad council.

Mr. McLoughlin

I am grateful to my right hon. Friend.

Mr. Bernie Grant

rose—

Mr. McLoughlin

I have given way enough. The hon. Gentleman has not been in the debate for long.

My right hon. Friend referred in his opening speech to a survey that the county council carried out about libraries. I wanted to look at the county council's record on the library service, so I turned to the public library statistics in the County Councils Gazette, which was published last October. It provided several interesting facts. In Derbyshire, it was estimated that there were 1,769,371 books on 1 April 1988. It cost £8,647 per 1,000 people in Derbyshire to administer that service. Staffordshire county council has 2,743,906 books, yet it cost £6,413 per 1,000 people to administer the service. In other words, it cost £2,000 more to administer 30 per cent. fewer books. The hon. Member for Newham, North-West talked about efficiency in local authorities and said that he wanted to see efficiency. Is it efficient that it costs £2,000 more per 1,000 of population to administer 30 per cent. fewer books? That kind of efficiency is lost on me and on my hon. Friends.

Mr. Pat Wall (Bradford, North)

Will the hon. Gentleman give way?

Mr. McLoughlin

No, I will not give way. I took my figures, as I have said, from theCounty Councils Gazette in 1988.

I wish to make another comparison. On 7 November, my hon. Friend the Parliamentary Under-Secretary of State answered a question about the number of people employed by county councils. In 1979, Derbyshire employed 35,835 people. In 1988, it employed 44,145 people—an increase of 8,310, so that the hon. Member for Hammersmith can get it right. Why has Derbyshire had the highest increase in staff in the country? I shall be fair and take the example of Durham. Are all Labour councils like Derbyshire county council or have we a special council? I would not mind if Labour Members said that Derbyshire was a one-off. However, in Durham 24,807 people were employed in 1977; in 1988, the figure was 23,927. That shows that even Labour-controlled councils can reduce their staff. I must give them the credit that some of them reduce their staff—unless one happens to be in Derbyshire.

Mr. Soley

Will the hon. Gentleman give way?

Mr. McLoughlin

No, I will not.

I should have thought that I had given an ideal opportunity for a Labour Front Bench spokesman to say that Derbyshire is a bit special and not wholeheartedly supported by the Labour party, but I suppose that that would be difficult. I live in Matlock, in my constituency, and in my local press last week there was an article about a letter from the Leader of the Opposition. He sent greetings and messages to Derbyshire and, in a letter to council leader David Bookbinder, he praised the authority's performance. Councillor Bookbinder went on to say: We believe this County Council enjoys an enviable reputation—efficiency has never been greater and our service delivery has never been more effective. We are committed to provide a wide range of quality services to those who need them most and it's nice to know our efforts have been recognised in Westminster. I do not know about recognising their efforts and I am not sure that there was not an ulterior motive in the right hon. Gentleman's comments.

Derbyshire county council has a bit of a reputation for looking after failed Labour Members of Parliament. I have read recently about the Leader of the Opposition's lunch with John Mortimer. One may read shortly that the right hon. Gentleman is looking for a job. He could look in Derbyshire and perhaps that is why he wrote the letter. It may have been a soft soap insurance policy for the future. At the beginning of last year, Derbyshire county council employed a certain Reg Race, whose only qualification was that he had once been a Labour Member of Parliament and a publicity officer for the National Union of Public Employees. He was appointed not as a publicity officer, but as a chief executive or county clerk of the county council at a salary of about £46,000.

Mr. Tony Banks

I must tell the hon. Gentleman to have a care. Reg Race worked for me when I was chair of the Greater London council. I would not tolerate an inefficient local authority officer working for me. Derbyshire county council had a good bargain in Reg Race and it was foolish to get rid of him.

Mr. McLoughlin

I am extremely grateful to the hon. Gentleman for making that point and I might even believe what he said. Perhaps he wants efficient local authorities and that is why he employed Mr. Race. I do not know what the qualifications of Mr. Race are, but perhaps the hon. Gentleman for Newham, North-West could tell me why Derbyshire county council sacked Mr. Race after nine months. Was it because he was being too efficient? Was it because he was doing what the hon. Member for Newham, North-West wanted? I have no idea, but I also have no idea how much it cost for that nine months' youth training programme to get under way and how much it cost the ratepayers of Derbyshire to get rid of Mr. Race. I do not know how much subsistence and travel to Derbyshire cost or how much it cost for his travel away from Derbyshire. That information has been singularly lacking from the county council. A mist of secrecy has built up around the whole scenario. Mr. Race came out of a puff of smoke and went in a puff of smoke. He was appointed on 23 December 1987 to take up an appointment on 1 January 1988. I said at the time that that was indecent haste and I was criticised for that. It is fairly quick for somebody to take up such a post in four days. I would not say again that it was indecent haste, but flaming well quick and there are several questions to be answered.

I know that a large number of hon. Members want to speak in the debate, so I shall not go through all the other reasons why we have high rates. However, I shall go through some of the county council's other actions. The council supports nuclear-free zones. That is fair enough and a number of Labour councils do that. But I object—and find it most repugnant—that school notepayer is taken back from schools to the county council to be overprinted with the words: Derbyshire supports Nuclear Free Zones. I know that the parents find it repugnant as well.

The county council recently gave student miners £1,500 for a jaunt to the European Parliament and the European Bank in Luxembourg. It also held a conference to look into the needs of black women, which cost £1,000. Under the libraries' multicultural fund, the council at present spends £50,000 per year on mother tongue printed material and English language books.

Mr. Soley

What is wrong with that?

Mr. McLoughlin

The hon. Gentleman asks whether that is all.

Mr. Soley

No. I asked what was wrong with that.

Mr. McLoughlin

Derbyshire county council approved the spending of £50,000 in July 1988 for a civil rights campaign organised by that famous organisation, the National Council for Civil Liberties. It spends money on political opinion polls and incurred expenses of £3,000 on a readership survey for Insight, the county council's magazine. Last year, the council staged its own May day celebrations at a cost of £5,000 and also gave £500 to help the Trades Union Congress to organise a May day event. It set aside £15,000 for a May day event in the American adventure theme park. The chairman of the county council's public protection committee attended a week-long conference in Athens entitled the "Acropolis Appeal for Peace and Life and Civilisation" and described as A conference of mayors and delegates from nuclear-free cities and zones. The councillor's travelling expenses, costs and attendance allowance were all paid.

Then there is the competitive tendering panel. Derbyshire county council set up a special panel to combat the effects of competitive tendering, which in June 1988 voted itself an initial budget of £300,000 to be spent in recruiting staff who specialise in tendering. I can tell the House about the effects of competitive tendering—they are awful. Amber Valley district council has done a wicked thing in Derbyshire—it has saved ratepayers £2 million by competitive tendering. No wonder the county council wants to spend money on the panel.

Derbyshire county council proposes to expand its equal opportunities and race relations department. Prior to that expansion, the department had a staff of 32 and cost £500,000 per year to run. Hon. Members may ask, "What is wrong with equal opportunities?" I do not mind people talking about equal opportunities, but I wish that they would act on what they say. Why is there not one woman committee chairman on Derbyshire county council? It seems that Derbyshire is happy to tell people how to behave but not to follow its own advice. What about the race relations department? I have not been monitoring closely the Labour candidates for the forthcoming county council elections, but I have not heard that any Labour candidate from the ethnic minorities is standing in Chesterfield, Bolsover, High Peak or West Derbyshire. The county council asks everybody else in the county to do a good job while setting a pathetic example itself.

Hon. Members may yawn, but I can tell them that my constituents yawn when they get their rate bills. Under the present system, ratepayers cannot see what council spending means to them. The sooner they can see that more easily, the better. I congratulate my right hon. Friend the Minister for Local Government on his enviable position as the last Minister to introduce a settlement under the present rate support system. Next year we shall have a far better system which will allow representation throughout the county and under which people will pay for the services that they desire. I hope that we in Derbyshire do not have to tolerate the present level of rates for much longer and I hope that we soon have a change in the county council. We shall then show that it is quite possible to reduce the rates while still providing the services that people in the county want.

7.43 pm

Mr. Derek Fatchett (Leeds, Central)

Last year I spent many long hours in the Standing Committee on the Education Reform Bill with the hon. Member for Derbyshire, West (Mr. McLoughlin). Thankfully he was then playing what I suspect many would regard as his proper role. He was Parliamentary Private Secretary to the Minister of State and therefore kept silent for the 200 hours. His speech tonight was predictable. I suspect that it is the speech that he has trailed up and down the valleys of Derbyshire in search of a reference in some local newspaper. Sadly, he gave the game away and told us a lot about himself and about the values of the Conservative party. One of the items of expenditure that he criticised was the translation of textbooks into mother tongues. In criticising that, he showed that he had no concern to extend opportunities in education or to improve standards and give passports to life to all our children. His comment told us the truth about the Conservative party.

There is a fundamental characteristic of all our debates on these matters. The hon. Member for Derbyshire, West told us that the system works in the same way for every local authority. It simply does not. That is why the hon. Members for Great Yarmouth (Mr. Carttiss) and for Eastleigh (Sir D. Price) have spoken on behalf of their constituents, saying that the system does not work and that they face an injustice. If the system worked in the same way for every authority, the hon. Friends of the hon. Member for Derbyshire, West would not have made those speeches.

Mr. McLoughlin

Will the hon. Gentleman give way?

Mr. Fatchett

No. The hon. Gentleman made a long speech. That inconsistency is characteristic of the system and the way in which it is worked and I hope that those Conservative Members who have raised their voices against the injustices of the system will join Labour Members in the Lobby.

Another characteristic that is typical of all our debates is the performance of the SLD. That party's spokesman is not with us at present and I do not criticise him for that, but his speech disappointed me and worried me greatly. His behaviour was typical. He said, "Yes, we are in favour of some things, no, we are against others." The essential political word from the SLD is "maybe". They say, "Maybe we believe it, and maybe we do not". I am amazed that the centre parties could ever find it possible to fall out over a principle, as it is impossible to detect a principle in anything that their members say in this place or elsewhere.

I have a soft spot for the hon. Member for Truro (Mr. Taylor). On the day when the hon. Gentleman was elected to the House I was in Truro for the "Newsnight" election special and I remember proudly announcing that it was the best by-election result for the Labour party in the 1983–1987 Parliament although admittedly we started from a very low base. During the election special the BBC allowed a phone-in—with all its usual sense of objectivity. The first call was from a Mrs. Rosie Barnes, housewife, of Greenwich. Even I did not believe that the BBC could be quite that inefficient. Then we had the moment of triumph when the newly elected hon. Member for Greenwich (Mrs. Barnes) came on screen to talk sweet words to the hon. Member for Truro in front of millions of viewers. I am sure that the House will understand how sad I felt when I discovered some 18 months later that they no longer speak to each other—perhaps not over a principle but over a personality.

The rate support grant settlement is bad news for the ratepayers and residents of Leeds, just as it is bad news for ratepayers everywhere. I base that assertion on one simple criterion. The rate support grant settlement is based on an inflation figure that takes no account of the Chancellor's foolishness and irresponsibility. The Chancellor is pushing up inflation, and as he does so, he pushes up rate bills and cuts services. Ratepayers everywhere will want to know the answer to the question posed by my hon. Friend the Member for Hammersmith (Mr. Soley). Will ratepayers have to meet the cost of the foolishness and stupidity of the Chancellor? Will they have to pay more simply because the Department of the Environment has not been able to budget to take account of that? Ratepayers will suffer also, especially in Leeds, because of the nature of the settlement.

Leeds is an authority which could never be criticised for inefficiency or its failure to deliver services. However, that authority—which occasionally has even been praised at the Dispatch Box by Government Ministers—is about to lose in this settlement £7.3 million. What justice is there in that? The Minister will say that part of that loss is due to the nationalisation of Leeds polytechnic. A Tory Government has introduced a measure of nationalisation which will take that institution out of local control. The Minister will know, however, that the loss of Leeds polytechnic does not account for the £7.3 million cut in Leeds' grant. Leeds' record over the years will stand comparison with that of any other authority; yet it is now to be penalised. Leeds' spending has never exceeded Government targets or GRE levels. Leeds' rates are the fifth lowest in the country for a metropolitan district. Leeds' grant percentage, however, has been reduced every year since 1980–81. Leeds has delivered in Government terms, but the Government have reneged on their commitment and promise to the ratepayers and those who want to use the services provided by Leeds city council.

Crucial questions need to be answered by the Minister. For instance, why does Leeds lose nearly £8 million, yet on the same settlement Bradford gains £5 million? I am not criticising that, because I believe money should be spent on the people in Bradford. My hon. Friend the Member for Bradford, North (Mr. Wall) is in the House. I saw recently the results of some of the cruel decisions which have been taken by Bradford Conservative council. It decided to close a unit with a national reputation for special education. That is Conservatism in Bradford. It decided to increase the price of school meals, which means that 9,000 youngsters are missing out on a crucial meal. The Minister may nod and grimace at that thought, but she should talk to those children and to their parents and discover what Conservatism in Bradford is doing to those children.

I do not criticise money going to Bradford, but the Minister must tell me why that money should go to Bradford and Leeds should lose out. In a reply to my hon. Friend the Member for Leeds, West (Mr. Battle), the Minister gave predictions for Leeds' rates. Leeds city council has not been extravagant, inefficient or profligate, but, as a result of this Minister's settlement, the Government are taking money from the ratepayer of Leeds.

My hon. Friend the Member for Leeds, West asked what would happen if the city's council's expenditure for 1989–90 was in line with the GRE predictions. The hon. Lady replied that on that basis the rate increase for Leeds would be 12 per cent. The Government have built into their model a prediction of a 12 per cent. rate increase for Leeds. That increase has nothing to do with Leeds' expenditure, because Leeds has expended at the level calculated by the Government. Why, therefore, a rate increase of 12 per cent.? The simple fact is that the Government are punishing the ratepayers of Leeds. The Minister may reply that Leeds city council could cut its expenditure and therefore stop the rates going up. [HON. MEMBERS: "Why have GRE?"] If hon. Gentlemen would be quiet for a moment, they might find out something about local government. Leeds has never spent above its GRE levels. Why, therefore, should Leeds cut its services in education, housing and social services? I want services in Leeds for my constituents.

I have heard during the debate that this is the last year of the rate support grant settlement. Over the hill, however, will come a new dawn, a new tomorrow and a new utopia called poll tax. That new utopia will not be heralded in with great enthusiasm in Leeds, because people have studied the figures. The city council has produced its figures. In Leeds, 33 wards make up the metropolitan district. On the Chartered Institute of Public Finance and Accountancy figures, in 29 of those wards there will be more losers than gainers. In only four wards will there be gainers, and, not surprisingly, those wards are in the richest and most affluent areas of the city. If I break those figures down to individuals in Leeds, the fact is that 75 per cent. will lose out because of the introduction of the poll tax. There will be no new dawn and no new tomorrow. Leeds has been asked to pay this year and will be asked to pay again and again in subsequent years. There will be no justice, no equity and no fairness. I ask the Minister for some justice, some fairness and some hope for the Leeds' ratepayers.

I understand that the Minister has agreed to meet an all-party delegation from Leeds. I wish that some of those Conservative Members who represent the city could have joined in this debate and made their voices heard. They are conspicuous by their absence. When that all-party delegation meets the Minister, we want to be in a position to negotiate. We do not want a closed door. We want to be able to put the case for the city and we want some movement from the Government.

Local government is important. It is important to the balance and the control over power in our society. Too much power has gone to the centre. Much more needs to go back to local people so that local people can make their decisions. We cannot do that until we have a change of Government. We cannot do that until we have a system of local government finance that is efficient and fair. We will get no such system from this Government, because they believe in making the burdens on local government and the tax and rate payers much more difficult and onerous. That is why I shall be voting against this settlement.

7.57 pm

Mr. Iain Mills (Meriden)

I am in some difficulties tonight and, before making a brief contribution, I should like to ask my hon. Friend the Under-Secretary to advise the Minister of State that Solihull council and I are most grateful for his reasoned, sympathetic and extremely kind attention to our affairs. He not only saw us separately on 26 October, but also saw a delegation which was present in the House earlier. We understand the difficulties facing him.

In thanking him, however, for his reasonableness and for listening to us, we are still adamant—and absolutely adamantine—in our dissatisfaction with the effect of the rate support grant on Solihull council. This is not a matter of personal criticism of Ministers. I have heard tonight much cheap politicking and the blaming of the Conservative Government. Hon. Members should look carefully at the origins of the redistributive effects within this legislation that allows for the rate support grant.—[Interruption.] If hon. Members care to listen—of course they may not—it goes back to the days of Sir Winston Churchill. They therefore must not make cheap points.

Mr. Battle

Will the hon. Gentleman give way?

Mr. Mills

No, I shall not give way. I have been asked to be brief, and, quite honestly, other hon. Members have been lengthy. I cannot give way if I am to keep my contribution to 10 minutes.

The redistributive effects go back to the early post-war years.

I am here not to argue with hon. Members but to put the point of view of Solihull council and of my constituents who live in its area. The system has been extremely unfair to those residents. In saying that, I am joined by my hon. Friend the Member for Solihull (Mr. Taylor), my constituency neighbour with whom I work closely. I know that he has worked hard behind the scenes in the same direction as I have to try to persuade the Government to alter the system to benefit our constituents. I have received letters from many people in my constituency—from Conservative branches, from my Conservative political centre, from individuals, from councillors and from the council itself. Some of those councillors travelled today at short notice to be here for the debate, and no doubt the exciting arguments heard in the course of it will sustain them in their journey home by InterCity.

It is unlikely that I can support this measure, and not in the sense that I am a disloyal Conservative—I sometimes think that the Prime Minister should be grateful that she shares my views on so many subjects—but on this matter I must show my loyalty to my constituents and to one of the most successful councils in the country. It is not a bad council; nor is it inefficient or lacking in cost-effectiveness. It is the most efficient and the most supportive of the Conservative Government. It was the first to introduce a city technology college, of which we are proud. The council is innovative, successful, and by its very effectiveness has been caught on the sharp point of the redistributive effect of the rate support grant.

The council has kept rate increases down for a couple of years, and houses, factories and commercial developments have been attracted to the area. Partly as a result of that success, the rate base has increased. The system works in such a way that if a council attracts these good developments, it receives less from the Government.

So its very success is bitter aloes to the council. Its efficiency has generated less money and could result in a rate increase for my constituents and for those of my hon. Friend the Member for Solihull of 17 per cent., 18 per cent. or 20 per cent.—not because of the council, but because it is one of the few—it is perhaps the only one—metropolitan boroughs to receive less from Government, and in real terms, allowing for inflation, the council has lost more millions.

The council has been the leader in implementing, a number of education policies. Where houses are built, schools must be built too. A new school costs £330,000, not an inconsiderable sum, and it is not allowed for under the rate support grant. The council has been a leader in implementing social service policies to look after disadvantaged people. It was said earlier that Solihull seemed to be a rich borough. I ask hon. Members who may believe that to remember, when travelling up the M6 between Coventry and Birmingham and passing dozens of high-rise flats, that they are part of Chelmsley Wood council housing estate, which is operated by Solihull council. It comprises 18,000 dwellings in which live many socially deprived people, many elderly people and many single parents—nice people who need expenditure to meet their needs. It is a cause of sadness to me and the council that such expenditure is not reflected in the rate support grant.

More bitter aloes are discovered in the fact that, because people are attracted to leave the cities and move out to villages where they build houses, thereby eroding the green belt—I am afraid that the target is about 2,000 more houses in the Solihull green belt—that in turn creates yet more demands on the council. It is extraordinary that Birmingham should have done so well out of the rate support grant, considering that the outflow from Birmingham and from Coventry, which has also done well, has created part of the problem that we must cope with.

Birmingham has gained magnificently—it is rate-capped. I am sure it will thrill Oppposition Members to know that the only council in the west midlands to lose is also the only Conservative-controlled council. To judge from their silence, Opposition Members can apparently understand the passion of my feelings.

In my 10 years in this House I have never voted against a Government measure, but I shall consider doing so this evening. That is sad, but I would not be doing justice to my constituents or to the council that runs their affairs if I did not make a demonstration of the strength of their views.

I have slightly exceeded my time and I conclude by reminding the House that this is not a transient matter. I alone, or with my hon. Friend the Member for Solihull, have led delegations to see three Secretaries of State, three Ministers of State and three Under-Secretaries of State. We have always been promised that the system would be changed. It operates to the disadvantage of Solihull.

I see that my right hon. Friend the Minister for Local Government has returned to the Chamber. I thank him again for his kindness in meeting the council. Our hon. Friend the Under-Secretary will tell him that I have been extremely critical of the system, but my right hon. Friend the Minister's interest in our affairs has never been lacking.

Will the community charge benefit Solihull? Because of the transitional period, which I opposed, it will add £75 to what will eventually be a much more successful system and a fairer charge for the residents of my constituency and of Solihull. It has long been needed.

Had the present system continued, Solihull would have continued to receive less and less benefit and to suffer higher and higher rates for the worst possible reasons. Let us change the system. If, at the last minute, my right hon. Friend the Minister of State could find it in his budget—because of falling school rolls, or the RSG or anything else—to make the system fairer, my constituents and the residents of Solihull would be grateful.

8.8 pm

Mr. Dennis Turner (Wolverhampton, South-East)

We should congratulate the hon. Member for Meriden (Mr. Mills) on his robust defence of his local authority, which faces difficulties because of this measure. Even though he considers that other authorities in the west midlands get a fairer distribution of rate support grant, he may be assured that other local authorities, including my own—Wolverhampton—will at this very moment be making painful cuts in their budgets to reach levels of expenditure and of rate increases that will be acceptable to the people of Wolverhampton. We must not under-estimate the difficult decisions that Birmingham, Walsall and Sandwell will have to make.

There is no point in the Minister coming at this eleventh hour to tell us about the end of the rate support grant formula and that, as an hon. Member said, we are moving into the unknown. The move to the poll tax or community charge—whichever we call it—is the wrong way to go from this iniquitous form of rate support grant that we are debating.

It is the Government's fault that we are in these difficulties. They do not date from 1988 or even from 1983–84. They go back to the advent of this Government. We all remember the changes made in 1979, and we remember successive Secretaries of State tampering with the system of rate support grant. They always reduced the level of rate support and at the same time introduced targets and grant-related expenditure assessments, holdbacks and clawbacks. All of us in local government in the early 1980s remember all the legislation passing through the House. Some Conservative Members know that I am speaking the truth when I say that the kind of legislation that we got year after year has brought us to our present position.

The problems that have been brought upon local government—uncertainties and difficulties in planning—are due to the failure of the Government from the outset to tackle local government and to deal with its finances and the planning that is necessary. Such a process would have achieved better services for the people that local government represents.

Three months ago, in a debate on the rate support grant settlement, we said that three crucial matters needed the Government's attention. One was the provision for current expenditure in 1988–89. We said that the expenditure level set by the Government was substantially lower than that which was likely. At that time, the Association of Metropolitan Authorities estimated that the amount required was about £1 billion. We also said that estimates of inflation were far too optimistic, and that has proved to be correct. We said that, even at that stage, pay awards were running at 3 per cent. above the Government's forecast. We asked for interest rates to be reconsidered because of the impact that they would have on local government expenditure in 1988–89 and 1989–90.

The Government's bold and exciting claim of a £1.1 billion, or 9 per cent., increase for 1989–90 was misleading. We told the Minister that £500 million would be returned to the Treasury because final grant entitlement for 1988–89 and for earlier years was based on estimates rather than on final audited figures. Those matters were raised in the debate three months ago and have not been adequately reflected in this final settlement.

For months the Minister has been trying in a subtle way to send out from the House the message that this rate support grant formula is inadequate, imperfect and complicated. We have known for years that it is totally unacceptable, but now the Government are introducing the poll tax and they try to give the people the feeling that they readily recognise all the imperfections, the rate increases and the problems that authorities such as Solihull have to place on their ratepayers. The Government give the impression that these problems are the result of some mysterious formula with which the Government cannot cope. The Government say, "Let us accept that, put it away and ride into the new dawn with the poll tax."

The people know that the poll tax will be worse and less fair. It is an iniquitous tax, and when the people get the opportunity in the coming council elections they will show the Conservative party and the Government what they think of the poll tax and of the way that the Government have treated local government.

8.16 pm

Mr. Jacques Arnold (Gravesham)

I have been in the House since the debate started and I have listened with some fascination to the speeches by Front Bench Members who seem to have achieved an inversion of political mythology. The hon. Member for Hammersmith (Mr. Soley) made a great virtue of the last Labour Government's attempt to restrain local government spending. They had to, because they had got our economy into such a mess.

The Minister explained how our Government had significantly increased the spending by local government, not least through the rate support grant. It is significant to note an increase in the rate support grant of 8.6 per cent. which is above inflation. That is another £1,100 million to be spent by local government. So much for the hysterical weeping by the Opposition.

I have spent much of the debate puzzling over this extraordinary document which seems to use algebra to explain how the rate support grant is calculated. That was well caricatured by my hon. Friend the Member for Eastleigh (Sir D. Price). One of the virtues of the community charge is that it will simplify this agonising mess that passes for local government finance. With minor exceptions, all adults will pay an equal amount and because of the social conscience of Parliament and people there will be generous rebates for 9 million community charge payers, those who are least able to pay.

I noted what Ministers said about subsidies and the effect of transfer of resources from one local government area to another. Those of us in Gravesham and in Kent generally know full well about this transfer of resources from our areas to badly run Labour cities. In my borough of Gravesham the average rate bill is £404. It is interesting to compare what would have been the community charge this year with that average rate bill.

The estimated community charge in Gravesham would have been £180. A little mathematics shows that those families with only two adults stand to gain. Households would lose out only when there was an average of well over two adults. A two-parent family will make a marginal gain in their bill and one-adult families, such as single-parent families and the widowed elderly, will gain substantially from the community charge. That £180 community charge that would have been levied in Gravesham compares favourably, thanks to the effective and efficient working of Kent county council and Gravesham borough council, even with Conservative authorities that would this year have levied an average charge of £196.40.

Earlier, the hon. Member for Workington (Mr. Campbell-Savours) called for a debate on Kent. He claimed that it was sad that no Kent constituency returned a Labour Member and that people in Kent were crying out for Labour Members. They would not cry out for them if they realised that, this year, the average Labour authority would have levied a community charge of £294.40. That is almost £100 extra per adult man and woman in Labour authorities compared with Conservative authorities. There is no doubt on which side the bread is buttered for the average community charge payer of the future.

Nevertheless, problems remain for this year, which is the last year of the rate support grant system, because the system places undue reliance on the numbers estimated by the registrar general. The dangers can be exemplified by the position in Gravesham where the registrar general tells us that, in the present financial year, he estimates the population to be 92,988 and that next year it will decrease to 91,692. That calculation appears to fly in the face of all other available statistics. For instance, the Audit Commission reports in its profile for 1988–89 that the birth rate in Gravesham is 13.7 per thousand of the population when the national average for a cluster family is 12.9. That would indicate an increase in the population, not a decrease. The report goes on to state that the standard fertility ratio in Gravesham is 107 compared with a national average of 96. Again, that indicates that the population is rising.

The death rate in Gravesham is 9.6 per cent. per thousand, below the national average of 9.7. Fortunately, fewer of our elderly people are departing, thus keeping the population higher. The standard mortality rate is 92 compared with a national average of 96. All of those figures show that the population of Gravesham is not decreasing and, therefore, the rate support grant should not be restricted as it is being this year.

Our electorates are steady. We should also consider the new dwelling figures in various boroughs in Kent. In Gravesham, there were 350 new dwellings but the commission suggests a population reduction of 1,300. There are fewer new dwellings in the borough of Ashford, only 300, but, nevertheless, the registrar general suggests a rise in the population of 1,500. There are 240 new dwellings in the borough of Tunbridge Wells, yet the registrar general reports a rise in the population of 608. How can it be that Gravesham, with the highest growth in new dwellings, should record a decrease in the population?

The result is significant. The financial effect on the borough of Gravesham's rate support grant is significant, particularly the effect on its rate precept. If the borough's spending were to stand still, the borough council would have to ask the ratepayers for a 15 per cent. increase in their precept. That calculation appears to accentuate the likelihood of the registrar general's figures being wrong and, consequently, that the rate support grant for the borough of Gravesham is wrong.

All the hon. Members who have spoken this evening have shown that the current system does not work. We must welcome the Government's decision to throw out the rate support grant system. When my right hon. Friend the Minister goes out to bury the system, I shall happily wield the shovel.

8.26 pm

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

The hon. Member for Derbyshire, West (Mr. McLoughlin) suggested that there should be uniformity and that a fair formula should be fixed across the board for all authorities. I could not disagree more.

When I first learned that the hon. Gentleman was an ex-miner, I had a natural affection for him. Over the years, I have looked for any signs of his being an ex-miner. I have chatted with him from time to time and looked for blue marks, but I have not found any. Tonight, however—with the greatest respect—he has proved that he is no miner or, at least, that he has not been in the mining industry long enough. If he had been in the industry for a long time, he would have been taught by the old miners, especially if he had worked in the Yorkshire mines. They would have said to him, "Ee lad, tha only spakes when tha's summat t' say." Some of his remarks tonight were not called for and had nothing to do with the debate.

Mr. McLoughlin

My blue marks are quite substantial. I have 10,500; that is my majority in Derbyshire. A number of people tried to change my mind in the Staffordshire coalfields, perhaps not as effectively as they might have done in the Yorkshire coalfields.

Mr. Lofthouse

When the hon. Gentleman has as many blue marks as I have, he will have a majority of 22,500.

I have heard a great deal tonight about efficiency and competence. I wish to direct my remarks to the subject of Wakefield metropolitan district council. The Minister will agree that Wakefield has always been acknowledged as a competent and efficient council. It must have been because, two years ago, the Government knighted the leader of the time. They had previously knighted the deputy leader, so I should have thought that the Government would concede that the council was a responsible and well-run authority.

It is rather strange, therefore, that last year the Government grant was 41.8 per cent., but, for the coming year, it will be cut to 38.6 per cent. That is a 7.6 per cent. reduction. If we take inflation at 6.7 per cent., the rates for the authority should increase by 14 per cent. The Minister has said that the rate increase should be about 2 per cent. but how can the authority approach that mark without a slashing cut in services? If an authority is efficient and there is a cut in grant, something will have to suffer. As Wakefield is a responsible authority it has decided to increase its rate by 9.48 per cent. when the figure should be 14 per cent.

Mr. Gummer

I do not quite understand what the hon. Gentleman is saying. The increase in grant to Wakefield is £2,233,000 and the estimated increase in general rate necessary for Wakefield if it spent at assessment should be 2 per cent. I wonder why the figure must be 14 per cent. With such an increase in grant, it should not be 14 per cent.

Mr. Lofthouse

I itemised the figures and explained earlier why it was 14 per cent. If the Minister cannot follow me, I will try again. The reduction in grant is equivalent to 7.6 per cent. If we take inflation at 6.4 per cent. into consideration, and if my mathematics have not deserted me, that makes 14 per cent. That was the increase that Wakefield required to stand still. I hope that the Minister has followed me.—[Interruption.]

Madam Deputy Speaker (Miss Betty Boothroyd)

Please carry on.

Mr. Lofthouse

If Wakefield's rate support grant was the same as last year, there should have been a further £5 million.

Perhaps we should compare Wakefield's grant with the grant received by Bradford. Bradford has received an increase of around £23 million if we consider the three years prior to this year's allocation. I hope that the Minister will advise me if I am wrong. When Bradford was Labour-controlled for three consecutive years, it requested the Government to release the council from rate capping. It is rather ironic and interesting to note that, immediately the Conservatives gained control of the council, the grant was increased to the figure to which I have referred. Many people will not need to gaze too long into a crystal ball before they realise what has happened. Wakefield has lost £5 million.

Mr. Gummer

I am genuinely surprised. I believe that the hon. Gentleman's figures do not face the fact that we have taken the payment for the polytechnics out of the equation. If he considers the figures with that balance in mind, he will see that 14 per cent. is wrong and 2 per cent. is right. It is a question of how the hon. Gentleman looks at the figures.

I have just checked the figures. The hon. Gentleman will recall that the effect of removing the benefit cap from Bradford has also been felt by authorities such as Derbyshire and Birmingham. Neither of those authorities is in the same category as Bradford. The hon. Gentleman is the first person to suggest that there is any connection between a council's political views and the change in funding. We were pressed very hard, particularly by Birmingham, to make changes and I believe that it has been widely welcomed. I hope that the hon. Gentleman would not suggest that the change was made after a change in control on the council. I do not want to play party politics with that, although I am quite prepared to have a good party political row if I want one.

Mr. Lofthouse

Some people may believe the Minister, but we will let people outside this place decide for themselves.

Mr. Soley

Perhaps I can help my hon. Friend. Perhaps my hon. Friend's local authority is taking account of a more realistic rate of inflation, closer to 7 or 8 per cent., than the Minister's figure of 4 per cent. Perhaps the authority is taking into account the additional cost of the poll tax, over and above the Government's assessment of it. With regard to the polytechnics, the block grant will still fall between 1988 and 1989 even when the polytechnics have been removed from the equation. The Minister is trying to dress that up today. He is wrong, and not for the first time.

Mr. Lofthouse

I am grateful to my hon. Friend. I can assure the Minister that my figures have been provided by Wakefield metropolitan district council's chief finance officer. If he is wrong, I will have to concede that, but where there is everyday local knowledge of what is happening in Wakefield, I accept the figures from the chief financial officer of that authority.

Mr. Gummer

I reiterate that the hon. Member for Hammersmith (Mr. Soley) is wrong. The grant is not cut. It is increased by £2,233,000. The figures are quite clear. That means that the general rate should not increase by more than 2 per cent. for the authority to spend at assessment. That is reasonable, and we cannot accept the figures from the hon. Member for Pontefract and Castleford (Mr. Lofthouse). No doubt we can argue about how best that money should be spent, but I hope that the hon. Member for Pontefract and Castleford will not ask his local authority to introduce a higher rise.

Mr. Lofthouse

The local authority has decided to increase its rate by 9.8 per cent.

Mr. Soley

My hon. Friend is being very generous in allowing himself to be a telephone line between myself and the Minister. My point applies across the board and probably affects the Minister's local authority as much as any other. The block grant total—the amount actually paid after holdback—will fall between 1988–89 and 1989–90 from £8,959 million to £8,812 million. That is the overall fall, and it will apply to most local authorities.

Mr. Lofthouse

That is the last time that I will give way, because other hon. Members wish to speak.

There cannot be a uniform formula for all authorities; that will not work. The House is aware that the Wakefield metropolitan district council area is suffering depression arising from the rundown of the staple industry. The area has lost 11,000 miners' jobs in four years. The authority must find money to attract other industries into the area. It is trying to sell the area to replace the jobs. When rates increase to the kind of level to which I have referred, we appreciate that there will be great hardship for many people in an already depressed area.

Of the total unemployed in the area, which in black spots reaches between 25 and 30 per cent., some 42 per cent. are under the age of 24. At that age people want to get married, set up homes and have children. However, with the increases in mortgage interest rates, some of those young people have been forced to leave the homes that they have bought and dreamed about and apply to the local authority to be housed. However, the local authorities cannot help them.

I still maintain that a figure of 14 per cent. is necessary, although it will be stuck at 9.8 per cent. There is evidence in the area that the responsible local authority is having many problems. For example, there are problems with road repairs and decorating schools. I received a letter from a blind person the other day in which I was told that the local authority could not fill the posts for three welfare officers for the blind. The dog warden service has been discontinued, although that service is essential in Wakefield and elsewhere.

There are also cuts in sports provisions. The House will be aware that, in the communities to which I have referred, a lot of the sports facilities were provided by British Coal and the Coal Industry Social Welfare Organisation. Those facilities now depend on the local authorities, but the authorities have no grants or assistance to offer to maintain those facilities.

I hope that the Minister will consider the mining communities to which I have referred. My area is not blessed by the Government, who have not considered it for intermediate area status grants. It receives no assistance. The added problems for local government in areas like mine are severe. Instead of being cut, the rate support grant should have been increased.

8.39 pm

Mr. Robert G. Hughes (Harrow, West)

Tonight we say goodbye to a system that has been with us too long. Opposition Members have spoken eloquently about the changes that have been made to local authorities' grants since the Government took office, but they seem to have a blind spot. They seem to have forgotten the Labour Government's record. They seem to have forgotten that it was the right hon. Member for Bethnal Green and Stepney (Mr. Shore) who, as Secretary of State for the Environment, started reducing the amount of rate support grant to local authorities. To listen to Labour Members, anyone would think that the only changes have been made since 1979.

In this, the last rate support grant settlement, we have had a generous 8.6 per cent. increase. I wonder what sort of debate we would have been having and what contributions we would have had from Opposition Members had a Labour Government run the economy so well that they could increase local authority spending by that much. When was the last time that a Labour Government increased local authority expenditure by 8.6 per cent.? The fact that Opposition Members are stuck firmly to the Benches shows that they do not know.

Mr. Soley

There has been a £27.7 billion cut since 1979. If the Conservatives had kept up the Labour Government's policies, local authorities would have had £27.7 billion more. Under Labour the figure was 61 per cent. It is now down to about 40 per cent.

Mr. Hughes

I am grateful to the hon. Gentleman for answering a different question. He clearly cannot answer the one that I asked.

I wish to make a comparison between certain London boroughs. The hon. Member for Brent, East (Mr. Livingstone) likes to refer to Brent's Labour administration as being like Pol Pot. That is unfair to Pol Pot. The London borough of Brent could be much more accurately compared with the script of "Who Framed Roger Rabbit?". Anyone who has seen that film knows that in it, as in the London borough of Brent, nothing is quite what it seems—the truth is never the truth for more than a couple of minutes and anybody in the film is never responsible for anything that might have happened.

It was pointed out to me by a Labour councillor from the London borough of Brent only a couple of days ago that the borough has failed over a number of years to face up to its problems. It has failed to face up to the reality of the amount of money available to it. It is one thing to have marvellous spending plans and to say how much one would like to spend on individual areas to solve problems, but when that money is simply not available it is irresponsible to make such decisions and many people are hurt.

Mr. Ken Livingstone (Brent, East)

I thank the hon. Gentleman for agreeing with my criticisms of the present administration in Brent. Will he also share my criticisms of the previous administration which left the incoming Labour administration with a budget in which income was 27 per cent. below expenditure?

Mr. Hughes

The fact is, as is well known, that that Conservative administration was in power for only a short time. Compared with the previous Labour administration, it turned round that budget, although not so fast as one might have wished. It is a bit rich to blame all the problems of the London borough of Brent on a brief Conservative administration. The problems had existed for a number of years, as is now admitted in private by Labour councillors in the borough. For a number of years, several councils have failed to make the proper spending decisions.

One is left with people being hurt by that lack of attention to detail—that lack of proper decision-making. Nothing so characterises that appalling council more than the fact that it prefers to spend money on a women's committee, on maintaining its so-called nuclear-free zone and on having political staff for its councillors rather than having staff in the social services department. When a family finds itself in the unfortunate position that one of its members has to be taken into a mental hospital under mental health legislation, a member of the family now has to take that decision rather than, as in every other council, someone from the social services department. What a heartless way to treat people, and what a heartless decision for a family to have to make simply because the London borough of Brent could not be bothered to live within its means.

I regret that I missed the speech made by the hon. Member for Hammersmith (Mr. Soley) because of my other duties in the House, but I shall read it with great interest. I understand that he made a comparison between rate levels in Harrow and in Ealing. He told the House, quite properly, that the rate level in Harrow was higher than that in Ealing. That crystallises what is wrong with the rating system and why we have decided to get rid of it and move to a system that is more accountable, allowing people to see how money is spent and what is being done in their name. Although the hon. Gentleman is right, he did not tell the House that Ealing plans to increase its rates by 35 per cent. this year. He does not want to acknowledge that. Last year there was a standstill in the rates because of the Government's generosity in giving the council a large rate support grant. The year before, the London borough of Ealing put its rates up by 65 per cent. Expenditure in Ealing has gone up and up. The council has not bothered to contain it. That is what is so damaging to people and industry in that borough.

Like my right hon. Friend the Minister, I too live in Ealing. We have to live with its services and pay its rate increases.

Mr. Soley

If next year's increase goes through in Ealing—it may not—the rate will be lower in real terms than it was two years ago. Why does the hon. Gentleman think that Ealing has been rate capped while his council has not? Is it because it is Conservative controlled or because the Government have already taken £10 million off Ealing in rate support grant in the past couple of years, even though its rates in real terms are less than they were two years ago?

Mr. Hughes

That is a bit rich when Ealing's rate support grant this year is £72.9 million and Harrow's is only £43.1 million. The hon. Gentleman knows that there are strict criteria to be met for a council to be rate capped. Harrow does not meet either of those criteria, although it nearly met one.

Mr. Gummer

My hon. Friend should point out that the situation has been altered considerably by the fact that Ealing was rate capped, which meant that excessive rates were pulled down. This year Ealing is getting an £8 million increase in grant. Therefore, it could have a rate increase on a spending assumption of 3 per cent. rather than 35 per cent. Anyone who lives in the London borough of Ealing, as I and my hon. Friend do, could give it a long list of things that it could stop spending on, as well as one or two things that it could start spending on, in order to provide better services at lower cost.

Mr. Hughes

My hon. Friend's last point is precisely the one that I want to make. We should pursue the comparison between the London borough of Harrow and its neighbours, Brent and Ealing. Living in the London borough of Ealing and seeing the change of administration and the contract for the collection of rubbish taken away from the private contractors and given back to the council work force, I did not think that the system had been changed, rather that it had been abolished; certainly the council does not come round very often to collect the rubbish.

If one looks at the movement of the population or talks to estate agents, one realises that people are clamouring to get out of Ealing and Brent and into Harrow. Any estate agent in my constituency will tell you that that is the reality, and even if people are not moving they are making sure that their children go to school in Harrow. We are grateful for the money that we receive as a result of children leaving the appalling education systems of Brent and Ealing to move over the border and enjoy one of the best in the United Kingdom. The figures show that Harrow's education system has been top for three years.

The Government's provisions represent a generous settlement and mark the end of a bad system, but it is up to councils to make spending decisions and to ensure protection for their ratepayers by making them prudently and sensibly. One makes the comparison between Bradford council, for example, which makes prudent decisions and lives within its means so that Bradford and its people may prosper and Sheffield and Brent councils, which have to make huge cuts in their services. Labour Members never comment on them, but those huge and unplanned cuts in services greatly disadvantage the people living under those authorities. If the Labour party were serious, it would welcome the Government's measure as being a generous settlement.

8.50 pm

Mr. Pat Wall (Bradford, North)

It is as well to remind ourselves of the figures quoted earlier by my hon. Friend the Member for Newham, North-West (Mr. Banks), now that we face a cut in rate support grant in real terms—which is based on the rate of inflation—and which, as a result of the Government's disastrous economic policy, is far lower than I realised. My hon. Friend points out that the Government's grant-related expenditure provision has fallen from 46.2 per cent. to 43.3 per cent., and is now £5 billion less in real terms than in 1978–79. Over the whole of that period, rate support grant has fallen by £28.4 billion. Next year, we shall also face increased expenditure of about 16 per cent. arising from the introduction of the poll tax, at least in London.

In two debates on rate support grant I have made a plea against the cuts imposed on Bradford. Tonight, it is a pleasant duty to be in the Chamber to hear remarks about the extra money that Bradford has been given, whereas Wakefield and Leeds has not. I am sure that that is purely fortuitous, and happily coincides with the return of a Conservative council to the metropolitan borough of Bradford. For two years, I argued the case against the £28 million cut in Bradford's grant resulting from application of the so-called multiplier, even though the council at no time exceeded its grant-related expenditure. I have protested also against cuts of about 70 per cent. in real terms in capital allocation grant over the past four years. I assure the Minister that I am sure those cuts were not political—but then I still believe in the Cottingley fairies, as do most local people.

Those cuts are part of a general attack on local authorities, established during the course of implementing about 20 new Acts. They are also part of a privatisation programme that threatens the jobs of more than 700,000 people, and of a general policy of shifting resources from the poor to the rich. As if the cold, hard figures were not bad enough, the harsh realities for many local authorities and their citizens are castastrophic, yet earlier the Minister said the Government like to give help to those who most need it.

In a previous debate, I crossed swords with the Minister on the question of council house rents. Subsequently, he said he had treated me rather harshly. However, I was not particularly terrified by the Minister's comments or arguments on that occasion. Perhaps it was because I was speaking from the Bench apparently permanently occupied by my hon. Friends the Members for Bolsover (Mr. Skinner) and for Bradford, South (Mr. Cryer)—one of whom is the most fearsome of my right hon. and hon. Friends, while the other is among the biggest of them. However, it is worth considering the council rents situation in a city such as Bradford.

Nationally, there has been a two thirds cut in local authority housing construction since 1979. Despite sales to private tenants, Bradford still has 35,000 council properties. Its repairs backlog alone is budgeted at 10 times the Government's total housing allocation. Bradford has 7,628 people on its housing waiting list, and 1,047 priority need homeless. Only a handful of pensioners' flats are being built.

In the period between 1983–84 and 1987–88, and before the new social security provisions came into operation, there was a doubling of Bradford's homeless due to mortgage defaults. The loss of housing benefits of £80,000 per week, £67,000 of which is council housing revenue, amounts to £4.1 million per year. That is a savage attack on the ability of Bradford's poor to purchase goods, having a knock-on effect on the local economy. The maximum level of housing benefit is set at £38.93p per week. Under the new local government housing finance Bill, Bradford will have to meet extra expenditure out of housing finance. At present, 70 per cent. of council rents are met from housing benefit.

In an earlier brush with the Minister I raised the point that rent arrears in Bradford have for the first time risen above £2 million. Nationally, there has been a 50 per cent. increase in council property rents. It is absurd for the Government to argue that 50 per cent. of people have deliberately decided not to pay council rents. The figures I give arise because of the change in housing benefit and the resulting increase in poverty.

Bradford has suffered one increase of £3 per week in council rents, with another to follow. We have had a freeze on housing benefits. There have been cuts in the standard of living, with, for example, 9,500 school meals being abolished every day because of increases of 30 and 50 per cent. in school meal prices. We have already seen the dismissal of the poorly paid women working in our school meals service, with redundancies reaching an estimated 1,000.

I conclude with two real cases. Conservative Members do not like hearing about cases of hardship but I assure them that they are enjoyed even less by those actually suffering deprivation. One of my constituents is aged 63, has had operations on both hips, and can only get around on sticks. He has one lung, and he has an epileptic son of 23 who is out of work. For two years they have stayed in a house without gas or electricity, cooking on a small camp stove, huddled around a paraffin heater that gives off more fumes than heat. They have had no running water since the winter of last year. When the woman was taken into hospital she lost £2 in benefit because she was treated as a new customer and reassessed.

On Christmas Eve I visited a family whose doctor had referred them to me as suffering from malnutrition. They were not wicked or feckless people; this was a single mother with two teenage children. The 18-year-old son had lost his job and his unemployment benefit had been reduced. The 17-year-old daughter was on a youth training scheme, and some bureaucrat had decided that she should be paid monthly rather than weekly. She had to find £20—£5 a week—in fares before she was paid. The lass could afford so little food that she fainted twice at work.

Those are not special cases, but the reality of life in Bradford. Those are the problems of inner-city deprivation, which emerge from the cold figures representing cuts in Government support for local authorities during the period of Conservative rule. The problems will worsen as a result of the poll tax and the new Housing Act. The Government are storing up for themselves an enormous revolt by people who will no longer be able to suffer, for themselves or their children, the misery that they and their policies are inflicting.

9 pm

Mr. David Wilshire (Spelthorne)

Every time an hon. Member gets to his feet there is a rustling of papers as other hon. Members search for whatever ammunition can be found among the statistics relating to the speaker's local council. Let me put them out of their misery and give them the statistics for my borough and county councils.

In the past seven years my borough council, Spelthorne, has reduced its rate by more than 67 per cent.—so there is no need to look that one up. My county council, Surrey, is out of grant, so there is nothing to be gained from asking me what happens in a county when RSG is reduced. Despite rate reductions and loss of grant, services in both councils have improved year by year. There is not necessarily any connection between reductions in rates and grant and cuts in services, and I have examples to prove that.

Whatever hon. Members may make of local cases, the debate in general—as always with local government debates—generates more heat than light. We hear claim and counterclaim. The same aims are espoused on both sides of the House. Both sides say that they want better democracy and better services. We then indulge in a kickabout because we are apparently heading in opposite directions.

Let us take one of those claims. Both sides have said tonight that they want better democracy. I have no hesitation in saying that the way to preserve democracy is to seek better value for money, to protect ratepayers and to lay down minimum standards for councils to follow. We are being accused tonight—as in every local government debate, especially debates about money—of being anti-democratic, but where is the democracy in the sort of waste that Labour councils typically go in for? Where is the local democracy in empty council houses and uncollected rates and rents?

Mr. Soley

Let me follow that line. Where is the democracy in the 6 per cent. of Government-owned houses that are empty—three times more than the local authority average? Where is the democracy in the other kinds of waste brought about by the present Government? Is it being suggested that we should abolish national as well as local democracy?

Mr. Wilshire

That makes my point entirely. Both sides will claim that they are in favour of democracy and then make opposite points.

The other thing about this debate on democracy and finance that I find difficult to stomach is that those who try to lecture us on our lack of democracy are themselves guilty of double standards. We are told that local government should be free to do what it likes—except, of course, if it wants to go on running grammar schools. We are told that local government should be free to raise its own funds—except, of course, from council house tenants or ratepayers when it is convenient or politically expedient not to bother to collect their money.

Double standards will get us nowhere in this debate. The way to make progress is to stick with the facts in the reports before us, to look at the 1989–90 settlement and to accept the reality of the planned expenditure for the final year of the present system being allowed to rise by 8.6 per cent. Opposition Members may wish to make cheap points about inflation, but an increase in expenditure of 8.6 per cent. will be above whatever they claim. It was asked earlier whether an increase in inflation would mean further change and an increase in rate support grant. If inflation goes down, as we believe that it will, will Labour councils hand back some of their rate support grant? Will nobody volunteer a refund?

Mr. Bernie Grant

Does the hon. Gentleman accept that local authority inflation is higher than inflation generally because local authority inflation includes a number of items that the Government do not use to calculate the national inflation figures? If that is the case, the 8.6 per cent. increase that the hon. Gentleman mentioned is barely sufficient to cope with local authority inflation as opposed to national inflation.

Mr. Wilshire

I accept that some local councils are guilty of increasing their expenditure because they cannot be bothered to keep it down, and I accept that some pay increases are unnaturally high because local government does not do its best to keep pay settlements down.

The report represents good news. It means that if councils are sensible there need not be a rate increase of more than 2 per cent. It means that services can be protected unless councils have party political reasons for trying to undermine them. It means that there need be no risk of variations. One of the reports that we are considering tonight is the fourth report for 1986–87. All those years after the money was spent, council treasurers are still trying to work out what the income might be. That is crazy.

The other piece of good news about tonight's debate is that this settlement is the last, so we shall not have any more gobbledegook of the kind in these reports. Given all that good news, why do Opposition Members make so much fuss? The answer is simple. Labour Members make a fuss because they do not want the public to know the truth. They want to disguise the fact that the rates need go up by only 2 per cent. We get all this hot air because the Labour party wants to mislead the public about the need for rate-capping and the truth about why it was introduced. When Labour Members talk about local government they are still hooked on some desperately out-of-date beliefs. They still believe that income is limitless and that the ratepayers can be soaked. They still believe that throwing money at a problem is the only answer and that value for money always means making cuts. When will they learn that value for money means that if local authorities save money where they are wasting it they can use that money to provide more and better services in other sectors?

9.8 pm

Mr. Ken Livingstone (Brent, East)

I did not originally intend to speak in the debate, but there have been so many completely unjustified and unbalanced attacks on Brent council that I wish to put the record straight. I am prepared to be as critical of Brent council as any Conservative Member when it is not working in the interests of local people. It is not my duty as a Member of Parliament to explain the shortcomings of the council to the people; it is my job to represent the views of the people to the council. Neither am I here to defend the track record of the last Labour Government. I condemned them at the time, as a local councillor. I condemned them when they made cuts in the rate support grant in the aftermath of the IMF talks and I condemned them when they took extra controls to interfere in the running of local government. That mistake has been amplified 100 times by the Government.

There has been a drift to centralisation which is totally unacceptable and profoundly damaging to competent administration in local government. I shall give one example from the past. When the Labour party took control of the GLC in 1981 and inherited a Tory budget, we took office under a commitment from the Tory Government to provide £140 million of rate support grant out of a total budget of £450 million. Within days of Labour taking office, we were told that that was to be cut arbitrarily by £5 million. Once we announced that we were going ahead with the commitment to reduce fares, we were told by Government that the entire £140 million would be withdrawn. How can one budget in a realistic way when money is clawed back in that way? That was only the beginning of the Government's track record. It has got far worse.

I am not surprised that, throughout the country, lifelong Conservative, Labour and Alliance councillors—people who committed themselves to providing a service to their local communities—have given up active local government service because they feel that they are being reduced to ciphers of central Government.

I ask my colleague, the hon. Member for Harrow, West (Mr. Hughes), as well as condemning mistakes that the present Brent administration may have made, also to condemn the appalling acts of profligacy by the outgoing Conservative administration that ran Brent for three years with the support of three Liberals. Because it was coming up for re-election and did not want to face the consequences of the way in which it had mismanaged the borough, it left a budget with expenditure of £226 million and income of £165 million—a gap of £61 million. I am amazed that the district auditor did not surcharge it for that irresponsibility.

I am not surprised that problems were caused. I have criticised decisions that Brent may have taken that in practice have not dealt with those issues as wisely as they might have been handled. But what occurred on that occasion was an outrageous and scandalous abuse of public trust, and if blame is to be heaped on Brent council, let it be equally and fairly spread.

The real blame rests with Government, who have massively cut rate support grant. We in Brent are now getting 40 per cent. less in grant from Government than the area received under the Labour Government. Under Labour, moneys were allocated to local authorities on the basis of need on defined criteria, which were applied equally to every local authority. As soon as the Conservatives took office, new criteria were introduced which allowed the Government to fix the system in a partisan way each year so that some councils saw all of their rate support grant clawed back.

What an outrage it is that for the best part of this decade ILEA has not had a penny of rate support grant to go towards providing education in inner London, yet Tory councils throughout the south-east are often getting 40 to 50 per cent. of their education costs covered. The allocation of grant to local authorities should be conducted on a completely even-handed basis, not on the basis of whether they are Labour or Conservative.

How would Conservative Members like it if a Labour Government were operating in that way? How would they like it if they suddenly had their entire rate support grant clawed back by central Government while Labour-controlled councils saw their income from Government doubled? They would be outraged.

What would be said of the board of directors of a private company that fiddled its accounts in the way in which the Government fiddle the rate support grant system? We would call it a crook and say that it was guilty of fraud. But because the Government can make the rules and laws and then change them year by year, they get away with it.

On how many occasions have Ministers had to propose emergency retrospective legislation to make legal decisions that they had taken but which had been overturned by the courts? Billions of pounds have had to be dealt with in that way. It is a disaster. How can local authorities at officer or member level plan a programme of expenditure fairly and even-handedly when the rules are changed year by year?

I fear that local government in Britain is virtually dead. We shall soon be at the point when nobody will wish to serve in local government because they will feel that they have no real responsibility and power. We shall have witnessed the death of a vital strand of British democracy by a series of stealthy, devious underhand mechanisms conducted by the Conservative party.

9.14 pm

Mr. Simon Coombs (Swindon)

It is a pleasure to be the last Back-Bench Member to speak in what I hope will be the last debate on the rate support grant.

In the few minutes remaining, I shall bring the House up to date with the adventures of the borough of Thamesdown. The councillors who form the majority in the borough have been described as "loonies". That description is not entirely fair, despite the fact that they indulge in support for organisations of every kind; despite the fact that they link with far-off countries in central America which will be of little benefit to the ratepayers of Swindon; and despite the fact that they warned in 1984 that rate capping would prevent them carrying out their responsibilities—since when they have been able to carry them out to a greater extent at greater expense to the ratepayers. There is money in Thamesdown for everything—for leisure centres, community centres, modern sculptures which give offence to almost everyone in the borough and a plethora of daffodils which are a delight to the eye every spring. There is never any shortage of money in Thamesdown. The watchwords are "naughty but nice". To compare Thamesdown's grant-related expenditure with what the Government suggest as appropriate is to compare Mount Everest with Ben Nevis.

Rate capping inevitably happened in 1984. As the rate income of the borough rises because of the growth and prosperity brought by the private sector, the rate level is reduced by Government, and it is hard for anyone to argue with that. Inevitably, however, that means that ingenuity is needed from the local Labour councillors. They instructed the borough treasurer—a man of the greatest probity and resourcefulness—to look for new ideas. The first suggestion was creative accountancy, which kept the ship of state afloat for three or four years. One cannot accuse Labour councillors in Thamesdown of lacking flexibility. They said that it was not possible to sell council houses. When they were ordered to do so by Government, they had no right-to-buy forms available and told interested customers to go to Bristol. Then they relented and sold about 4,000 council houses in a few years. Inevitably, the sale of assets followed.

Councillors will not sell the shopping centre because it is a monument to municipal Socialism, but they are at last prepared to consider selling land. The first land that they think of selling this year is part of the largest and most attractive park in the centre of town, but it will help them to dispose of a building nearby. My constituents say that if they sell part of the Lawns they will sell anything. I say that they can sell almost everything else, but not public parks.

The next move is what is known as factoring—a new name on the local government scene which means mortgaging the future and disposing of assets to match current expenditure by letting it off to the finance men of the City. The Audit Commission says that that method of local government business is wrong and illegal, but that has not stopped the council in Thamesdown. On 22 February, we shall know whether it is legal or not. If it is, the people of Thamesdown will lose out on the ever-increasing value of the land that is to be sold in one heap to pay for this year's current expenditure. If it is illegal, the council will almost certainly be unable to formulate a legal budget for next year. If that happens, my constituents will almost certainly suffer the most savage cuts in services, which need not have happened if the council's financial affairs had been planned and executed in a proper way over the past five years.

The information provided to the House for this debate shows that of the seven rate-capped councils five were prepared to accept re-determination—four were successful in obtaining an increase in the funds available and only one was told that it must spend at last year's level—and two councils refused to talk to the Minister. The people of Thamesdown and my constituents lose out, because of all the Labour councils up and down the country Thamesdown is one of only two that will not talk to my right hon. Friend the Minister.

I long for the time when this crazy system is abolished for ever. It leads local councils into the muddle and stupidity that I have had to witness over the past five and a half years from Labour councillors in my borough. The sooner they and the system go, the better.

9.20 pm

Mr. William O'Brien (Normanton)

A number of issues arise out of the rate support grant reports. The Minister criticised the rate support grant system and swanned around criticising local government. We should make it abundantly clear that the Minister referred only to the new proposals and the poll tax but we are discussing grants.

Under the new procedures the grants system will apply with 75 per cent. or 80 per cent. of local government income being controlled by the Minister. The grant system will still apply but not in its present form. There is substantial concern about the way in which the new grants system will apply when the present system is abolished. If anyone thinks that the Minister will introduce a formula under the new grants system which will satisfy all the needs of local government—particularly the authorities represented by certain Tory Members who have been expressing concern at the way they were treated under the present system—they are living in cloud-cuckoo-land. Since 1979 there has been a reduction in rate support grant from 61 per cent. budgeted by the Labour Government to 43 per cent. under this Government. One can imagine that happening when the Government get hold of the global amount of rate support grant to be handed out to local authorities.

Last July the Secretary of State announced that the expenditure provision for the current year, 1989–90, would be £29,140 million. That figure was based on a then projected inflationary factor of 4.7 per cent., so the scenario sketched by the Secretary of State in his famous juggling act with the figures in his usual maladroit way allowed him to state in the House that the increase in the inflation factor for 1989–90 over 1988–89 was to be 4.7 per cent. The Secretary of State tried to demonstrate his compassion for local government by saying that 4.7 per cent. was a generous consideration.

When we examine some of the other features that are included in these reports on the rate support grant to local government we find that, excluding the provision for poll tax costs of £110 million in the current year, the increase in the 1989–90 budget compared with last year's budget is only 4.3 per cent. and not 4.7 per cent. as the Secretary of State claimed. Once again, the Secretary of State has got it all wrong and there is a mismatch in his representations of the rate support grant settlement. Since the announcement of the provisions of the rate support grant last July, the inflation rate has accelerated dramatically and is running now at no less than 6.4 per cent. It is forecast to peak—or pimp, I believe, was the word—during 1989 to 7 per cent. and may reach 8 per cent.

The result of the Secretary of State's abysmal record in provision for inflation in that the rate support grant settlement means that the allowed increase in the RSG is wholly inadequate and should be reviewed. The shortfall between what is forecast to meet the increase in inflation and what is provided to maintain the essential services in local government will be about £1 billion. That reduction in the RSG could mean one of two things, which have been described on several occasions by my hon. Friends. There may be cuts in services or rate increases above the level that the Government suggests.

Mr. Wilshire

The hon. Gentleman has been enthusiastically trying to talk inflation up as high as he can, but he has talked it up only to 8 per cent. He wholly ignores the fact that the amount made available through grant next year will be 9 per cent. up and he has not yet reached that figure. What is his problem?

Mr. O'Brien

It is clear that the hon. Gentleman is unaware of what his own party's Ministers are doing. If he reads the report, he will see that the amount allocated for inflation was 4.7 per cent. It is the Chancellor of the Exchequer who has said that he expects inflation to blip at 7 per cent. or 8 per cent. in 1989. I am, therefore, only using the figures of Ministers in the same party as the hon. Gentleman. Now that people have realised the extent of the costs concerned with the poll tax—

Mr. Robert G. Hughes

Will the hon. Gentleman give way?

Mr. O'Brien

Not until later. I shall deal with the point that the hon. Gentleman raised in a little while.

The figure of £110 million for poll tax preparation was produced last July when the authorities responsible for the poll tax were beginning to consider the costs. Now that they have realised how much the costs will be, the Minister should agree to give a commitment to increase the resources provided by the Government if the actual costs are higher than those determined by his Department's formula. It would be cruel and dishonest to the people who rely on local government services not to increase resources in line with the formula.

Mr. Harry Cohen (Leyton)

My hon. Friend referred to the cost of the poll tax. Is he aware that in my borough of Waltham Forest the Government have allocated £683,434 for the implementation of the poll tax, yet the independent consultants Peat Marwick say that it will cost £6.31 million in one borough alone. That leaves a gap of £5.7 million to be met by local people.

Mr. O'Brien

That illustrates my point. I hope that the Government will make up the difference between what has been budgeted for and what is actually needed.

A significant factor is the aggregate Exchequer grant, and it is helpful to examine the record on that since the Government came to office in 1979. For 1979–80, the last year of the Labour Government, 61 per cent. of local government services were provided from AEG. For the coming year, the Government's AEG contribution has fallen to 43.3 per cent. of relevant expenditure.

If we deduct from the total AEG for 1989–90 the £835 million that has been withdrawn in the change in funding of the polytechnics, we find that there is still a cut in AEG for 1989–90 from £8.95 million to £8.12 million. Expenditure and grant provision by the Government are being reduced by £835 million to reflect the transfer of the polytechnics, which will have no benefit for local ratepayers. There is a massive cut in block grant of more than—

Mr. Robert G. Hughes

Will the hon. Gentleman give way?

Mr. O'Brien

In due course.

Significantly, the Government maintain a margin between the total expenditure of the local authorities and grant-related expenditure. That penalises the authorities which have to meet greater need. Every time the Minister for Local Government comes to the Dispatch Box he says that in future the system will be based on need. The rate support grant system is already based on need, yet local authorities' needs are being ignored by the Minister.

We have also to consider the devastation caused to local government by the Secretary of State when for the purposes of the Rate Support Grants Act 1988 he decided that all grant entitlements—

Mr. Robert G. Hughes

Will the hon. Gentleman give way?

Mr. O'Brien

The hon. Gentleman should not be so hasty. His turn will come.

In July last year the Secretary of State decided that all grant entitlement for previous years would be frozen on the basis of the expenditure data that was with his Department on 6 July 1988. The Secretary of State should reconsider his decision because of the unfairness of that holdback, which was referred to by more than one of his hon. Friends. I would ask the Minister to reconsider the question of holdback.

Mr. Robert G. Hughes

Let me ask the hon. Gentleman two questions. Will he confirm—whatever he likes to dredge out in the way of details—that the overall effect is that the RSG settlement is raised by 8.6 per cent. next year? Secondly, will he tell the House what the rate support grant was in the year when inflation peaked at 27 per cent. under the Labour Government?

Mr. O'Brien

I can tell the hon. Gentleman that when he said that people were leaving the borough of Ealing—[HON. MEMBERS: "Answer the question."] The hon. Gentleman said that people were leaving the borough of Ealing and going to Harrow, West for better education. His constituency is well down the list when it comes to nursery provision. He is afraid of the real issues on education—[HON. MEMBERS: "Answer the question."] When it comes to education, the hon. Gentleman does not know what is happening in his own constituency. [Interruption.]

Mr. Speaker

Order. Let us get back to an orderly debate.

Mr. O'Brien

Provision is made in the bulk grant formula for fire and civil defence, which has not been mentioned in this debate. When the bulk grant system was introduced in 1981, the Department of the Environment intended it to provide sufficient grant to the fire and civil defence authorities to allow them to provide a standard of service at a standard of rate levied on their ratepayers. Since 1986, however, the fire and civil defence authorities have had their level of services determined by the Home Office, which has developed a complex and puzzling system for distributing the grants, which in turn has significantly affected the precepts levied by the fire and civil defence authorities.

The Minister for Local Government is fully aware of this anomalous situation, because on Wednesday 6 December 1988 the Minister held a meeting with people from west and south Yorkshire fire and civil defence authorities, along with Members of Parliament representing those areas. It was explained to the Minister in detail, and made abundantly clear, what those irregular precepts levied in different areas would mean. The variations in precepts levied to provide services for fire and civil defence authorities in the metropolitan areas range from £10 per head of population in one area to £14 in west Yorkshire. That is the unfairness of the system about which the Minister has been told. Those variations in fire protection are due in the main to the way in which the grant system is distributed. The grant system is unfair because of the way in which the Minister and his colleagues in his Department distribute the grants.

At that meeting with the Minister an effective and fair system was outlined, with the appropriate adjustments to meet the level of services as determined by the Home Office—not the Department of the Environment. The understanding between the Home Office, which determines the level of fire cover for an area, and the Department of the Environment, which decides the level of grant to provide that fire cover, is abysmal. Ratepayers in Yorkshire, especially in west Yorkshire, are again under attack by the Government because of this mismatch of rate support grant distribution.

The Minister was given a solution to the problem well before the 1989–90 settlement was decided. He has chosen, however, to ignore the proposals completely. Why does he not accept that there is a need to review the grant for the fire and civil defence authorities? Will he consider the situation and accept the suggestion that the total GRE for fire and civil defence authorities, as circulated in the main rate support grant report, should be redistributed in the current year among the authorities involved? I suggest to him that two thirds of the total should be allocated on the basis of the existing methodology and one third on the basis of the establishment levels. That is not a perfect solution, but it would be fairer and nearer to the needs element which is so sacred to the Minister.

My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) referred to the situation in the Wakefield area, especially that concerning highways and roads, which are included in the transport grant. It is classed as a supplementary grant and is restricted by the Secretary of State deciding what the programme of local authorities should be. In the main, the transport grant covers roads for longer distance traffic and circular and bypass roads, but people are concerned about other roads and streets. Local authorities urgently need to be able to tackle the ever-increasing problem of holes in the roads. Because of the limited expenditure imposed on authorities by the Government and the cuts in rate support grant, repair work on the holes cannot go ahead, so our urban and estate roads are generally deteriorating. I ask the Minister to look into the problems for local authorities of utilities opening up and reinstating road surfaces.

If there is no more money in the rate support grant for maintaining roads, there must be a change of legislation. I hope that the Minister will deal with that point. Failing a change of direction and application of the rate support grant for next year, I ask Conservative Members who have spoken against the Government's measure to join us in voting against it.

9.41 pm

The Parliamentary Under-Secretary of State for the Environment (Mrs. Virginia Bottomley)

This is the final speech in the last debate on the rate support grant system. Throughout the debate Opposition Members have sought to dig up the past. Being reluctant to consider next year's rate support grant settlement, they paraded a variety of figures on the rates of grant in past years, with which they unsuccessfully tried to discredit this settlement.

The fact is that next year the grant for local authorities will be £13.575 billion, an increase of 9 per cent. That is £1.1 billion more than will be paid out this year. That is the money on the table, the increase in grant in the contribution from the taxpayer. It is the highest increase of any year in which this Government have been in office. The additional grant will enable authorities, if they spend sensibly, to budget for very low rate increases of about 2 per cent. on average.

In recent years there has been a preoccupation in local government finance with expenditure restraint, through grant adjustments, targets and rate limitation. Many of the speeches made today have shown the flaws in the present system. The Local Government Finance Act 1988 is a move towards establishing local accountability. It depends crucially on the relationship between paying for local services and voting in local elections. Of the 35 million local electors in England, only 18 million are liable to pay rates now.

Many hon. Members have spoken about the importance of local government, about its value, about its role in serving local ratepayers and about it being able to be more autonomous so as to provide services efficiently and effectively. We believe that the new system of local government finance makes that possible. My right hon. Friend the Minister, in his role as the Minister for Local Government, has often spoken of his confidence in local government and of the importance of ensuring that it is accountable.

Our policy is to widen the liability for local taxation to almost all voters through a simple, clear community charge, and to help those who cannot pay it in full. That is a logical and essential step towards greater local authority freedom. The Government should be able to stand further back from local government because the electors will stand much closer. When everyone pays something towards the costs of local services, voters will be more conscious of the cost consequences of local decisions.

One of the complaints by the hon. Member for Hammersmith (Mr. Soley) about the present system was that there was no link between rate rises and increased spending. That is a ringing endorsement of our policies. The whole point of the community charge is to ensure that local people will feel the effect of local decisions.

The hon. Member for Hammersmith tried to argue on the grounds of fairness. That rang rich. For a long time, many of my hon. Friends have failed to understand the fairness of the pensioner paying the same rates as the household next door with several earners. He compared the millionaire with the pensioner. I hope that he knows that the millionaire contributes 15 times as much towards local government expenditure as the single pensioner. Four out of five single pensioners and nine out of 10 one-parent households will pay less under the community charge, and 9.5 million people on low incomes will receive assistance.

When one looks at the injustice suffered by many people on low incomes in high rateable value areas who have to contribute to those on high incomes in low rateable value areas, one sees that questions of justice are especially important. People who are concerned about that should appreciate the opportunities offered by the community charge.

Mr. Fatchett

rose—

Mrs. Bottomley

I shall not give way because I want to make progress. The hon. Gentleman spoke about Leeds and will want to hear what I have to say.

The settlement provides £110 million for the extra current expenditure costs that authorities will incur in preparing for the community charge. This expenditure is financed by a specific grant of £55 million, with the other 50 per cent. being reflected in block grant. An extra capital allocation of £135 million will be made in 1989–90 in addition to the £25 million in 1988–89. The provision that we have announced is derived from the forecast by Price Waterhouse which made an independent study of the preparation costs. It strikes a balance between the Price Waterhouse estimate of the costs that authorities would incur if they used administrative procedures similar to those presently followed, and the amount needed if all authorities operated in the same way as the most efficient authorities.

Having lost the parliamentary battle on the merits of the community charge, it is inevitable that the opponents of the policy should now turn their energies to exaggerating the costs of implementation. The most recent estimates put forward by local authority associations are based on surveys that simply asked member authorities how much they thought they might spend if they were given a blank cheque. On the basis of the findings in the independent study carried out by Price Waterhouse, the Government are confident that the forecast is objective and is to be preferred to survey results. We think that we are providing sufficient resources to meet the reasonable costs of preparation by authorities.

Many hon. Members spoke about the change in grant levels. When Labour left office, the grant percentage was about 60 per cent. Restoring that would cost about £4 billion which is equivalent to 3p or 4p on the standard rate of income tax. The Opposition have not promised to restore the grant percentage to its previous level. They have said only that grants to local government will increase in line with the growth of the economy nationally. I doubt whether their plans for the economy would enable them to increase grant payments by 9 per cent. or £1.1 billion.

The hon. Members for Wolverhampton, South-East (Mr. Turner), for Hammersmith, for Leeds, Central (Mr. Fatchett), and for Truro (Mr. Taylor) spoke about inflation. The settlement allows authorities to increase spending broadly in line with inflation as measured by the gross domestic product deflator, which is generally accepted as the measure of inflation in the economy as a whole. The retail price index is an appropriate measure in many areas of Government activity and is used to uprate many of the social security benefits such as the state retirement pension, unemployment benefit, invalid care allowance and statutory sick pay. For local authority matters, the GDP deflator is a much more accurate measure.

The hon. Member for Hammersmith asked whether we would increase grant if inflation turns out to be higher than anticipated. We have already made generous provision for grant in the settlement. I remind him that it is being increased by £1.1 billion, an increase of 9 per cent. That is well above the rate of inflation and if authorities budget sensibly, they should be able to keep rate increases low.

Mr. Soley

That is not the question that I asked. If the rate of inflation approaches 7 or 8 per cent., as even the Chancellor accepts that it may, will the Government increase the rate support grant to take that into account—yes or no?

Mrs. Bottomley

The hon. Gentleman should know that the rate support grant is already well above that figure. A 9 per cent. increase is being made available.

Reference to Schleswig-Holstein is an indispensable part of many debates on rate support grant. However, reference by my hon. Friend the Member for Eastleigh (Sir D. Price) to the city fathers of Florence, Euclid and Hamlet and the Prince of Denmark were novel developments. Eastleigh's situation may seem harsh. It is losing grant, although it is not an overspender, but it has relatively low needs and well above-average resources per head. In addition, its resources are rising faster than its needs. Its grant has been calculated on the same principles as apply to all authorities and I can assure my hon. Friend that it has not been selected for special treatment. In a system based on rateable values it is unlikely to do any better. Its low spending will be better reflected under the new system. When the system is fully operational, the charge payers will face lower bills than most of their neighbours in Hampshire, based on this year's figures. In the meantime, we have to operate the system as it is.

My hon. Friend the Member for Ealing, Acton (Sir G. Young), who had a long and distinguished period at the Department, spoke strongly about the effect of sharp rate increases in Ealing. It would have been difficult to spell out more clearly the importance of efficient and effective services in a London borough. Whether asking for building control, rate rebates or all the other services provided by local authorities, he made it clear that efficient and effective distribution of services is a prime requirement for helping those whom local authorities are there to assist. He asked what protection there would be for his constituents in future if Ealing continued to demand excessively high community charges. As he said, Ealing has slipped through the capping net for the coming year, but, if it persists with its plans for a 35 per cent. rate increase, that will show just how little regard it has for the interests of the people of Ealing.

The charge-capping powers that we have taken will enable us to deal with the situation that my hon. Friend fears, if it should arise. Charge capping is designed to enable chargepayers to be protected from the actions of an irrational and irresponsible council which, perhaps to prove some sort of distorted political point, decides on excessive spending policies.

Mr. Blunkett

How does the hon. Lady square what she has just said with her comments a few moments ago about how the poll tax would increase accountability? How does she square what her Government have done in terms of rate-capping Ealing and imposing a 25 per cent. reduction in its rate and the attacks that have been made by her colleagues by rate-capping a number of authorities over the past five years with the notion that those authorities that have been rate-capped and have had their expenditure and rate limits fixed by the Government are somehow to blame for what the Government have done? Surely accountability lies not with those authorities and their elected members but with the Government.

Mrs. Bottomley

We have made it clear that we hope we shall not have to use charge capping. For many years, local authority citizens have been desperate about their exorbitant rates. It is necessary for Government to intervene. It is not, of course, a first choice and the purpose of the community charge is to have a more direct relationship between the provision of services and payment for them.

Many other hon. Members have made distinguished contributions tonight. My hon. Friend the Member for Great Yarmouth (Mr. Carttiss) spoke at length about his authority. We hope to simplify the way in which needs are assessed. I hope that my hon. Friend will take some reassurance from the fact that my Department earlier today discussed the issue of rural deprivation and the Association of District Councils referred to tourist resorts during this week. We are looking at all those questions and our aim is to achieve a simple and fairer system.

The hon. Member for Newham, North-West (Mr. Banks) referred to the London situation following on from the remarks made by my hon. Friend the Member for Acton. We do not need to spell out further the importance of providing effective and efficient services. It is not a good enough excuse to say that London's problems are overwhelming and that nothing can be done. There are great contrasts between the provision of services in different areas. As my right hon. Friend the Prime Minister has often said, efficiency should be the ally and not the enemy of compassion. The needs may be great—and none of us would dispute that—but that is no excuse for not providing for those needs effectively and efficiently.

My hon. Friend the Member for Meriden (Mr. Mills) referred to his local authority as one of the best councils in the land. Some hon. Members may dispute that, but once again he referred to the difficulties of success. As the rateable values have risen, he has gained less grant. The system in future will do away with that. The hon. Members for Leeds, Central and for Leeds, West (Mr. Battle) referred to the position in Leeds. It was claimed that Leeds would lose £7.3 million. That is quite wrong. Leeds will save about £12 million a year because the Department of Education and Science is paying for polytechnic education. There will be £5 million extra in net terms from the Government to finance services. If it spends in line with our assumptions, rates need rise no more than 4 per cent.

Mr. Fatchett

rose—

Mrs. Bottomley

My hon. Friend the Member for Derbyshire, West (Mr. McLoughlin) referred to the situation in Derbyshire. It would be difficult to find a better contrast between the efficient and effective distribution of services and the wasteful and the profligate. His specific, clear and well-documented examples, put humorously, made his point powerfully.

Mr. Matthew Taylor

rose—

Mr. Fatchett

On a point of order, Mr. Speaker.

Mr. Speaker

I hope that it is a point of order and not a point of argument.

Mr. Fatchett

Is it in order for the Minister to give information in this debate which is inconsistent with a parliamentary reply given on 12 December to which my hon. Friend—

Mr. Speaker

Order. That is not a point of order for me. The Minister must take responsibility for what she says.

Mr. Fatchett

Further to that point of order, Mr. Speaker. The Minister is providing the wrong information.

Mr. Speaker

Order. The Minister must take responsibility for what she says.

Mrs. Bottomley

My hon. Friend the Member for Harrow, West (Mr. Hughes) also contributed to the debate. The behaviour of the hon. Member for Bradford, North (Mr. Wall) brought a poor name to this House and his philosophy of extremism and disruptive divisiveness also gave a bad name to local government.

I appreciated the remarks of my hon. Friend the Member for Spelthorne (Mr. Wilshire). The hon. Member for Brent, East (Mr. Livingstone) failed to say that next year Brent will receive £19 million more than this year. It could reduce its rates by 13 per cent. if it spent in line with inflation.

Reform of the grant system will assist accountability. The present RSG distribution is complicated and many hon. Members have complained about the difficulties involved. The basic and fundamental role of local government is to ensure the provision of services locally that are best provided locally. The task is to serve the public wherever it is best served.

The changes facing local government are wide-ranging. They are not an attack on its powers or its rights. The changes are designed to meet a constantly changing pattern of need for services in a constantly changing economic environment.

Sadly, the Opposition will oppose this final rate support grant order. They show few signs of understanding that we are moving from Government control to effective decision-making by local people, backed by local voters and the local councillors whom they elect.

The real choice is a democratic choice; a local choice. Our choice tonight is to grant £1,100 million—9 per cent. More—to local authorities. The House should support it.

Question put:—

The House divided: Ayes 257, Noes 203.

Division No.40]	[9.59 pm
AYES
Aitken, Jonathan	Blackburn, Dr John G.
Alexander, Richard	Blaker, Rt Hon Sir Peter
Alison, Rt Hon Michael	Body, Sir Richard
Allason, Rupert	Bonsor, Sir Nicholas
Amess, David	Boscawen, Hon Robert
Amos, Alan	Boswell, Tim
Arbuthnot, James	Bottomley, Peter
Arnold, Jacques (Gravesham)	Bottomley, Mrs Virginia
Arnold, Tom (Hazel Grove)	Bowis, John
Ashby, David	Boyson, Rt Hon Dr Sir Rhodes
Aspinwall, Jack	Brandon-Bravo, Martin
Atkinson, David	Brazier, Julian
Baker, Nicholas (Dorset N)	Brooke, Rt Hon Peter
Banks, Robert (Harrogate)	Brown, Michael (Brigg & Cl't's)
Batiste, Spencer	Browne, John (Winchester)
Bendall, Vivian	Bruce, Ian (Dorset South)
Bennett, Nicholas (Pembroke)	Buck, Sir Antony
Benyon, W.	Burns, Simon
Bevan, David Gilroy	Burt, Alistair
Biffen, Rt Hon John	Butcher, John

Butler, Chris	Jones, Gwilym (Cardiff N)
Butterfill, John	Jones, Robert B (Herts W)
Carlisle, John, (Luton N)	Kellett-Bowman, Dame Elaine
Carlisle, Kenneth (Lincoln)	Key, Robert
Carrington, Matthew	King, Roger (B'ham N'thfield)
Cash, William	King, Rt Hon Tom (Bridgwater)
Chalker, Rt Hon Mrs Lynda	Knight, Greg (Derby North)
Chapman, Sydney	Knight, Dame Jill (Edgbaston)
Chope, Christopher	Knowles, Michael
Churchill, Mr	Lamont, Rt Hon Norman
Clark, Dr Michael (Rochford)	Lang, Ian
Clark, Sir W. (Croydon S)	Lawrence, Ivan
Clarke, Rt Hon K. (Rushcliffe)	Lee, John (Pendle)
Colvin, Michael	Leigh, Edward (Gainsbor'gh)
Conway, Derek	Lennox-Boyd, Hon Mark
Coombs, Anthony (Wyre F'rest)	Lester, Jim (Broxtowe)
Coombs, Simon (Swindon)	Lightbown, David
Cormack, Patrick	Lilley, Peter
Cran, James	Lloyd, Sir Ian (Havant)
Critchley, Julian	Lloyd, Peter (Fareham)
Currie, Mrs Edwina	Lord, Michael
Davies, Q. (Stamf'd & Spald'g)	Luce, Rt Hon Richard
Davis, David (Boothferry)	Macfarlane, Sir Neil
Day, Stephen	MacGregor, Rt Hon John
Devlin, Tim	MacKay, Andrew (E Berkshire)
Dickens, Geoffrey	Maclean, David
Dorrell, Stephen	McLoughlin, Patrick
Douglas-Hamilton, Lord James	McNair-Wilson, Sir Michael
Dover, Den	McNair-Wilson, P. (New Forest)
Dunn, Bob	Madel, David
Durant, Tony	Malins, Humfrey
Dykes, Hugh	Mans, Keith
Emery, Sir Peter	Marshall, Michael (Arundel)
Fallon, Michael	Martin, David (Portsmouth S)
Fenner, Dame Peggy	Mates, Michael
Field, Barry (Isle of Wight)	Mawhinney, Dr Brian
Fishburn, John Dudley	Mayhew, Rt Hon Sir Patrick
Fookes, Dame Janet	Mellor, David
Forman, Nigel	Meyer, Sir Anthony
Fox, Sir Marcus	Mitchell, Andrew (Gedling)
Garel-Jones, Tristan	Mitchell, Sir David
Gilmour, Rt Hon Sir Ian	Moate, Roger
Glyn, Dr Alan	Monro, Sir Hector
Goodhart, Sir Philip	Morrison, Sir Charles
Goodson-Wickes, Dr Charles	Morrison, Rt Hon P (Chester)
Greenway, Harry (Ealing N)	Moss, Malcolm
Gregory, Conal	Moynihan, Hon Colin
Grylls, Michael	Mudd, David
Gummer, Rt Hon John Selwyn	Neale, Gerrard
Hampson, Dr Keith	Needham, Richard
Hanley, Jeremy	Nelson, Anthony
Hannam, John	Neubert, Michael
Hargreaves, Ken (Hyndburn)	Newton, Rt Hon Tony
Harris, David	Nicholson, David (Taunton)
Haselhurst, Alan	Nicholson, Emma (Devon West)
Hayes, Jerry	Norris, Steve
Hayhoe, Rt Hon Sir Barney	Oppenheim, Phillip
Hayward, Robert	Page, Richard
Heddle, John	Paice, James
Hicks, Mrs Maureen (Wolv' NE)	Patnick, Irvine
Hicks, Robert (Cornwall SE)	Patten, Chris (Bath)
Higgins, Rt Hon Terence L.	Patten, John (Oxford W)
Hind, Kenneth	Pattie, Rt Hon Sir Geoffrey
Hogg, Hon Douglas (Gr'th'm)	Pawsey, James
Holt, Richard	Porter, Barry (Wirral S)
Hordern, Sir Peter	Porter, David (Waveney)
Howard, Michael	Portillo, Michael
Howarth, Alan (Strat'd-on-A)	Powell, William (Corby)
Howarth, G. (Cannock & B'wd)	Raffan, Keith
Howell, Rt Hon David (G'dford)	Raison, Rt Hon Timothy
Howell, Ralph (North Norfolk)	Redwood, John
Hughes, Robert G. (Harrow W)	Renton, Tim
Hunt, David (Wirral W)	Rhodes James, Robert
Hunter, Andrew	Riddick, Graham
Hurd, Rt Hon Douglas	Roberts, Wyn (Conwy)
Irvine, Michael	Roe, Mrs Marion
Irving, Charles	Rossi, Sir Hugh
Jack, Michael	Rowe, Andrew
Jackson, Robert	Rumbold, Mrs Angela
Jessel, Toby	Ryder, Richard

Sainsbury, Hon Tim	Thompson, Patrick (Norwich N)
Sayeed, Jonathan	Thorne, Neil
Scott, Nicholas	Thornton, Malcolm
Shaw, David (Dover)	Thurnham, Peter
Shaw, Sir Giles (Pudsey)	Townend, John (Bridlington)
Shaw, Sir Michael (Scarb')	Townsend, Cyril D. (B'heath)
Shelton, Sir William (Streatham)	Tracey, Richard
	Tredinnick, David
Shephard, Mrs G. (Norfolk SW)	Trippier, David
Shepherd, Colin (Hereford)	Trotter, Neville
Shepherd, Richard (Aldridge)	Twinn, Dr Ian
Shersby, Michael	Vaughan, Sir Gerard
Sims, Roger	Waddington, Rt Hon David
Smith, Tim (Beaconsfield)	Walker, Bill (T'side North)
Soames, Hon Nicholas	Ward, John
Speller, Tony	Wardle, Charles (Bexhill)
Spicer, Michael (S Worcs)	Warren, Kenneth
Squire, Robin	Watts, John
Stanley, Rt Hon Sir John	Wells, Bowen
Steen, Anthony	Whitney, Ray
Stern, Michael	Widdecombe, Ann
Stevens, Lewis	Winterton, Mrs Ann
Stewart, Allan (Eastwood)	Winterton, Nicholas
Stewart, Andy (Sherwood)	Wood, Timothy
Sumberg, David	Woodcock, Mike
Summerson, Hugo	Yeo, Tim
Taylor, Ian (Esher)	Young, Sir George (Acton)
Taylor, John M (Solihull)
Taylor, Teddy (S'end E)	Tellers for the Ayes:
Tebbit, Rt Hon Norman	Mr. David Heathcoat-Amory
Temple-Morris, Peter	and Mr. Tom Sackville.

NOES
Abbott, Ms Diane	Cox, Tom
Adams, Allen (Paisley N)	Crowther, Stan
Allen, Graham	Cummings, John
Alton, David	Cunliffe, Lawrence
Anderson, Donald	Dalyell, Tam
Archer, Rt Hon Peter	Davies, Rt Hon Denzil (Llanelli)
Armstrong, Hilary	Davies, Ron (Caerphilly)
Ashton, Joe	Davis, Terry (B'ham Hodge H'l)
Banks, Tony (Newham NW)	Dixon, Don
Barnes, Mrs Rosie (Greenwich)	Dobson, Frank
Barron, Kevin	Dunnachie, Jimmy
Battle, John	Dunwoody, Hon Mrs Gwyneth
Beckett, Margaret	Evans, John (St Helens N)
Beith, A. J.	Fatchett, Derek
Bell, Stuart	Faulds, Andrew
Benn, Rt Hon Tony	Fearn, Ronald
Bennett, A. F. (D'nt'n & R'dish)	Field, Frank (Birkenhead)
Bermingham, Gerald	Fields, Terry (L'pool B G'n)
Bidwell, Sydney	Flannery, Martin
Blair, Tony	Flynn, Paul
Blunkett, David	Foot, Rt Hon Michael
Boateng, Paul	Foster, Derek
Boyes, Roland	Fraser, John
Bradley, Keith	Fyfe, Maria
Bray, Dr Jeremy	Galbraith, Sam
Brown, Gordon (D'mline E)	Galloway, George
Brown, Nicholas (Newcastle E)	Garrett, John (Norwich South)
Brown, Ron (Edinburgh Leith)	Garrett, Ted (Wallsend)
Bruce, Malcolm (Gordon)	George, Bruce
Buchan, Norman	Gilbert, Rt Hon Dr John
Buckley, George J.	Godman, Dr Norman A.
Caborn, Richard	Golding, Mrs Llin
Callaghan, Jim	Gordon, Mildred
Campbell, Menzies (Fife NE)	Gould, Bryan
Campbell, Ron (Blyth Valley)	Graham, Thomas
Campbell-Savours, D. N.	Grant, Bernie (Tottenham)
Canavan, Dennis	Griffiths, Win (Bridgend)
Cartwright, John	Grocott, Bruce
Clark, Dr David (S Shields)	Hardy, Peter
Clarke, Tom (Monklands W)	Harman, Ms Harriet
Clay, Bob	Hattersley, Rt Hon Roy
Clelland, David	Haynes, Frank
Clwyd, Mrs Ann	Healey, Rt Hon Denis
Cohen, Harry	Heffer, Eric S.
Coleman, Donald	Henderson, Doug
Corbett, Robin	Hinchliffe, David
Cousins, Jim	Hogg, N. (C'nauld & Kilsyth)

Holland, Stuart	Nellist, Dave
Hood, Jimmy	Oakes, Rt Hon Gordon
Howarth, George (Knowsley N)	O'Brien, William
Howell, Rt Hon D. (S'heath)	O'Neill, Martin
Howells, Geraint	Orme, Rt Hon Stanley
Hoyle, Doug	Parry, Robert
Hughes, John (Coventry NE)	Patchett, Terry
Hughes, Robert (Aberdeen N)	Pendry, Tom
Hughes, Sean (Knowsley S)	Pike, Peter L.
Hughes, Simon (Southwark)	Powell, Ray (Ogmore)
Illsley, Eric	Prescott, John
Jones, Barry (Alyn & Deeside)	Primarolo, Dawn
Jones, Martyn (Clwyd S W)	Quin, Ms Joyce
Kaufman, Rt Hon Gerald	Radice, Giles
Kennedy, Charles	Randall, Stuart
Kinnock, Rt Hon Neil	Rees, Rt Hon Merlyn
Lamond, James	Richardson, Jo
Leadbitter, Ted	Robertson, George
Leighton, Ron	Robinson, Geoffrey
Lestor, Joan (Eccles)	Rogers, Allan
Lewis, Terry	Rooker, Jeff
Litherland, Robert	Ross, Ernie (Dundee W)
Livingstone, Ken	Rowlands, Ted
Livsey, Richard	Ruddock, Joan
Lloyd, Tony (Stretford)	Sedgemore, Brian
Lofthouse, Geoffrey	Sheerman, Barry
Loyden, Eddie	Sheldon, Rt Hon Robert
McAllion, John	Shore, Rt Hon Peter
McAvoy, Thomas	Short, Clare
Macdonald, Calum A.	Skinner, Dennis
McFall, John	Smith, C. (Isl'ton & F'bury)
McKay, Allen (Barnsley West)	Snape, Peter
McKelvey, William	Soley, Clive
McLeish, Henry	Spearing, Nigel
McNamara, Kevin	Steel, Rt Hon David
McTaggart, Bob	Stott, Roger
McWilliam, John	Strang, Gavin
Madden, Max	Straw, Jack
Mahon, Mrs Alice	Taylor, Mrs Ann (Dewsbury)
Marek, Dr John	Taylor, Matthew (Truro)
Marshall, Jim (Leicester S)	Turner, Dennis
Martin, Michael J. (Springburn)	Vaz, Keith
Martlew, Eric	Wall, Pat
Maxton, John	Wallace, James
Meacher, Michael	Walley, Joan
Meale, Alan	Wardell, Gareth (Gower)
Michael, Alun	Wareing, Robert N.
Michie, Bill (Sheffield Heeley)	Welsh, Michael (Doncaster N)
Mills, Iain	Williams, Rt Hon Alan
Mitchell, Austin (G't Grimsby)	Williams, Alan W. (Carm'then)
Moonie, Dr Lewis	Winnick, David
Morgan, Rhodri	Wray, Jimmy
Morley, Elliott
Morris, Rt Hon A. (W'shawe)	Tellers for the Noes:
Morris, Rt Hon J. (Aberavon)	Mr. Frank Cook and
Mowlam, Marjorie	Mr. Ken Eastham.
Mullin, Chris

Question accordingly agreed to.

Resolved, That the Rate Support Grant Report (England) 1989–90 (House of Commons Paper No. 75), a copy of which was laid before this House on 19th December, be approved.

It being after Ten o'clock, Mr. Speaker proceeded, pursuant to the order of 13 January, to put forthwith the remaining motions relating to local government finance.

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1. LOCAL GOVERNMENT FINANCE 131 words
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2. Statutory Instruments, &c. 18 words
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1. AGRICULTURE 32 words