§ 2 pm
§ Mr. David Amess (Basildon)
There is nothing quite so stimulating as addressing a full House. Obviously this is such an occasion this afternoon. I am proud to represent Basildon, which I believe is the finest town in the country. I am proud of our many achievements, but I am certainly not proud about what I have next to tell the House—indeed, I am absolutely disgusted about it. Socialist-controlled Basildon district council has just imposed on its ratepayers the largest rate increase in the country of 57.2 per cent. People are rightly outraged about that and those who have been party to such irresponsibility should be thoroughly ashamed of themselves.
I want to take this opportunity to put the record straight about who is to blame for this absolutely shocking state of affairs, as many lies have been spread throughout the constituency on this subject. The rate increase has nothing to do with the provision of essential services; it has much more to do with the enhancement of leisure facilities. Socialists under their different labels are entirely to blame for the massive rate increase through their irresponsible fiscal mismanagement which I will describe.
Constituents have asked me why Basildon's rates were not capped this year. I hope that my hon. Friend the Minister, when she replies, will confirm that, through creative accountancy and by drawing upon its reserves, the council failed to meet the Department's criteria.
In previous years Basildon's rates were capped. There was obvious disappointment that they were not included in the capping procedure this year. I made my maiden speech on the Rates Bill and I expressed my wish then that the present system of rates should be replaced by the community charge. I am delighted that the present unfair rates system will be replaced by the community charge next year. I hope that my hon. Friend the Minister will make it clear that, where taxpayers' money is spent, the local council should be called to account for its fiscal management.
At the moment, all sorts of leaflets and news items are being spread locally conveying to ratepayers what the level of community charge will be. Somehow the myth is being spread that the level of community charge is entirely the Government's responsibility,. I hope that my hon. Friend the Minister will take the opportunity today to put that right.
I also believe that no one in future should be able to pass the buck and blame others for the level of community charge. I strongly believe that the community charge is good news for Basildon. It is certainly good news for the country at large. It will spread the burden of the cost of local services much more widely. Only a minority of people bear the cost of those services at the moment.
During the last year, Basildon council has been described as a hung council. I know that my hon. Friend the Member for Chelmsford (Mr. Burns) has some experience of that. Throughout the past year the casting vote has been held by the chairman of the council, but in reality what happened has been farcical. A Liberal councillor suddenly announced that in future he would sit as an independent. In practice, this so-called independent councillor voted with the Labour members of the district council on every conceivable occasion. The Labour district council did not have the guts to take responsibility for its 1302 actions, so—surprise, surprise—after the local elections in May this so-called independent announced that he was going to join the Labour party. However, I have just been advised that not all the Labour councillors are aware of the fact that he has been allowed to join the Labour party. The suggestion, therefore, must be: watch this space.
The council's behaviour has been quite extraordinary. Despite all that has happened, at its first meeting the council went on a massive spending spree. I voted to increase members' allowances, something which the Conservative group on the council has long opposed. The meeting was not held in the council chamber, which was available. Instead, it was held in the Olivier room of the new Towngate theatre, thus involving even more expense.
There is no doubt in my mind that the cost of building and maintaining the new Towngate theatre is a significant reason for Basildon district council having imposed the largest rates increase in the country—57.2 per cent. The old Towngate theatre was razed to the ground. In its place we have the most expensive municipal theatre in the country. It cost £8.5 million. Of course, we did not have the money to build the theatre. As we could not afford to build it, the money had to be borrowed. A private company has been set up to manage the theatre. Its board consists of councillors and other interested parties.
The stark reality of the enterprise is that even if every seat were occupied on every day of the year, we would still lose money. As that reality dawns on our community, many questions are rightly being asked. Who is responsible for having embarked on such a financially stupid scheme in the first place? Who was responsible for designing the theatre? Who approved the final plans? Who gave the advice which, presumably, councillors saw fit to take at the inception of the scheme? Who has been responsible for managing the theatre's affairs from the day that it opened? The Towngate theatre has so far received about £1.5 million in support for the current year, £900,000 of which relates to repayment of the debt charge.
The Labour group did not incorporate a council chamber in the new town hall. It believes that a council chamber is dead space for most of the time, so in future full council meetings are to be held in the theatre's Mirren studio. I believe that all hon. Members will be shocked to hear that in future council meetings in Basildon will be held in the theatre. I believe that that is a gross insult to the democratic process which we all support, and that Basildon will become a municipal laughing stock.
Local people will never forget the brutal way in which the old Towngate theatre was razed to the ground. It was part of the Basildon culture. The local community was attached to the old building. I do not think that the staff's feelings were considered. Many local residents find it patronising and insulting that it is suggested that, with the advent of the new theatre, culture and sophistication have been brought to Basildon. We find that deeply offensive. I can think of nothing that is less in keeping with this new development than the awful banner which has been displayed across the £8.5 million building and the dirty old caravan which looks as though it has been abandoned outside the main entrance.
All manner of questions should be asked. Those who have been responsible for what has happened should be brought to account. Nobody should be allowed to walk away from the issue until a full, proper and independent inquiry has been held. I am advised that the losses on 1303 revenue last year were £650,000 and that a debt payment of £1,147,000 had to be serviced, courtesy of the burdened ratepayers of Basildon.
I am not attacking the concept of a theatre in Basildon. We have always enjoyed very successful theatre. I applaud the arts and enjoy the entertainment that is provided by local groups, but as a Basildon ratepayer I am outraged by what I believe has happened regarding the financial viability of the new Towngate theatre, bearing in mind the huge rate increase that we have suffered.
It is now rightly being asked what proper services the Labour party will sacrifice to satisfy its ego and to continue its support of the theatre. My hon. Friend the Minister, who has responsibility for new towns, has had to grapple with several difficult issues involving Basildon during the past year. Perhaps the most appalling example of Socialist hypocrisy are the lies that have been spread, and which have frightened new town commission tenants about the security of their tenure. The lies are endless, but despite repeated assurances to the contrary from my hon. Friend the Minister, the elderly, who are among the most vulnerable in our community, have been frightened, and local Socialists have continued to stick to the line that new town commission tenants will lose their security of tenure.
The episode is all the more disgraceful when one considers that the Labour party was offered new town commission properties when there was a Labour Government. Unlike the council in Harlow, it refused. I believe that, as a result of that decision, Basildon has lost a considerable amount of income which we could have used to great effect.
In spite of the local financial crisis, the Socialist council intended to spend £35,000 of ratepayers' money on a so-called tenants' ballot. It has just had the nerve to send out, at the expense of ratepayers, letters congratulating tenants on something that the Labour party was responsible for starting. The letters were sent out in envelopes depicting a champagne bottle. That is a disgrace and the people responsible for the outrage should be called to account.
The so-called tenants action group is described as non-political but local people know that the organisers are Labour party activists. I am advised that in the recent local elections the disgraceful Militant organisation was active in some parts of the constituency. I thought that Militant was proscribed by the Labour party. How is it that a candidate is allowed to stand under the Labour party banner when we know that he is supported by Militant? The tenants action group leaflet was distributed locally by the Labour party and at the bottom the leaflet says that it has been donated at the expense of Morning Star publications.
The role of local government officers has also been questioned by some people. Local government officers have always enjoyed a proud history of political neutrality and I have always thought that they approached their duties in a thoroughly responsible and professional manner. Therefore, we have a fine tradition that should be encouraged and which, we hope, will flourish. However, the relationship between local government officers and elected representatives should be clear. It is for the latter to tell the former what to do, obviously after taking advice. It should not be the other way round. Elected representatives should be seen to run things and officers 1304 should never be put in a compromising position by making political statements that cannot be backed up through the ballot box.
The Socialist authority, in its never-ending desire to spend money, continues to interfere in areas for which it has no statutory responsibility. It has recently set up a Health Service monitoring and liaison panel, an anti-poll tax committee and a transport committee, and it has now had the cheek to set up a committee to monitor the activities of the Commission for the New Towns.
We know that all those committees are a cloak behind which to knock the Government. That is what it is all about and it is all at the expense of Basildon's hard-pressed ratepayers. The style of Socialists in Basildon has always been to take the credit for things for which they have no responsibility and to avoid criticism for those things for which they should rightly be taken to task. That is highlighted by the fact that they have no concept of what voluntary work is all about. They simply sit there handing out money regardless, and they believe that people should be paid for everything they do.
Council proceedings have become so farcical that, to avoid political change, area management such as has been suffered in Walsall and Tower Hamlets has now been adopted at a huge cost to Basildon's ratepayers. Control of spending has been given to area management committees which Socialists hope will remain in the control of Socialist activists.
Basildon's direct labour organisation has just lost £634,000. I know that the Department of the Environment is looking at what action to take over that financial failure. Grandiose schemes, which did not materialise, were heralded by the council.
I hope that a sensible conclusion is reached about the completion of the roofing of our town centre. It is essential that both sides hold constructive talks and that commitments given to established traders are honoured.
We are currently celebrating 40 glorious years since the birth of Basildon as a new town. It is a wonderful place in which to live because of the strength of the local community. I certainly do not wish it to be broken by the financial mismanagement that we are suffering at the hands of the Socialists.
§ The Parliamentary Under-Secretary of State for the Environment (Mrs. Virginia Bottomley)
I congratulate my hon. Friend the Member for Basildon (Mr. Amess) on securing this Adjournment debate to highlight the recent high rate increase in Basildon and the predicament in which the community finds itself. It is fortunate to have as its Member of Parliament such a champion of its interests.
I congratulate and strongly support my hon. Friend on his persistent efforts over the past few years to bring to light the irresponsible and extravagant expenditure of Basildon district council, which until last year was Labour-controlled but only recently has become hung—an apt description of the difficulties in which it finds itself, which it is foisting on local residents. Efficient management, good common sense and more accountability are needed on Basildon district council.
My hon. Friend told us that Basildon increased its local rate by over 57 per cent. for 1989–90 to finance a huge increase in spending of 87 per cent. My hon. Friend mentioned its spending on leisure activities. It seems to me 1305 that its leisure activity is spending other people's money. That increase is the largest rate increase of any shire district and well above the average increase of 12 per cent. for shire districts. The local rate for Basildon—78.1 p—is the third highest in England. Only Harlow and Wear Valley, which are Labour-controlled districts, have higher rates. In contrast, hon. Members will be interested, but scarcely surprised, to learn that the average increases in local rates between 1988–89 and 1989–90 is almost 14 per cent. among Labour shire authorities compared with only 9 per cent. among Conservative authorities.
Those figures highlight the extreme profligacy of Basildon district council with its ratepayers' money. To understand how the huge rate increase occurred, I shall give the House the basic facts behind it and show that it has nothing to do with the Government but was the result of decisions taken by the council purely and simply to make ratepayers pay for its numerous and extravagant schemes.
Basildon district council has a long history of excessive spending. Throughout the 1980s, total expenditure was well above the amounts assessed for grant-related expenditure. Average spending over GRE since 1983–84 has been a staggering 80 per cent., and in two of the past three years expenditure has been over double the assessed GRE level. That is clearly excessive by any standards and is a heavy burden for the ratepayers of Basildon to carry.
The district's needs are assessed in the same way as those of every other shire district. The assessment measures what an authority needs to spend to provide a standard level of service at a common rate poundage, taking account of the characteristics of the area. It is an objective method based on indicators of need. Of course, there can be, and often are, argument and discussion about precise detail. Hon. Members will be aware that officials are reviewing, with the associations, the methodology for a set of simplified needs assessments to be used under the new revenue support grant system.
Basildon's excessive spending led the Secretary of State to rate-cap it each year between 1985–86 and 1988–89. By 1988–89 we had reined rates back to a level below that in 1985–86. But in 1989–90 it was not possible for us under the Rates Act 1984 to cap Basildon. I understand the frustration of many local residents. Section 2(2)(a) of the Rates Act exempts an authority from designation for rate limitation in any financial year if its total budgeted expenditure for that financial year does not exceed a threshold which is statutorily updated each year. This is because authorities with low expenditure in absolute terms have only a relatively small impact on the level of rates which ratepayers actually pay. The Rate Limitation (Designation of Authorities) (Exemption) Order 1988 set the threshold for designation in 1988–89 for capping in 1989–90 at £13.1 million. Basildon's budgeted total expenditure figure of £13 million is just below the threshold for capping.
Although Basildon will receive no block grant in 1989–90 because of its excessive expenditure relative to GRE levels, I should point out that the 1989–90 rate support grant settlement would have allowed Basildon to reduce its local rate by 3 per cent. without the use of balances, had it held its spending roughly constant in real terms. However, even a decrease of 3 per cent. would still 1306 have left Basildon ratepayers facing one of the highest rate poundages, but it would have been a welcome step in the right direction. Clearly, there was no need for such a substantial rate rise.
I greatly regret the misinformation and scaremongering on the community charge. Labour local authorities that are spending highly know only too well that the writing is on the wall. With the introduction of the community charge, the community will be well and truly in charge. High-spending, profligate authorities will be exposed for what they are to the local charge payers. The system will be fairer. It will restore local accountability and local residents will know what they should do in the local elections.
I am sure that my hon. Friend hopes that the residents of Basildon will take the good advice of the citizens of the county of Essex and ensure that they elect Conservative representatives, who will conduct themselves efficiently and effectively, have a responsible attitude towards local charge payers' money and provide the best value for money together with high-quality services. We have estimated that, had the community charge been in operation in 1988–89, the charge in Basildon would have been about £267, £65 more than the community charge for spending at need. I stress that those figures are merely illustrative. The level of community charge depends upon the spending policies of the local authorities. Basildon's charge payers will be free to vote for the policies that they want and the party that puts them forward.
My hon. Friend referred to the fact that the ratepayers are now paying the price for excessive capital commitments during the 1980s, using deferred purchase arrangements. We all know much about all those policies seeking to take the waiting out of wanting—live now, pay later. The chickens are coming home to roost.
In recent years, Basildon has entered into substantial deferred purchase arrangements for capital programmes, totalling at least £44 million. These include the Towngate theatre, referred to by my hon. Friend, the Basildon centre and the Markham Chase centre. I share his concern that even if every seat of the theatre were filled for every day of the year it would still make a loss, as he said earlier this week. The district auditor outlined the financial impact of these schemes on the ratepayers of Basildon in his report of July 1987. He estimated that the payments falling due in 1989–90 from deferred purchase schemes would be equivalent to adding 19p to the rate in 1989–90—a rate which I have already said was very high compared with other shire districts. We estimate that these payments could account for around two thirds of the recent rate increase in Basildon.
Basildon district council has obviously entered into huge financial commitment and, now that the payments have to be made, the reality of the arrangements is hitting home. The Government have given public warnings many times about the inevitable financial consequences of authorities buying today and paying tomorrow. We have made it clear that local authorities must provide for the debts that they have chosen to incur.
In 1987 Parliament passed legislation designed to remove the advantage within the capital control arrangements for local authorities to enter into deferred purchase agreements. It seems unlikely that authorities would now imprudently use such arrangements. Under the new capital finance arrangements for local authorities 1307 which we propose to bring into force from 1 April 1990 deferred purchase arrangements will be treated as a credit arrangement similar to borrowing.
I thank my hon. Friend for the opportunity to comment on the situation in Basildon. I note that the slogan on the headed notepaper used by the council is, "Caring and winning through". I hope that the Council will take it to heart and provide the ratepayers and future community chargepayers with more responsible financial management. I have no doubt that the new community charge system will bring about greater accountability—
§ It being half-past Two o'clock, the motion for the Adjournment lapsed, without Question put.