HL Deb 19 May 1976 vol 370 cc1415-22

3.59 p.m.


My Lords, with the leave of the House I should like to repeat a Statement which is being made by my right honourable friend the Secretary of State for the Environment in another place. His words are as follows:

" The report of the Committee of Inquiry into Local Government Finance —the Layfield Committee—is published this afternoon. Copies are available in the Vote Office.

" The Committee were appointed in the summer of 1974 by my predecessor together with my right honourable friends the Secretary of State for Wales and the then Secretary of State for Scotland. Their terms of reference were to review the whole system of local government finance in England, Scotland and Wales, and to make recommendations'. The Committee presented their report in March of this year.

" This is, as the Committee points out, the first comprehensive review of local government finance since 1914. It was therefore bound to be a major undertaking and we are grateful to Mr. Frank Layfield, QC, and his colleagues on the Committee for completing their work within 21 months of their first meeting. This is a tribute to the intensive work put in by the members of the Committee.

" The report itself runs to nearly 500 pages, and I will not attempt to summarise it in a short Statement. Nor will the House expect me to announce today any decisions on the Committee's recommendations. The Government will want first to hear the views of local government, of other interested parties and, of course, of both Houses. Secondly, the Committee have provided not a single clear-cut list of recommendations, but a fundamental analysis of the present state of local government finance. They conclude that the design of a system of local finance must depend on the view taken about what the whole relationship between central and local government should be. Thirdly, as the Committee themselves acknowledge, and I quote: The detailed implications of our recommendations would require very much more time to explore than was available to us ' " To take one conspicuous example, the proposal for a local income tax is indeed complex. The report recommends that, if much greater freedom of action were to be given to local authorities a local income tax should be introduced so as to reduce their dependence on Government grants. I must stress that the Committee envisaged local income tax as a supplement to the rates and not as a substitute for the rates. This proposal obviously requires very careful consideration.

" We propose to press ahead urgently with our consultations and studies. My right honourable friends and I will be discussing the report with the Consultative Councils on Local Government Finance and with the Convention of Scottish Local Authorities. Naturally, we could not possibly write to all the vast number of other parties with an interest in local government finance. But we are anxious to obtain the widest possible knowledge of public and professional opinion. I would therefore urge any interested organisations or individuals—including, of course, right honourable and honourable Members—to send us their comments.

" I fully appreciate how complex are the issues raised in the report of the Layfield Committee and that local authority associations and others are already occupied with preparing comments on other important documents such as the Transport Policy Review. Nevertheless, we should press on urgently with the consideration of the Layfield Report and I think that interested parties ought to be able to come to a view on the issues raised within the next six months. So I must ask that comments be submitted by the end of November.

" Progress thereafter will depend on the outcome of our consultations, but we shall aim to come to decisions and to report to the House as soon as possible.



My Lords, we are of course grateful to the noble Baroness, Lady Birk, for repeating this Statement, and even more grateful to Mr. Frank Layfield and my noble friend Lord Ridley, who was a member of his Committee, and their colleagues, for undertaking and completing such an arduous task. The noble Baroness will be aware that there has been a serious leak, about which there is concern, in the two months during which this report has been in the hands of the Government, but my noble friend Lord Ridley has down a Question for Written Answer about that and I will leave him to press that matter now if he wishes to do so.

Of course, we shall look forward very much to a debate on this topic, and it will be interesting to know as soon as possible —though I know the noble Baroness cannot tell us now—whether the Government propose to find time for that before or after the Recess. What we are dealing with here is not just a matter of financial adjustments but something which goes to the heart of the fundamental relationship between central and local government. When we come to the debate there will be protestations from all sides about the importance of independence and autonomy for local government, but what we shall want to know from the noble Baroness is whether the Government propose to translate that into practice or whether we shall continue, as we have for too long in the past, a situation where central Government pay the piper and call the tune—a state of affairs which prevails under, for instance, the Community Land Act, where central Government find all the money and local government does their bidding. This is the issue which our debate must try to settle.

4.5 p.m.


My Lords, I should like to join in thanking the noble Baroness for repeating the Statement made in another place, and also in thanking Mr. Layfield and his Committee for their considerable labours. I am sure that we in this House are all glad that this important report is now published. We on these Benches will study it very carefully and will form our conclusions on its proposals. It deals with a system of finance which has been in crying need of reform for some considerable time. We welcome the recognition of the fact that if the local authorities are to have greater freedom of action then additional sources of revenue for local government must be found, and I am glad that in this connection local income tax is suggested, even although its operation may be, as the Statement insists, quite complex.

I am glad, too, that the burden on the rates is also to be reduced, which is another recommendation. I understand that the report recommends that the rates should be applied to capital values of both property and land. 1 should myself have preferred to see them levied on the site value alone. There must clearly be the fullest consultation, as is proposed in the Statement; yet I hope that legislation will not be too long delayed, and I wonder whether the noble Baroness can tell us if the Government have any target date for that. I would ask that we should have a debate on the report in this House as soon as it can be conveniently arranged.

4.7 p.m.

Baroness BIRK

My Lords, perhaps I may answer the points made by the two Front Bench speakers opposite. The noble Lord, Lord Sandford, asked me about the question of a debate before or after the Recess. The question of a debate in either House of Parliament is a matter for the House itself, to be arranged through the usual channels. As to whether these recommendations will be translated into practice, in the report the Government have been given, I think noble Lords will agree, a thorough analysis of the complex problems of local government finance. Our concern must be to develop solutions which protect our democratic structure and the growing partnership between local and central government in the provision of services and the control of expenditure, and naturally we will want to take the views of local authorities and the public before coming to a decision on the report. Therefore, the translation into practice must depend on this timetable.

The noble Lord, Lord Banks, said—and this was the whole object in the Government's setting up of the Committee—that there was crying need for reform in local government finance, and he referred to the need for additional forms of revenue. I think his views were summed up when he spoke in the debate on local government on the 5th May, in col. 539, when he referred to the financing of local government. I can assure him that there will be the fullest consultation. So far as concerns legislation not being too long delayed, it of course depends on what decisions the Government come to as a result of the consultations and their own considerations; but, as the Layfield Committee itself points out, there are some areas of its recommendations which could be implemented quite quickly whereas others will take considerable time. If indeed the Government come down in favour of some form of local income tax—and they have not as yet had the opportunity to study this completely—as Layfield itself says, it would take at least five years before there could be any implementation of this proposal. The point that both noble Lords raised about rates takes us into more detailed fields. Perhaps I could make it clear and emphasise that the Committee themselves welcomed both the retention of the rating system, as such, together with a form of local income tax.

Viscount RIDLEY

My Lords, as a member of this Committee, I should like to add my thanks to the noble Baroness for the Statement and to say how much we welcome the publication of the report. I would ask her if she would note the date. This was signed on 9th March—and here we are at 19th May which is too long a gap. The Government will also know that during this gap the whole matter appeared in considerable and accurate detail in The Times. I hope that the Minister is aware that this leak has been greatly resented by members of the Committee among other people. They feel themselves to some extent under suspicion at this moment. While I do not wish to cast any aspersions on The Times, they perhaps have cause for congratulation rather than anything else. I hope that the Minister will promise a full and searching inquiry into what happened. This leak is just as fishy as the debate we are interrupting at this moment. I hope that we will be able to stop this sort of thing from happening in the future.

Baroness BIRK

My Lords, may I reply to the noble Viscount, Lord Ridley, as he is a member of the Committee and is present in the House, to convey to him personally the appreciation of the Government for the work that has been done by the Committee, for the expedition with which it was done and also, as I am aware, for his own considerable contribution to that. The big gap to which he referred is not really such a big gap in terms of printing and publishing. These things take time. It was, in some ways, quite a short time because, as we are all aware, it is a very substantial report. It also means correcting, setting up proofs, galleys and so on.

So far as the leak is concerned, I share—as do the Government through my right honourable friend the Secretary of State—the concern of the noble Viscount and his feelings and the resentment felt by the Committee. I should like him to assure Mr. Layfield and the Committee that certainly on the part of the Government there is no feeling at all that this in any way could be attributed to the Committee or any member of it. We are undertaking currently a full and searching inquiry into how the leak occurred. On how successful we shall be, I cannot give any promises, but this is not in the future; this is under way now. All I would say is that from all sorts of past experience, I am sure that we all are aware that directly any publication, any piece of paper appears, or even any word drops from the lips or pen of one person, it gets into the arena of perhaps a risk of public disclosure. Nevertheless, I can assure him that every care was taken in my Department and I should like to assure him on behalf of the officials within the Department of the really personal regret and anxiety that this should have happened. It is not something that we have treated lightly or where we are not aware of the consequences and the feelings of the Committee.

Viscount AMORY

My Lords, I am sure that everybody connected with local government would want to join in the tributes that have been paid to this very able and authoritative Committee on their labours. Their report is full of meat and I am sure that everybody in local government will want to study the proposals with the greatest care in the world. I should like to exonerate my noble friend Lord Ridley from any leak at all. I wrote to him about two months ago to ask him if he could tell me what was going to be in the Layfield Report. He wrote back a very polite letter making no comment on the Layfield Report itself but sending me a package of oat cakes that he strongly recommended


My Lords, I would ask my noble friend whether she is aware that we view with satisfaction her assurance that this leak is going to be inquired into. I say that as an old newspaper man who always used to be on the look-out for the advance story. The second point is this. Will the Government announce a decision on this fundamental question of local income tax as soon as possible so that we can all give it consideration? At the moment it is just thrown out theoretically and many of the very grave difficulties associated with it have not been explored. Thirdly, may I ask my noble friend whether she would draw the attention of her Department to the paper on rating and its future which I presented at the annual conference of the Rating Association 15 years ago? I think that she will find there the whole problem examined most carefully and a solution put forward in more simple terms than in the Layfield Report.

Baroness BIRK

My Lords, I will pass on to my right honourable friend what has been said about the leakage. On the question of local income tax which my noble friend says has been theoretically put forward, the Layfield Committee have put forward their proposals backed up by a tremendous amount of evidence and thought. It is something of such vital concern to the whole of our local government and central Government financial and taxation system, that I am certain that my noble friend (while I share his desire for expedition in this matter) would not want it to be dealt with except very thoroughly for it is going to have long and far-reaching effects. All I can tell him is that the reason I gave for the need to have all the consultations in by the end of November is so that we can speed things up. As for the last point, the moment that I return to my Department I shall get his paper, read it myself and certainly see that everyone concerned sees it. If only we had known about it before we might have avoided all this.


My Lords, I am not one of those who had the advantage of a surreptitious advance look at this extremely important report, but, as a former Minister for Local Government, I should clearly like to express my profound thanks to Frank Layfield and to all the members of his Committee, not least my noble friend Lord Ridley. Is the noble Baroness aware that, although she correctly said that this was the first major public inquiry into local government finance for 60 years or so, a tremendous amount of work has been done, to my certain knowledge, under different Governments, inside Government Departments, among local authority associations, in academic circles and so on. In so far as I have been acquinted with those, most of them came to the final conclusion that, although there were interesting possibilities of change, the changes likely to accrue would be for the worse and not for the better. That is why it is very exciting to people like myself to know that we are going to have the advantage of reading a thorough-going report on this subject which, although it does not seem to have very definite recommendations, has nevertheless given us some hope that there may be solutions which will be for the better and not for the worse.

Baroness BIRK

My Lords, I should like to thank the noble Lord, Lord Brooke of Cumnor, for his comments because we are all very much aware of the amount of work that he has undertaken in this field during his distinguished career. I am quite sure that the Layfield Committee were able to lean very heavily on the various inquiries and work done in the past. The point about its being a first review is that it is the first comprehensive review in this area since 1914, but this by no means implies that all the other work done by the noble Lord and others has either been overlooked or forgotten.