HL Deb 16 December 1981 vol 426 cc181-9

3.50 p.m.

Lord Bellwin

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

" Mr. Speaker, I will, with permission, make a statement about a number of rating and local government finance matters. In their relationship with local authorities, the Government face two main problems—first, the need to contain levels of expenditure; and, second, the need to make progress with their commitment to reform the rating system. The Government are determined to reduce the level of local government current expenditure and to ensure through the distribution of the rate support grant that the consequences of high spending policies are financed more directly by those local communities where the highest spending takes place.

" The majority of local authorities have now proved that the Government's expenditure targets were realistic and attainable. I am most grateful to these authorities for the very real efforts that they have made. The continuing wish of most local authorities to co-operate with Government by reducing the rate-borne costs of public expenditure in their areas is further reinforced by the publication today of the latest local government manpower figures for England. These show the largest total drop in manpower ever achieved in one year. At 1.9 million, the number of full-time equivalent employees in local government in England is the lowest total recorded since the joint manpower watch system was introduced, and effectively eliminates all the manpower growth that has taken place since 1974.

" In their determination to maintain pressure on current expenditure, particularly in authorities which do not co-operate with the overall policy of securing a better balance between the public and private sector, the Government decided to legislate this Session to deter high spending. The Government intend to proceed with legislation. Instead of the proposals to permit supplementary rates only after a poll of local communities, the Government propose to ban supplementary rates altogether. Parts II and III of the Bill, subject to drafting changes, will stand. I am therefore withdrawing the Bill which was introduced on 6th November. I am introducing today a new Bill incorporating these proposals.

" It may be that during the financial year an authority may incur unforeseeable expenditure. In these circumstances, it could apply to me for temporary borrowing permission. I would not grant such permission, unless it was absolutely essential for the expenditure to be incurred in the year, and unavoidable commitments met. I should expect the borrowing to be repaid out of revenue income within the first quarter of the following year.

" Our election manifesto restated our determination to reform the domestic rating system. I am today publishing, together with my right honourable friends the Secretaries of State for Scotland and Wales, a Green Paper on alternatives to, and possible reforms of, the present system of domestic rates. Copies are available in the Vote Office. The present system contains anomalies and unfairness. In publishing the Green Paper, the Government reaffirm their long-standing commitment to reform.

" The Green Paper considers, first, the main requirements to be met by any revenue-raising system for local government. Against those requirements, it discusses, first, domestic rates; and then the most promising alternatives—local sales tax, local income tax, poll tax and assigned Exchequer revenues. It then discusses a number of associated questions, including the economic effects of change and the consequences for the system of Exchequer grant towards the cost of local services.

" We have said in the Green Paper that the country views the question of domestic rates with a sense of urgency and that the Government wish to move ahead as quickly as possible. I am, therefore, asking for comments on the Green Paper to be submitted by 31st March 1982. I look forward to wide ranging consultations between now and next April. We shall then aim to produce proposals for a system which would remedy as fully as possible the shortcomings of the existing system of domestic rating, and which would command the widest possible acceptance in the country as a whole ".My Lords, that concludes the Statement.

3.55 p.m.

Baroness Birk

My Lords, I should first like to thank the Minister for repeating the Statement, but I also want to make a very strong protest. I have not yet been able to get a copy of the new Bill or of the Green Paper. They have not yet been released from our Printed Paper Office, and it is extremely difficult at a time like this, when one is trying to deal with a Statement, not to have a copy of the Green Paper or the Bill. I appreciate that it is not the fault of the Minister, but that really has to be said.

I am rather disappointed at the tone of the Statement because, after all, the new Bill—which I have not yet had the pleasure or displeasure of seeing—is a direct result of the Government having to change their mind over the referendum, which they have had to do because the pressure was so great not just from the Opposition, but from members of all parties and from supporters of local government. It would have been a little more gracious if that had been incorporated in the Statement. It could have been done in a very felicitous way, without the Government entirely stabbing themselves in the front and the back. But instead of that we have this rather curious Statement today.

I should like to draw attention to the point made in the Statement about the drop in manpower. It seems to me extraordinary that, at this moment, the Government now seem to be taking a tremendous amount of credit for increasing unemployment, especially in the building and related industries, because that is where there have been great lay-offs. Also, all the way through our society we are seeing the effect of the cuts in the social services, in education—and I could go on for ever. So I do not think that this is something which, at this time, makes any sense or fits in with some of the policies that the Government say they are attempting to bring about. It is no good making remarks and compassionate comments about unemployment and then bringing this in.

It also seems very odd, when we had a Statement last week on the inner cities according to which a certain amount of money was to be given, that we now have this Statement with the Government congratulating themselves on the cuts. Does this mean that the Statement on the inner cities—as many of us suspected—did not mean as much as it appeared to do? Is it pretty meaningless, therefore, in financial and employment terms, if at the same time the Government are attempting to cut both expenditure and employment?

As regards the refusal to allow authorities to raise a supplementary rate, I should like to point out that the Government have consistently under-estimated the rate of inflation and the level of wage settlements. This must mean that in every local authority, whether it is Tory. Labour, or whatever it is, the treasurers, who will be responsible, will fix the rates at a level which will provide sufficient income to cover all the eventualities and contingencies that may arise. This is a direct incentive to over-rate from the beginning, and any sensible authority will be induced to do that because they know that they will not be able to raise supplementary rate.

As for the slight let-out in the Statement about unforeseeable expenditure, whereby a local authority can appeal to the Secretary of State for temporary borrowing permission, I would only say that, going by the past record, any authority in its right mind would scarcely appeal to the Secretary of State for temporary borrowing. That is very unlikely. The Statement mentions that the Green Paper discusses the most promising alternatives. Am I not right in believing that every single alternative here was examined in detail by the Layfield Commission? If so, why do the Government want to go through this exercise again? It will involve considerable expense. Why have the Government not made up their mind and come forward with proposals? We on this side of the House are not against consultation. Indeed, we are very much for it. But the Government seem to be going over the same ground again. It will be a similar exercise to that carried out by Layfield.

Will the Minister also take note that, so far as the various alternatives are concerned, we on this side of the House would be opposed to any change which switched the burden on to those least able to bear it—that is, the low paid, the unemployed and pensioners? The Green Paper which is referred to in the Statement (I have not seen that Green Paper) deals with domestic rates. What are the Government's intentions concerning the rating of commerce and industry, about which we have read and heard whispers and rumours? How would the rates of industry and commerce be related to domestic rates? Are the Government not grasping this thistle because they are aware that in Westminster, for example, 84 per cent. of the rate revenue comes from the non-domestic rate, while in a small place like Rother in Sussex it is only 25 per cent.? This Statement will exacerbate the very unfortunate relationship which exists now between central and local government. We are reaching a state of almost civil war between local and central Government, which can only be bad not only for local authorities and for the people living in those authorities but for our democracy as a whole. Nothing in the Statement has led me to believe that anything will be done to help or to improve that situation.

Lord Beaumont of Whitley

My Lords, I, too, should like to thank the noble Lord the Minister for repeating the Statement. We on these Benches give a welcome to the Green Paper and look forward to studying it in the hope that we shall be able to find and support a system of rating which will give true independence to local authorities all over the country, the kind of devolution to which this Government paid lip-service when they came to power.

I find it very difficult, as did the noble Baroness, to stomach the Secretary of State's boast that he has eliminated all the manpower growth that has taken place since 1974. This would seem to be the wrong moment to do that. I should like to ask what I think is a concomitant question: what steps are the Government taking to repair and halt the dreadful decay that is occurring to the capital infrastructure of this country? I find it extremely difficult to understand how the Secretary of State, who is a nice, well-meaning man, can possibly put forward these proposals which will increase unemployment and decrease local autonomy. It reminds me of a remark made by a distinguished Tory pamphleteer of the past about a Socialist Chancellor of the Exchequer. Colm Brogan asked how it was that despite Sir Stafford Cripps being a highly intelligent, deeply honest, Christian man, wherever he trod the grass never grew again. We are beginning to reach the stage where we are asking that question about the Secretary of State.

I have two more specific questions to put to the Minister, one of which echoes a point made by the noble Baroness. How will this proposal to do away with supplementary rates lessen expenditure? Will not councils merely inflate their normal annual rate setting in order to guard against this eventuality? And since it will be all councils who will do this instead of merely the one or two which are forced to charge a supplementary rate, will not the results be worse rather than better? Finally, may I ask what consultations the Secretary of State has had with local authority associations on the banning of supplementary rates and what replies he has received?

Lord Bellwin

My Lords, it does not surprise me that the noble Baroness was disappointed at the tone of the Statement. I have yet to make a Statement which has not disappointed the noble Baroness. But who knows? Perhaps I shall, one day. The noble Baroness said that the Bill was changed because of pressure. If listening to what is said and reacting to people's feelings is pressure, she is quite right. I do not think many noble Lords would quarrel too much with it having been done in that way. The Secretary of State made it quite clear that he was willing to listen to alternative ways of achieving the same objective, so I hope we shall not be too critical of that.

The important point which the noble Baroness made, as did the noble Lord, Lord Beaumont of Whitley, when referring to the drop in manpower figures was that rather than being a cause for some satisfaction it is quite the opposite. I would have to differ totally and utterly from that point of view, as again perhaps they will not be too surprised to hear. It has been a constant complaint that ever since reorganisation in 1974 (I am well aware of where that came from) the number of people employed in local government has risen steadily. Indeed, in 1979 it was at a peak. Yet who would claim that the level of services is any better? Is it said that in 1979 the level of services was all that superior to what it was in 1974–75? I do not hear people saying that, and it is not necessarily my experience. If one looks at what people were employed upon, one sees a 65 per cent. cut in spending on capital projects in those years, with all the dramatic impact that had upon the construction industry.

Never mind about employing people upon current spending and then saying that is employment. You have to look at what people do. I will not accept the criticism that this reduction is other than a cause for considerable satisfaction. I prefer to look at exactly what is being achieved. That is what concerns me. So when the Secretary of States says, as he does, that there has been some progress, I agree entirely with him.

Baroness Birk

My Lords, if I may take up that point before the Minister forgets it, he made a point about capital projects. There is nothing in this Statement about the reduction in manpower affecting only current expenditure. Would not the Minister agree that, while there was a certain amount of " fat " to be carved off, we have gone beyond that and are now getting down to the bare bones, which, as the noble Lord, Lord Beaumont of Whitley, has said, is affecting the whole infrastructure of local government and increasing unemployment?

Lord Bellwin

My Lords, I do not accept that. It is what people do that matters. There is sufficient evidence to show that, while some authorities are very prudent and are having to manage very tightly and very carefully, there are others who could not care less and who, indeed, have embarked, deliberately and openly, on a policy of frustrating central Government policy by employing people. If you look at some of the activities for which those authorities employ them—I could reel off a whole string—it is a matter of shame for local government that a few local authorities should be spending as much as they do in that way. I take no pride in it at all, with my attachment to local government.

If I may continue with the other points which were made by the noble Baroness, she said that the Layfield Report was published, so why have a Green Paper? Why did not the Government come forward with proposals? We really cannot win. If the Government had come forward with something, the Opposition would have asked what consultations we had had. We have consulted over the years. The Layfield Commission was in 1976. Everybody who is interested in this subject has had something to say. We have already received many submissions from people, with suggestions as to what might be done about altering the rating system. Of course, we shall look at those, but here we are saying, " Come on, we want some reactions quickly from those who may not have made submissions and we want some reactions to the Green Paper when you read it ".

I take the point made by the noble Baroness, Lady Birk, about not having a chance to look at the Green Paper. Nevertheless, when you do read it you will see that we have tried to set out in greater detail exactly what are the implications of the alternatives which Layfield put forward and some new ones as well which are in there. I am sure we shall have some more discussion in due course on that.

As to the Government's intentions on the non-domestic rate, again I do not think that one can really consider a review of the domestic rating system without recognising that there is an impact on non-domestic rating. Clearly that will have to be part of the debate, and certainly I expect that. With regard to the point made by the noble Lord, Lord Beaumont, as to whether local authorities will simply put up the initial rates to compensate for not being able to make a supplementary rate, I do not think that will be so. The fact is that for the very first time, almost, rates have become and are becoming an electoral issue—something which many of us wish had been the case in the past—and local authorities are not going to make swingeing increases in their rates and try to blame it on Government. They will not be able to get away with that, in my submission. I think that, generally, the proposals will mean that ratepayers, both domestic and non-domestic, will know in future where they stand right from the start of the year, and I hope that that will help in the budgeting which they have to do.

Before I sit down, may I just say to the noble Baroness, Lady Birk, that, with regard to her not having received a copy of the Bill, I am informed that until a Bill has had its First Reading it is quite normal in fact that this cannot be made available. Although I take the noble Baroness' point on the Green Paper, perhaps she will take mine on that latter point.

4.13 p.m.

Lord Kennet

My Lords, party interests might cause us to rejoice at this further exchange of broadsides between authoritarian, paternalist monetarism at the centre and dogmatic, public sector, inflationary, entrenched positions at the grass roots, but we do not do so because, having adopted the policy of local autonomy, so far as is conceivable in a parliamentary democracy, we stand by it even when we see the champions of two conflicting policies destroying each other on the ground. This party stands for local autonomy in the levying and the expenditure of taxes. This does not prevent us from being interested in and casting a favourable eye over the promised Green Paper and the alternatives which are going to be proposed to the present rating system. We do think that the rating system is defective and if the Green Paper and the consequent legislation contain proposals to replace it with something we consider satisfactory, then we shall of course be in favour of that.

In the meantime, I have one question to put to the Government: when does the prohibition of supplementary rates come into effect, and can the Minister say anything to clarify the position about London ratepayers at the moment and the supplementary rate demand which is now in doubt in more than one quarter?

Lord Bellwin

My Lords, I make no general observations about the comments which have been made by the noble Lord, Lord Kennet. I think they speak for themselves, and no doubt will be read for themselves. As to his request for information about when the procedure will come into effect, clearly, it has now to be put through, but we are hoping for the beginning of the municipal year. That means at the end of March and the beginning of April. I do not think that I can help the noble Lord further with anything else he said. I know of his interest and I know of his considerable experience in that field. I respect that, and I hope that, when we come to debate the nuts and bolts, if I may call it that, he will make a contribution, and I shall look forward to hearing it.

4.15 p.m.

Lord Nugent of Guildford

My Lords, is my noble friend aware that on this side of the House his information that there has been this reduction of manpower in local government services is very welcome news for the hard-pressed ratepayers of this country? Is he aware also that the noble Baroness's good debating point, that this is increasing unemployment, does not really have much substance, because in many cases the high financial burden of rates at the present time is handicapping industry and commerce and so causing more unemployment? Is my noble friend aware that, in the forthcoming review based on his Green Paper, we look most hopefully to a new system of financing local government which will make a fairer distribution of the financial cost of local government upon more shoulders and with a considerable reduction on the shoulders of industry and commerce, because that is the best way of getting a more competitive edge to our industry and commerce and so increasing employment rather than reducing it?

Lord Bellwin

My Lords, I am most grateful to my noble friend for making a point that perhaps I should have made. I see so many representations to our department of the impact of high rates, and only this week I had two letters that were really quite heartbreaking, about firms which had moved out of inner London areas and taken their employment with them, so that they could pay, not all that far from London, rates something like a quarter of those they were paying here. Yet in both cases they had taken considerable employment out of the centre. There is no doubt that, although there are those who argue otherwise, there is now a mass of examples which show that high rates do create unemployment. My noble friend helps very much in reminding me of that.

Lord Davies of Leek

My Lords, is the noble Lord, Lord Bellwin, aware that we all like him and that he has made a magnificent effort to change a threnody into a eulogy? I could even set it to music; it would be in a minor key, but it could be done. I should like to ask the noble Lord about a couple of facts. Had he been in any of the streets of Britain in the last tempestuous week or so he would have seen shivering people standing waiting for buses which did not come and motor cars which could not move, and heard about some people being found dead in cars on roads which could not be cleared. And yet we have swanked about cuts in manpower in local authorities, while local authorities were stating in local newspapers that they could not afford to spend money on salt or on sand to keep the country moving. Is the noble Lord aware that if we added up the social accountancy of this swanking about less pay going into manpower in local government against the loss of work and hours of production, and its effect on exports, this Paper would be thought a disgrace to the minds of the famous old Conservative Party?

Secondly, and lastly, what about British agriculture and rates? It took a Labour Government to put British agriculture on its feet, and the only time that the farmers paid in to the local Conservative Party was when they had better money under Tom Williams's agricultural policy. What is to be done about British agriculture when we are destroying the fabric of local government, which is older than central Government?

Lord Bellwin

My Lords, I am not about to bandy words with the noble Lord, Lord Davies of Leek on the agricultural scene. I am sure that he has far greater knowledge of it than I have. But when he talks about the streets not being gritted or whatever, this is of course a priority for each authority. Some may think it a very strange priority that some authorities claim not to be able to do so while at the same time they do feel able to subsidise their fares to the tune of over £50 million a year, as I know one local authority does. It subsidises bus fares to the tune of over £50 million a year, and I hope that that authority is not saying that it does not have the funds to grit the streets.

4.19 p.m.

Lord Raglan

My Lords, the noble Lord the Minister will be very well aware that the number of obligations which a local authority has to discharge has increased enormously over the past 15 years compared with the past 100 years or so in which local authorities have been in being. When considering how the Government are going to raise finance for local authorities, will they also consider the strength of the management structure which needs to control the spending of this money, and bear in mind that it is just as important a matter how this structure is designed, that it should be brought up to date and not designed for 100 years ago when local authorities were quite a different animal?

Lord Bellwin

My Lords, to go into the management structures of local authorities one would have to debate all that came at the time of reorganisation. There is no doubt that different local authorities have different management régimes, and perhaps that is not a bad thing. I have my own view as to the best way of doing it. But if we are also committed, as I think we are, despite what was said a moment ago, to allowing local authorities to do their own thing, they will manage their affairs in different ways, and some would criticise many of them for the way they do it. It is part of the whole problem.

Viscount Montgomery of Alamein

My Lords, may I ask my noble friend a question about the timetable? Restructuring of the domestic rating system is widely welcomed and all those of us concerned with local government in any way will read the Green Paper with great interest. But it is a very complex subject. Is the noble Lord confident that the timetable, allowing for full consultation and reporting back by 31st March, is sufficient?

Lord Bellwin

My Lords, I am grateful to my noble friend for pointing out the need to be careful. I would only repeat what I was saying earlier, that it is not something that is new. The noble Baroness said that much of what is in the Paper she understands is what Layfield had said. That is quite true, but it puts the implications in much greater detail. But the whole subject is not new. We have had many representations already. I do not think we should hang around, if I may use that expression. I do not think anyone would want us to do that for longer than need be. I cannot give the House a timetable as to what will follow from that. It will depend upon what is decided. But I repeat that we understand the urgency of something being done without any more delay than is absolutely necessary.