HL Deb 26 October 1983 vol 444 cc284-357

5.5 p.m.

Debate resumed.

Lord Graham of Edmonton

My Lords, I feel that I shall have the sympathy of the whole House in this my first speech in your Lordships' House. I know that your Lordships have a reputation for generosity and understanding in these matters. I am most grateful for the kind personal references already made both in this debate and elsewhere in the House. I have been made to feel very welcome indeed.

I do not intend to abuse either convention or custom. I am strengthened in my belief that I can contribute to your Lordships' proceedings from the experience I bring from other places. First, there is my long association with the co-operative movement which has been my inspiration and my guide and on whose behalf I have worked for more than 44 years. It would be my intention to maintain that association in the years that lie ahead. Secondly, there is my deep sense of gratitude to the people of Edmonton who honoured me with their trust for many years and on whose behalf I sat in the other place where I learned to appreciate the values we know and love as our parliamentary heritage. That experience will stand me in good stead in your Lordships' House.

Thirdly, I bring with me a knowledg of local government instilled in me over the years, but especially born out of my experience from serving on the council of the London Borough of Enfield. It was there that I learned to respect the dedication of men and women of all political persuasions, and to understand that love of one's community often transcended party dogma. There is a fierce loyalty to the democratic precepts of our local government institutions which rests on a healthy respect for central Government, but which flourishes the better when the sovereignty of local government is properly respected by central Government.

We are all grateful to the noble Lord, Lord Beloff, for giving us this opportunity to bring to the attention of the Government the profund sense of unease and dismay felt at almost every level of local government at their current crop of initiatives. I am, indeed, conscious that a maiden speech should be non-controversial, but I hazard a guess when I say that it would be a miracle for any speech in this debate to fail to offend someone. I do not intend to give offence, but it will be very difficult indeed to avoid doing so.

It is a plain statement of fact to assert that these past four years have seen a deterioration in the hitherto healthy relationships between local and central Government. I served in another place on the committees which considered the Local Government, Planning and Land Bill, the Local Government Finance Bill and the Housing and Building Control Bill. All had a common theme: the placing on local councils of the heavy hand of the man in Marsham Street, a diminution of local powers and the aggregation to the centre—the Secretary of State—of more and more powers. Over these past four years working in or for local government has been an unhappy and at times a miserable task.

As we look at the White Papers on rate capping and on the abolition of the metropolitan counties and the GLC, as we view the horror and despair born out of the latest cut in rate support grant, we are entitled to ask: Will the Government ever learn? Are we really to look forward to yet a further dose of chastisement for local people? Is it such a crime for them to have innocently thought that when they were elected to provide services they would be allowed to raise the required revenues in the form of charges or grants, or rates?

The Government are fully entitled to claim the credit for uniting local government as it has never been united before. It is united neither in defying the Government of the day, nor in what the Government misleadingly describe as "overspending". The Association of Municipal Authorities, the Association of County Councils, the Association of District Councils and the London Boroughs Association are all united in a defence of the constitutional rights that local government has enjoyed for more than 380 years, since 1601.

No words from a political opponent trying to make a comparatively non-controversial speech could match the anger and anguish heaped upon the Minister from his own side, who feels betrayed—and not for the first time. Instead, let me quote to this noble House the words that I heard during the passage of the Local Government Planning and Land Bill while in Committee on 8th July 1980: When the public funds have been distributed, it is then a matter for individual local authorities and their councillors as to what their expenditure decisions are. It is their choice between services, their choice as to the volume of expenditure on these services, and their choice as to the rate levels that they decide to impose. That is the freedom and discretion that exists in local government. It is this partnership: public, ministerial and parliamentary responsiblity for the public funds, the national taxpayers' funds, paid to local government; the local councillors' responsibility for the final rating decisions and the expenditure of their own local authority. That is the basis on which local government and central Government partnership exists. We each have our responsibility to our own electorates in that respect".—[Official Report, Commons, 8/7/80; col. 313.] All who are taking part in this debate today could subscribe to those views. They were accepted by all in that Committee on 8th July 1980. They were spoken by the Minister in charge of the Bill, the now Secretary of State for Employment. They have formed the cornerstone of central and local relationships for more than 380 years. I ask this question: are the Government so insensitive and inflexible that they cannot even now reflect and make the partnership they talk about a living reality? Except for political ends surely there is nothing to be gained by driving the impending legislation through Parliament, and so much to be lost which, once lost, could damage the relationship beyond repair?

Pots calling kettles black is no new phenomenon in British political life or politics. Sweeping assertions that local government cannot control its expenditure or keep to targets comes ill from a central Government of any political colour which have a record of constantly exceeding their forecasts and budgets. On any objective criteria the totality of local government control of its expenditure stands comparision with central Government performance in recent years. I ask the Government: why not trust locally-elected men and women to manage local affairs? If they fail to satisfy their electors, they will receive their just deserts through the ballot box at the next election. Why seek to deprive both the councillors and the electors of that democratic opportunity?

In putting forward their proposals both to cap the rates and to abolish authorities, the Government lamentably fail to produce convincing evidence to buttress their case—all too often there is no evidence at all. If the Government are so convinced that the practices in some areas are so much against the interests of ratepayers, are resented and should be ended, why not give democracy the chance to work? What are the Government afraid of?

Much is made of the dissension and conflict which has been created in local government of late. I fear that if the Government persist along their present path, they will create far more conflict and dissension than they assert is present today and which I beg leave to doubt exists. This Government have a wonderful opportunity. There are thousands of dedicated men and women serving on councils at parish, district, borough and county level. These servants of the public have, in the main, whatever their political allegiances, taken to public service because they felt that they could make a contribution to the improvement of their village, their town, their city. I am proud to say that for a number of years I shared their hopes and their aspirations. From my experience of working with those of other political persuasions, I know that their prime purpose is serving their community and that, in fact, crosses all political boundaries.

Respectfully, I tell this House that there are limits to what those men and women—our local councillors—will take. It is one thing to combine with others to strive to create a town in the image of all that is best and then to stand accountable, publicly, for what one has achieved or not achieved. It is quite another matter to become merely the agent of a central power, lacking in any real decision-making powers and frustrated at every turn. Rather than suffer further humiliation, the men and women I know will conclude that it is not worth the candle to play charades and to pretend that local councillors govern.

I say: give them back their role; allow them to apply their local knowledge for the good of their community. If this debate has served the purpose of alerting the Government to these dangers, it will have been time and effort well spent. We will all rejoice if this debate helps to persuade the Government once more to restore central and local relationships to what they once were, and to what they could and must be again.

5.16 p.m.

Viscount Ridley

My Lords, on behalf of the whole House, it is a real privilege to be the first to congratulate such an excellent maiden speaker as the noble Lord, Lord Graham of Edmonton. I am sure your Lordships will agree that he was very right in not wasting too much time—I think only one day—between his appearance here and his fluent and excellent maiden speech. It is all the better for me because I agree with a great deal of what the noble Lord said. However, just before he rose to his feet he may have felt that for one awful moment he was back in another place. I hope he will realise that that is not his fate, and that we very much hope that his long experience in local government will be of great value to this House for many years to come.

I have spoken too often on this subject before us today and it may be a great delight to your Lordships to know that this is probably the last occasion on which I may be able to give the totally political view of the Association of County Councils before I retire from politics. In doing so, I realise that I may be defying my noble friend Lord Beloff, whose introductory speech we all so much enjoyed, as I think he rather implied that only those who live in Camden or South Yorkshire, or some such places, who knew the full horror of local government, would be entitled to participate today. But that is not quite the case. The legislation that we have been discussing does not confine itself entirely to South Yorkshire and is, in fact, countrywide; so I have no qualms about putting the views of the ACC.

The debate is about the relationships between central and local government. I think that they can be summed up in one word; they are "unhappy". They are not getting any happier, and I am afraid that during the four years of the last Government it was difficult to see any improvement. It is entirely a matter of opinion whether you put this down to the fault of a few extravagant and reckless authorities for defying the Government, or whether you blame the desire of Whitehall to centralise as much power as possible—a danger which was most certainly foreseen in the Layfield Committee's report. No doubt it is somewhat of a mixture of both and, depending where you sit here, you can choose for yourself which view to take. But there is mistrust on both sides of this argument.

I should like to turn to the White Paper on Rates, which was published this August. There are two general reactions about that: first, that it is commonly thought (and I certainly think so) that it is a missed opportunity; one might call it a whole forest of ungrasped nettles—massive things which should have been tackled. Secondly, in its central ideas, as the noble Lord, Lord Graham, most forcibly said, it has perhaps united all shades of political opinion in all local authority associations against its principal proposals.

Why is this paper so disappointing? It is, indeed, acknowledged that rates are here to stay; that they are forever likely to be a form of taxation. This is a realistic conclusion which must be welcomed. Some Conservative words have had to be eaten and thoroughly digested to produce this result. We all hate rates; in fact, we all hate paying taxes anyway. But surely rates are one of the most unpopular taxes that you can have. That is really the whole point of them. The fact that they are so obvious, unpopular and unavoidable means that those who pay them can actually realise more what they are getting for their payment. I do not think that the White Paper has gone nearly far enough in tackling the problem of making those who levy the rates accountable to those who actually pay them. It is in fact a classic case of treating the symptoms and not the disease.

The non-domestic ratepayer, or business ratepayer, has indeed a great cause for complaint. As has been mentioned, he is paying something like 57 per cent. of the total rate bill at the moment. But this is hardly the fault of local government, or of the local authorities. The relationship between the domestic and the non-domestic rate is entirely the result of a political decision by various Governments—not entirely this one, of course—to relieve the voter and to put as much as possible of the burden on the unrepresented industry.

I would agree that reintroducing the business vote does nothing to help this problem, and business does have a considerable cause for complaint in this matter. The proposals we heard from the Alliance on this matter of the business vote certainly deserve more careful study than perhaps they have had. I hope that they will be published, because there may be something in what they say—not all of what they say, let me hasten to add, but in the business vote situation I believe they may have some constructive answers.

To some extent business (using that word as a very general term) has only itself to blame. How many members of the CBI, how many directors of industry, how many senior management people in industry, have tried in one way or another to sit on local councils, to get on to the councils and to be represented on them? They too often complain about the rates, but they do not try to do the dirty work, sitting on the councils and taking the necessary decisions before the rate is fixed. Not nearly enough people from industry have found the time, or been released by their employers, to stand for election to local authorities. I regret this. I equally regret that the White Paper has nothing to say on the relationship between the domestic and non-domestic rates, because it is of crucial importance; and I repeat that the unfavourable relationship at the moment is not the fault of local authorities, it is the fault of Parliament.

I ask three questions about this new legislation which will come before us. First, is it necessary, or is it the result of a vendetta against some local authorities which may indeed be justified but may be temporary? How serious is the problem? Is there a better way, and what else could we suggest for the undoubted need to control expenditure? Regarding the necessity for this legislation, the White Paper can be criticised for its rather selective use of statistics. We all use the statistics which justify the case we are trying to make, and the Government themselves cannot escape some criticism on that account.

For example, they say that domestic rates have increased by 91 per cent. between 1979 and 1983–84, but that the retail price index has gone up by only 55 per cent. This is of course undeniably true, but they do not point out that two things have affected this figure. First of all, over this period the rate support grant percentage, which is a massive sum, has fallen from 61 per cent. to 53.8 per cent.; and, then, the domestic rate relief, now at 18½p in the pound, has not kept up with inflation over this period and is therefore way out of date.

If these two facts are taken into the picture there is quite a different story. The Government have transferred the burden from taxpayer to ratepayer of an equivalent of 2p in the pound—not 3p, as the noble Baroness, Lady Birk, said. The 2p in the pound by way of income tax has in fact been transferred to the ratepayer. That is a perfectly fair and legitimate political decision which has been made, and one cannot query it, but it is no good blaming local authorities for the increase in rates which has been necessary to take up this burden and to replace the loss of rate support grant. If you do these sums you see that local government domestic rates have actually risen by 2.7 per cent, less than the RPI, and industrial rates have risen by about 2 per cent, less than the RPI, over that period.

Indeed, another statistic which is not mentioned is that local authority expenditure as a percentage of GDP has fallen from 15.9 per cent, in 1974–75 to 12.8 per cent. in 1982–83. Nor does the White Paper acknowledge in any way the fact that the pressures on the Government's own social services budget—the tragically high level of unemployment, the ageing population and such like factors—which have led the Government themselves to overspend their own budget have equally been operating to some extent on the social services budgets of local authorities. In addition to that, the local authorities had the dramatic and expensive experience of Professor Clegg.

Nobody would deny that a handful of local authorities have totally abused their powers and caused genuine hardship and distress. It is a matter of opinion whether this demands a radical change—and it is a radical change—in the constitutional relationship which now exists between local and central government. In an ideal situation the pressure to curb extravagance should come not from the top but from the bottom. The electors should revolt. I believe that there are signs that that is happening, or will happen. Surely our aim should be to encourage that process and to develop accountability, and the White Paper does nothing in that direction.

At the moment there are no incentives to save money. There are no votes in closing schools—quite the reverse. Not unnaturally electors demand more and more services, certain at the moment that very few of them will contribute anything to the cost thereof. A certain county council was one of the few to reduce its rates by a considerable percentage in 1981. It was a Conservative-controlled council. However, they were swept from power despite this fact. They might just as well not have tried.

Perhaps the activities of Mr. Livingstone, which have taken up so much of our attention in newspapers over the last few years, will result in a higher turnout of electors at the next election, whether to register support or otherwise for his policies. It is perhaps rather sad that, the only time I mention the other White Paper, we may be denied the opportunity to see what does happen if there are no more elections to the GLC.

The Government should be taking more steps to mobilise the ratepayers rather than putting the lid on rates. We are approaching it from the wrong end. It would be more effective in the long run, and less harmful to local and central government relationships, if this were done. There are already severe penalties for overspending under the current system, and they should be given a chance to work.

However, I am sure that the Government will insist on such proposed legislation, and one may make a strong case with specific arguments for certain cuts. However, may I ask them, in framing this legislation, for the benefit of relationships and for the benefit of their own friends in local government as well as their enemies, that they should try to make this legislation for specific councils as temporary as possible, and not permanent. We can understand and appreciate the need to put a stopper on the wild extravagance that could come from a dying GLC or a dying metropolitan county council. As we know, half of the overspending is already attributable to them, and if they had a free rein for the last few years I dread to think what could happen. We had enough experience in 1974 of seeing what a dying rural district council could do to get rid of its balances before they went into new district councils, and the Government must take steps to stop that deathbed extravagance.

May I ask the Government to define precisely the criteria which will be needed to distinguish the naughty boys? It is one of the most difficult things to accurately assess the needs of different local authorities, and the Government, in taking this on themselves, must be clear what they are doing and why, and who is being singled out.

Finally, may I suggest that if there is a case to be answered then legislation should be confined to the business rate only if it is to be permanent, and not the domestic rate, at least until we have been able to re-examine the total relationship between domestic and non-domestic rates. Before they introduce the second part of this legislation—and I for one hope that they never will—regarding the general rate-capping proposals, may they remember that it is quite wrong for the flock to suffer for the activities of a few black sheep.

I am not going to open a new box on agricultural rating. I had enough trouble with that in Layfield days. May I make one suggestion on that? It is that farmers who over-indulge in straw burning and break the rules on that might be susceptible to agricultural rates because of the demands they put on our fire brigade. There would seem to me a possibility there of keeping the punishment in line with the crime.

It gives me no pleasure whatever, on behalf of the ACC, to criticise the proposals before us. There is indeed much unhappiness among the Government's strongest supporters in local government, in the county councils—more than I can recall in 25 years' involvement in local government. There is a risk of damage to our relationships. I hope and believe that the Government will move carefully on this and will consult the associations and the responsible people in all walks of local government, and that together we can go forward to see how best we can achieve what we are all really after, the one thing that all this is really about, and that is value for money in the public service.

5.30 p.m.

Lord Stewart of Fulham

My Lords, I am very happy to congratulate my noble friend Lord Graham of Edmonton on his maiden speech, to which we all listened with great interest. We look forward especially to hearing the speech he makes when he starts to be controversial. I am sure that will be extremely stimulating and very good for the Government.

The noble Lord, Lord Beloff, to whom we owe this debate, began by pointing out to us that local government in its present form is only a century or a century and a half old. I am obliged to say, "So what?" How old is democracy in this country? No one can really say that this country was a democracy before the year 1867 at the earliest; the date of the second Reform Act. But democracy has taken root; it has become a real part of the Government of this country. We regard it as part of our constitution. The two things are united, because the value of local government and of giving considerable powers to local authorities is the exercise that it gives the citizens in democratic government. Lenin sneered at our form of Government on the ground that it allowed us to go to the ballot box once every five years. That even so was not true, but the existence of local government is one answer to that. It is there that people get exercise not only in judging and voting, but many of them receive experience of government itself. Both this House and another place have been enormously enriched by the coming into both Houses of people, such as my noble friend Lord Graham of Edmonton, who started their political experience in local government.

The development of a sense of interest in local affairs has been one of the things that have helped to provide the legislature with experienced and useful people. I am bound to say that I thought the noble Lord, Lord Beloff, was seriously under-estimating the real value of local government and local liberties and diversities to this country.

Next, the existence of local government and the power of local authorities to handle problems in different ways is valuable in providing opportunity for experiment. We now regard rent rebates as part of the whole process of rents, but they began as an experiment by a local authority. In the first place it was a very unpopular experiment, but it took a local authority which had the courage to persist. It brought the question into public discussion and that caused that development in our local government.

Similarly in education one thing often being argued about is the discretionary grant. There are always arguments about whether a particular educational grant ought to be at the discretion of the local authority or ought to be mandatory. One of the values of having such things as grants at the discretion of a local authority is the experimentation. There are examples of local authorities who are bolder or more generous and what has been in one decade a discretionary grant will probably be decided to be so valuable that in the next decade it becomes universal practice. That is one of the ways in which progress is achieved in the development of public services.

The noble Lord, Lord Beloff, also objected to the fact that local authorities have taken to themselves something that ought to belong to Parliament; that is the redistribution of wealth. On what grounds can we say that that is not a reasonable function for a local authority to assume? When it provides poorer people with housing of a quality that they could not possibly afford out of their own incomes, when it provides their children with education of a kind that their parents by themselves could not afford, those are examples of the redistribution of wealth, and a very good thing too. If we did not have that we should have a profoundly impoverished nation. One of the most interesting things to do in local government is to look at the kinds of public library provided by a working-class borough in London or any other of our great cities; surrounded by people who could not possibly afford to have a well stocked library in their own homes on their own shelves, but who are quite obviously very ready indeed to go on voting for councillors who spend a good deal of money on a first-class library and thereby affect, to some extent, the distribution of wealth and bring to poorer people something they could not afford for themselves. They are extending knowledge and education and generally enriching and adding to the dignity of our life.

All this means that we build up by our form of local government the quality of civic pride. I wish that more people voted when it came to local elections, but even the 45 per cent., though that is not what one would wish, is a considerable figure. It illustrates the feeling of pride in their city which a great many people feel. That is a healthy emotion and is something that contributes to the good functioning of democracy in general. It is an unspeakably difficult thing to organise. There are practically no right answers to any of the questions in the field of local government.

If one asks what is the right size for a local authority, the answer depends on what service one is arguing about. In education, for example, one can make a case for a large authority because in a large authority there will be a sufficient number of people with very exceptional needs; the afflicted, the handicapped, the people who wish to learn an unusual foreign language. In a large authority there will be enough of them to make that possible and to make proper provisions. On the other hand, one can argue that a smaller authority may be more accessible, more understandable to the public. One can continue those arguments indefinitely. When one has decided what is the right size for one local authority and its services, one may find it is not the right size for another. My advice to all Governments who attempt to reform local government is, "For goodness' sake, do not seek for perfection". One should not too rashly tear up what exists before one is reasonably certain of something better. One thing quite clear about these two papers is that the Government cannot be reasonably certain of any such thing, because nothing like sufficient consideration has been given.

We listened to Lord Bellwin's contemptuous account of the uselessness of the Greater London Council and the other metropolitan councils. Who brought those bodies into existence? It was the party to which he belongs, with very little enthusiasm or support from us. My point is that, with nothing like the detailed study there was before the Greater London Government Act, they are now proposing to get rid of them. They might be right; they might be wrong. It is extremely doubtful whether the advantage or disadvantage will be sufficient to compensate for the trouble of making the change, because whenever one makes these changes one has to consider the lives and careers of the public servants, the arrangements that have to be made for redundancy pay, and the general discouragement of people who work in local authorities.

What is the reason that is urged for the latest attack on the range of powers of local authorities? It is the alleged misbehaviour of certain local authorities. If things were to go on as they have been, in 1985 we should have an election in London and we should be able to decide whether in fact the citizens and voters of Greater London share the hostile opinion of the GLC that has been expressed on the Benches opposite. It is interesting to notice that it is exactly that which the Government propose to prevent them from doing, for they are going to abolish the body before the electorate has had a chance to express a view on it.

But where have the problems of these authorities that are regarded as badly behaved come from? They come partly from the fact that they are inner cities and because of the general problem that has been affecting inner cities in recent years—a decline in population, sometimes an increase in the proportion of the population who are immigrants or the children of immigrants and, in some cases, considerable sections of the population whose mother tongue is not English and who create special and additional problems for the local authorities. The authorities have had special burdens and difficulties placed upon them. It is from that, really, that their financial difficulties arise and not from the alleged extravagence. The total amount spent in what are regarded by some people as extravagent and unnecessary ways, is a tiny proportion of their total expenditure. Their real expenditure problems come from the social difficulties that they have to solve.

It was interesting to notice in the report of the noble and learned Lord, Lord Scarman, on the riots at Brixton, that he went out of his way to speak of the useful influence exercised in Brixton by the Tulse Hill comprehensive school and to speak in general of the useful work done on the ethnic problem by the Inner London Education Authority. Not unnaturally, that part of the report of the noble and learned Lord was not given a great deal of prominence in the media. Indeed, Dr. Rhodes Boyson, who at one stage had some responsibilities in the field of education, was saying contemptuously that the comprehensive schools in London had done nothing to help with the problems of racial discord. One must assume that he had not read the report of the noble and learned Lord, Lord Scarman. If he had done so, he might have realised that that was an ill-considered judgment.

I would say, while on this topic, that there are a very great many parents in London who send their children to ILEA schools who would not at all agree with Lord Beloff's verdict on the matter. Indeed, one might note over the years a steady and bitter hostility of the Conservative Party towards the authority which has had charge over London's education. That hostility has not been because the authority's schools have been bad, but because they had have been good. And it has been because they have been gradually extending to people who, under the old selective system of education did not enjoy it, the opportunites of education that are now becoming increasingly available.

One of the greatest injuries that will be done by these proposals is if we are provided with some botched-up arrangement for the running of the London schools. I understand that, according to the White Paper, the members are to be indirectly elected. Am I not right about that?

Lord Bellwin

My Lords, when the noble Lord says "indirectly elected", I presume he means that the membership will be of elected members of the local authorities concerned, appointed by those authorities?

Lord Stewart of Fulham

My Lords, that is exactly what I meant. The electorate will elect the borough councils, the borough councils will elect the education authorities. That is why I said that the education authority would be indirectly elected. That seems to be a fair and accurate description of it.

One of the great objections to ILEA in the past has been that it was not democratic and one of the reasons advanced for the charge that it was not democratic was that some of its members were only indirectly elected. Now, apparently, they are all to be indirectly elected. This has never been regarded, I think, as a particularly good way of choosing a representative. The electorate, when it is electing the borough council, will not know who is going to sit on the body that controls the schools which its children attend. That will be decided for them in the council chamber by the local councillors in the majority party in each borough. I cannot think that there is any conceivable advantage in doing this.

After all, the Conversative Party has not a very good track record on reforming local government. It produced the London Government Act, which I do not believe has provided a benefit for any single human being, and which they themselves are now engaged in deriding with every attack they make on the Greater London Council. Then there was the great reform of local government outside London, and no sooner was it over than everybody cmplained that it was becoming intolerably expensive. Now, apparently, they are going to do it again. One cannot approach this with any great enthusiasm. And look at the way they have treated ILEA itself! First of all, because it is considered to be spending too much, it gets its grants reduced to nothing. As a result, it has to spend still more and then it is told that it is spendthrift. You first compel it to be spendthrift and you then say it must be penalised because it is spendthrift. This is not the way to command confidence.

I listened with very great interest to the speech of the noble Baroness, Lady Stedman. I think that everyone, without distinction of party, would listen with great interest to what she had to say about local government finance. I have always believed that it ought to be possible to raise at any rate some considerable part of local revenue by means of a local income tax. I have always been told that it cannot be done. But everybody seems to find the present way of doing it almost equally impossible and undesirable. My advice to the Government would be this. "If you must make changes, try to do it in the direction of local income tax. If you cannot, please leave it alone!—because the amount of damage done by Convervative Governments to local government by not leaving it alone is already very considerable".

My Lords, there is no need to do this. The total amount of resources which might be considered as being wasted—and that is a matter of political argument—by high-spending local authorities is nothing like enough to justify a major change of this kind. Although I accept that one cannot call it a constitutional change, it is a profound change in the relations between central and local government; and, if things go on in that direction, it will reach dimensions where one could fairly call it a constitutional change. My noble friend Lady Birk was asking in one of the proposed Bills why there should be provisions for the councils that are not regarded as having been badly behaved. Why do you need them? Of course, we know why the Government need them—it is so that they can, if necessary, step in and clobber them at any time they like if they think it necessary. After all, why was the old LCC clobbered? It was because its citizens went on voting a Labour majority. Why do they now want to abolish the GLC? It is because, after you had the London Government Act and created that in order to get rid of the Labour majority on the LCC, you still got Labour majorities turning up on the GLC—and you have to get rid of that! This arrangement for clobbering any and every local authority will be handy for future Governments if those authorities show a tiresome tendency to vote Labour and to provide services on the scale that their citizens want them to be provided. That is what it is all about. That is why I hope that it will be steadily resisted.

5.50 p.m.

Lord Alexander of Potterhill

My Lords, when this debate started I began to wonder whether I would become involved in a party political debate, which I always seek to avoid. I recall the speech that I first made in your Lordships'House some nine years ago, and I feel that the essential point I made in that speech had some relevance to the debate which is taking place today. Naturally I made my maiden speech in a education debate and I contrasted the East and the West: the East with over-central control and direction, perhaps quite efficient but with no freedom, and the West with over-devolution, which had a great degree of freedom but which made educational opportunity dependent on place of birth or the length of a parent's purse.

I took the opportunity to find great happiness in the structure of this country and in the relationship between central and local government, in which central Government performed those functions which were appropriate to central government—those things which necessarily had to be common and uniform throughout the service—leaving local authorities to provide the service and administer it, providing a grant formula which ensured that educational opportunity was not dependent on place of birth or the economic status of the parents.

Since that date I have watched with growing concern what I am bound to describe as the deliberate destruction of the relationship between central and local government, which was then the envy of the world. I say "deliberate" advisedly, and obviously I must seek to justify that phrase. The present Government, coming into their first period of office, did so with a very important pledge: that they would bring central government expenditure under control. Now let us face the fact: they utterly failed to do so, and they recognised a very real danger in the situation, with increasing criticism being directed against the central Government for not controlling Government expenditure. So there was a need to do something about it. The obvious thing to do was to transfer the criticism somewhere else, and the readiest answer was to transfer the criticism from central Government to local government.

They found—and nobody disputes this fact—a few local authorities which were guilty of gross misbehaviour, spending more money than could reasonably be justified. But they were not sure that it would sufficiently divert criticism from central Government if they merely dealt with those local authorities, and so they decided that the best ploy was in fact to bring the criticism to bear on all local government. They had a simple and ready means to do that: the rate support grant. That is a simple means by which central Government can force local authorities to increase their rates. Let us be quite clear about that. If a local authority did not increase its expenditure by one penny from 1978 or 1979 until today, it would have had to increase its rates every year because of the reduction in rate support grant. That is a fact—

Lord Bellwin

My Lords, if the noble Lord would just allow me to intervene, would he then explain why it was that when the rate support grant was reduced under a Labour Administration from 65 per cent. down to 56 per cent. local government as a whole did not increase its rates in the way that he says it would have been compelled to do?

Lord Alexander of Potterhill

My Lords, I suggest that we examine carefully the accounts of central Government and of local government during the years of the present Government's while in office. In every year the increase in expenditure in local government is less than the increase in central Government expenditure. I take the education service whose accounts I study every year. The transfer from taxes to rates over that period is £ 1,000 million a year. Applied to the whole of local government, it is probably of the order of £2,000 million, because education represents half the expenditure of local authorities. You cannot carry out that operation without greatly increasing central control and direction in order to impose that policy. Let there be no mistake: the increase in central control and direction over local government, probably in every service but certainly in the education service, is a matter of the gravest possible concern to those of us who are invoved in that service.

I began my professional career as a teacher. When a teacher found a few children misbehaving—which is what the central Government found in relation to local authorities—the right thing to do was to deal with the few children who were misbehaving. But if the teacher was weak or anxious to divert attention from his or her own incompetence, then they punished the whole of the class. What happened, my Lords? the whole of the class rebelled. And what was the end result of that? There is only one possible answer: you got rid of the teacher. This is precisely what the central Government have been doing to local government. They have found a few—we are all agreed on that—local authorities misbehaving. But instead of dealing with the few local authorities who misbehaved, they have applied the punishment to the whole class—to all local authorities; and the proposals would involve very severe punishments indeed.

I must say I fear that if the Government continue in this way they may get the same answer as applied in the case of the teacher: they may get the sack. But, much worse than that, they will have destroyed a relationship between central and local government which was the envy of the world and perhaps the best expression and structure for a truly free democratic society.

6 p.m.

Lord Mottistone

My Lords, I hope that the noble Lord, Lord Alexander, will forgive me if I do not follow his every argument. Perhaps I might say that he was really rather over-simplifying matters in comparing local authorities with children in school. They are vast organisations handling vast sums of money, and are not quite the same as schools. I do not think that the analogy will go all the way. I also rather hope that my noble friend Lord Bellwin will settle the other arguments in his own good time when he replies.

I should like very much to congratulate the noble Lord, Lord Graham of Edmonton—and I am sorry that he is not here. For a non-controversial speech, he has given us a good foretaste of what he will be like with a controversial one. I look forward to it, and hope that I may find myself debating with him.

I should like very much to thank my noble friend Lord Beloff for introducing this most interesting debate. It has had the makings of a quite fierce one in some respects, but it is none the worse for that. I should like to remind your Lordships that my noble friend Lord Bellwin, speaking from the Government Front Bench, is probably one of the most experienced local authority councillors that we have in our midst, and his fondness for local government, which he has demonstrated to us over the last five years, has been quite considerable. I find it a little strange for the noble Baroness, Lady Stedman, to say that the Government are prejudiced against local government when one observes that my noble friend Lord Bellwin is the Minister for Local Government. I do not think that that quite ties up.

I have been advised by many people, as I am sure most of your Lordships have, but particularly by representatives of industry, especially the CBI, and I speak mainly with that sort of bias in contributing to the argument. But I have also been advised by the Association of Local Councils, of which I have recently been honoured to be made a Vice-President, and I am delighted to see that the noble Lord the leader of the Opposition has also recently been made a Vice-President. I am sorry that he is not in his place, so that we can compare our honoured positions together.

I propose, first, to tackle the White Paper on rates, and I suggest that there is general support for the Government's conclusion that for the foreseeable future rates should remain the main source of local revenue for local government. Industry welcomes the proposals for the new statutory duty on authorities to consult with business before fixing business rates, especially because these represent a higher charge on businesses than central taxation and because they bear no relation to the profitability of the business, so they may be extremely unfair. My noble friend Lord Ridley has told us that 57 per cent, of the rates bill is supplied by business rates, and that is something which is very much the concern of industry.

The CBI say that the consultations to which I have referred already happen with 40 county councils. However, there is general agreement that it is most important to establish that such consultation is properly effective. The CBI have suggested a code of practice. Other businessmen have expressed the view that the draft policy statement and draft budget are available for consideration by business ratepayers, with at least four weeks allowed for written comment before key policy decisions are taken. This may be something which is desirable, but it would be difficult to put into effect. Indeed, the Association of Local Councils have picked up the point in another way, by expressing the view that the consultations will probably be of little value because of the short time normally existing between the information becoming available and the rates being applied. This is clearly a matter which the Government will have to consider carefully, including giving consideration to an appeal system for use when business advice is ignored. I hope that my noble friend the Minister will consider this of sufficient importance for him to take it into account.

The point has also been strongly made by the ACC and the ADC, as well as by some business representatives, that the most effective way in which they can contribute to decision-making is by many more businessmen becoming councillors. Indeed, my noble friend Lord Ridley said as much in his most interesting speech. This is certainly the best solution, and it was the case in the last century. It is also something which the CBI and other employers' organisations encourage. However, if one looks into it, it is extremely difficult with present-day business structures to get enough people with the right level of business authority to stand for election. Companies are very different from what they were a hundred years ago, when there were a whole multiplicity of what we would today call medium-sized companies. So many of them have now been bought up by bigger companies and operate as subsidiaries, without the subsidiaries having the kind of authority which they could probably convey back into the local authorities.

So there is a different structure, but that does not mean to say that it is not something that is worth going for, and I think that people will try to organise it and try to persuade others. But then there is the other problem that the individuals concerned, the ones who are most talented in business, are the ones who are busiest and most keen to get on. They are reluctant to spare their own time to undertake this task for fear that they will lose the opportunity to do their job in the company. So there are difficulties, but it is certainly a good idea.

Turning now to rate limitation, this has been accepted by industry as a step forced upon the Government by a relatively few irresponsible local authorities. But many businessmen—and this may surprise some of your Lordships—would have preferred the problem to be solved by local discipline and increased accountability; in effect, saying as my noble friend Lord Ridley did in his plea for mobilising ratepayers, and only capping the business rates. That is something which I am sure business would be keen to support if it were practicable.

It is certainly hoped that the Government will never need to use the proposed general rate limitation scheme, though it is appreciated that there is an argument for including it in the legislation as an "awful warning" to the recalcitrant few. The Association of Local Councils' like all other local authorities, do not at all like the concept of rate limitation. They take the view that the Government are, of course, entitled to impose terms on monies provided by them, but they object to restrictions on local authorities own resources. They appreciate that local council funding should not be directly affected by this, but fear a knock-on effect from the superior bodies. They suggest that the best answer would be to leave the precepts of all local councils out of rate limitation schemes altogether. If my noble friend thought that that was practicable, he might give thought to it when considering how the White Paper will be put into effect. In doing that, he might remember that in local authorities for small towns and villages the local councillors enjoy a special, close contact with ordinary ratepayers. I am sure that other representatives on different types of councils will say that they do, too, but local councillors really are living in among them.

The objection by all associated with local government to the proposals for rate limitation leads to the main point of my noble friend's Motion—the relations between central and local government. Much of what I will say here reflects what has been said by my noble friend Lord Beloff. These relations certainly are not good in many areas, and the problem seems to me to stem from an assumption by some that local authorities should be given complete freedom to exercise their responsibilities how they wish. This might have been a tenable argument in the early days of elected local government, when local responsibilities were few and comparisons between the ways of life in different parts of the county were limited. However, in the last 70 years the responsibilities of local authorities have much increased, meaning that there is a greater opportunity for variations in government at local level, whether or not people like it.

In addition, communication between communities has been vastly improved, meaning that people can be aware of differences in local government and can justly expect the Government of the nation to ensure that they are not too great. Over the years, many more precise failings have grown up in the present-day local government system. I emphasise the word "system". It has come about from behind, as it were, because what I am about to say does not, in the main, relate to the hard-working councillors or to their even more hard-working senior officials.

These precise failings are spelt out in detail in an excellent new book entitled Municipal Empire by Mr. David Walker, which some noble Lords may have read. I was fortunate recently to see it reviewed in the Economist and our Library kindly obtained it for me. While mentioning libraries, I might say to the noble Lord, Lord Stewart of Fulham, that it is not only the poor who have to go to libraries; it is also your Lordships—and certainly this noble Lord, because I cannot afford to have a big library. May I also say, in passing, that it was my grandfather who started the libraries in the Isle of Wight.

Though it may offend some, I believe that Mr. Walker's book really ought to be compulsory reading for all who are attempting to grapple with the problem which we are debating today. During the early part of our debate I said to myself, "Especially, if I may dare to say so, the noble Baroness, Lady Birk".

Mr. Walker questions whether local government really is local—this is the problem—with so much centralisation of management matters. Mr. Walker gives several examples of it. One of them is wage bargaining which, if it were local, would give much greater authority at local level to local authorities. He spells out how many groups of local government employees have insulated themselves from any sort of investigation into the cost-effective performance of their tasks. He identifies startling differences in costs of services per head of population between apparently similar authorities. Mr. Walker makes clear what we all know: that in some authorities councillors use the system to flaunt the policies of the national Government. This, I would suggest to your Lordships, specially qualifies for criticism, since the Government have recently been re-elected with an increased majority.

A recent example of this was the attitude of certain authorities to the Government's civil defence policy. The new orders, currently under debate in another place and to be debated here next Tuesday, will require positive action by all local authorities concerned. I am delighted to learn that the Association of County Councils welcomes these orders. I trust that any local authorities which have resisted civil defence in the past will now cease to deprive their ratepayers of this necessary protection against the possibility in the future of threat from an opponent.

Mr. Walker concludes his book with seven immediate steps that he recommends to make local government more local and more responsive to the disciplines of the market and to restore power to the consumer against the producers of various services.

Lord Molloy

My Lords, I am following with great interest what the noble Lord is saying but I find in it an appalling, frightening paradox. This Government were returned with an overwhelming majority. Quite a number of authorities which once were Labour are now Conservative—to wit, Cardiff. They now follow policies which were not followed before, because at that time those authorities were Labour controlled. The policies which they now follow are close to those advocated by central Government. But is it an offence for a city which, despite a Conservative Government, has a Socialist administration to try to adhere to what they believe to be proper Socialist principles? If it is, democracy dies in this debate.

Lord Mottistone

My Lords, the answer to the noble Lord's question is that Mr. Walker does not say that that is an offence. Mr. Walker has written a very well balanced and fair book which calls to account authorities, regardless of party, whose procedures have led them to be profligate. All Mr. Walker says in relation to the political differences between the parties is that, on the whole, none of them really gets elected properly because councillors are chosen by a small number of people. Less than 40 per cent. of the electorate actually vote for the candidates. Therefore, local elections are not nearly so democratic as the national system which provides a much wider opportunity for people to choose their prospective candidates, since many more electors vote.

I end on the point, which I emphasise, that what is really needed is the restoration of power to the consumer against the producers of various services. For a whole host of reasons, the producers of services are not subject to any kind of discipline which makes sure that they produce those services as efficiently and cheaply as they can. The losers are the rest of us. This is not blaming individuals; it is blaming a vast system which has grown up. In many respects it resists disciplines, such as examination of whether or not particular services are being handled efficiently. It is that which causes the trouble. The complaints ought to come from the ratepayers, but they do not have much of a chance. Even if they returned another party—this brings us back to the argument we had a minute ago—the system would continue to operate inefficiently. This shows that in modern times it is reasonable for central Government to have some powers to ensure that there is a degree of cohesion in our everyday life. I would hope therefore that local government colleagues will accept some restraint from the centre, for the good of the nation as a whole, that they will endeavour to govern as responsibly as practicable in their own locality, and that they will take pride in the vast range of responsibilities which Parliament, over the years, has granted them.

6.18 p.m.

Baroness Fisher of Rednal

My Lords, perhaps the noble Lord, Lord Bellwin, would listen to what I am saying. I always feel a certain amount of sympathy for the noble Lord, Lord Bellwin, when we discuss local government. Today he has had half-hearted support from one of the members of his party. In the last five debates we have had on anything to do with local government the noble Lord has made marvellous speeches and then sat down, looked round and found that he had not got one supporter. The noble Lord bats alone. I do not know whether that is the Yorkshire way of playing cricket.

Lord Bellwin

My Lords, perhaps the noble Baroness would allow me to say there is nothing new about that.

Baroness Fisher of Rednal

My Lords, one wonders why this happens. One understands why the noble Lord, Lord Bellwin, has been given the job: because nobody else on the Government side is able to do anything about local government, or anything about what the other House wants us to do.

I wish to congratulate my noble friend Lord Graham of Edmonton on his very excellent maiden speech. We look forward to hearing many more speeches from him. Having myself started in the co-operative movement, I began listening to my noble friend a long time ago, before either of us entered this House. It is a pleasure that he has joined us on these Benches.

If we are talking about the reorganisation of local government and the savings which will arise with the abolition of the metropolitan counties, the noble Lord, Lord Bellwin, does not need to be reminded that I come from Birmingham, and that I sat on that council for 15 years. We were the biggest opponents of the formation of the metropolitan counties. That was not a Labour point of view but an all party point of view. Birmingham reckoned that they ought to have been able to convince the Government, as the largest all-purpose local authority in the whole ofEurope—but the Government took no heed and in 1971, when the Second Reading took place in another place, there was supposed to be great acclaim. I believe that both Labour and Conservative councillors in Birmingham can say, "We told you so".

Lord Bellwin

In Leeds as well, my Lords.

Baroness Fisher of Rednal

Yes, my Lords, the noble Lord the Minister says, "Leeds as well". But somebody—and not local authorities—wanted metropolitan counties. It appears that the wheel has turned full circle in a very short space of time. What a waste of public money that experiment has been—and that is the important point we have to remember; public money has been wasted on an experiment. Thank goodness that experiment is to finish quite quickly.

What worries us now is the assumption that the demands of the public are the same in every part of the country. It may be that the Government will now try to aim for total uniformity, which in my view will stifle any innovation. This was one of the points made by my noble friend Lord Stewart of Fulham. Many of the Acts now on the statute book arose from something that a local authority decided to do originally. It concerns me that centrally determined decisions are not necessarily sensitive to local needs and very often create large-scale errors. It cannot be credible that the Government will be able to produce a scheme of rate control which will be fair between authorities and which takes into account individual circumstances and needs.

Ministers, quite realistically, have neither the time, the energy, nor the resources to determine the policies of every local authority. In the constituency I used to represent in another place, there were eight multi-storey blocks of flats, and 50 per cent, of the families living in them were one-parent families—many of them members of the ethnic minorities in very serious circumstances. At the school there, 95 per cent. of the children had free meals. That information would not be readily known to many people representing constituencies in the shires or in other parts of the country. They are matters not readily recognised by Whitehall and the people who make such decisions.

The noble Lords, Lord Bellwin and Lord Mottistone, quoted instances in support of the argument that rates are a heavy burden on industry and commerce. We have heard some evidence, but what is the balance of the evidence? In the West Midlands, we are facing the most serious economic crisis in the history of the West Midlands. Some 17.8 per cent. of the workforce are out of work, and 25 per cent. of those people have been out of work for more than 12 months. When we read about closures in the local press, many manufacturers give their reason for closure in the Birmingham Evening Mail and the Birmingham Post as loss of orders. Never do they make any mention of rates; they blame loss of orders. The question the Government need to ask themselves is: why do manufactuers lose orders? Are they just inefficient as the Government think the National Health Service is? Do they need Marks and Spencer and Sainsbury to go round all these manufacturers, to make them more efficient?

The latest disaster we have in Birmingham is the closure of the large Dunlop complex, Fort Dunlop. Part of that complex is to be rescued by a Japanese company. They will have to pay full rates, because Birmingham is not an assisted area. I do not know why another company can come in and take over a complex as large as Fort Dunlop, keep production going, and also pay our rates. There must be something wrong somewhere with the way in which British Industry is organised.

We heard certian quotations, and I shall now quote not from Labour Weekly or any other socialist magazine but from CBI News for 16th September. It states: West Midlands' recovery fragile… Dr Kevin Kawkins, the regional director, says; 'The recovery', such as it is, remains fragile and is threatened by several factors'. That is something different from what we hear being said by the Government Front Bench. He goes on: Many exporters are increasingly concerned about the present exchange value of sterling, particularly against key European currencies. Interest rates are still far too high and are discouraging investment in our manufactureing base. He makes no mention of rates. Perhaps that is a figment of imagination in the minds of some people.

I wish to quote another comment. Again it is not from the Daily Mirror, which one might expect would be trying to support the Labour Party, but it is from today's issue of the Guardian. It reports that the Confederation of British Industry has recently undertaken a survey about the priorities it believes the Government ought to have. The priorities emerging from the survey—and 200 British managers replied—as to ways in which the Government could help get British Industry going again were reducing energy costs and cutting National Insurance charges. The most important priority of all was Government injection of more money into the economy. Again, there was no question of rates in the priorities of these very eminent people in the business community.

Lord Mottistone

My Lords, if the noble Baroness will permit me, if she were to quote from other public statements of the CBI and from other publications at other times, she would find rates mentioned there. The noble Baroness has just picked on those which do not include any mention of them.

Baroness Fisher of Rednal

That is not true, my Lords. I was just giving the most up-to-date comments. There may have been some mention of rates before the last general election, but not now.

If we look at the White Paper, we see that the Government give credit to the rate system. They say it is well understood, cheap to collect and very difficult to evade, and that it acts as an incentive to the most efficient use of property. If one was sitting an examination and gave an answer such as that, one would get 10 out of 10. What is wrong with it? That satisfies any cost-effective macro-economic genius there is. You could not have anything simpler than that. One could only wish that the same criteria applied to the many and various ways in which the Government collect taxes.

This paragraph continues as follows—and perhaps the noble Lord, Lord Bellwin, could elucidate further when he replies: The Government recognises that rates are not a popular tax". What I really would like to know, if the Minister could inform me, is which of the many forms of taxation levied by the Government are popular.

I am fully aware that local government and central Government cannot be equated. Though central Government by their statutes place the responsibility for providing a wide range of public services on the shoulders of local government, local government then has to come as a supplicant for finance to provide the services. The Government are constantly asking for extension of services; this Government is no different from any other in that respect. The Government are transferring expenditure from central Government to local government. I will give just two or three instances; the housing benefit scheme, which has been transferred from the DHSS. It was hoped by local authorities that the administration costs would be fully reimbursed, but I understand that a flat-rate specific grant mechanism will most likely apply within the Exchequer grant system. So the real burden of housing benefits scheme will be falling in the main upon local authorities.

It is so easy then for the Government to say that they have cut expenditure and the number of employees, when all they have done is shift the burden from one form of government to another. Take the housing improvement grants. I fully accept that those grants have done a tremendous amount for some of the very bad property, expecially in our inner cities. In1980–81 70,000 grants were paid. For this financial year the figure will be around 200,000. This represents an enormous extra workload on local authorities. Yet the local authorities are not expected by the Government to take on any extra staff, nor to receive any extra revenue grant within the rate support scheme. You are just told, "Get on with the job and do it. Do not have all these long waiting lists. Pull your finger out. You have people waiting for improvement grants". Local authorities cannot sit on labour, so we have to have excessive overtime. Then quite recently we have the DoE shifting the responsibility for action on environmental lead pollution on to the backs of the local authorities, again without any resources.

If I could come to something which is quite important to me as a magistrate, especially in the city of Birmingham, where—I do not want to boast about our city—we have the largest court system in the whole of Europe, with 25 courts sitting every day with the exception of Saturday when only six sit. So do not come to Birmingham if you are going to be unruly or anything like that. When we are thinking about the probation service, the Home Office again is encouraging services to be expanded, and of course further work is arising from the Criminal Justice Act 1982. Magistrates are being constantly reminded, "Use some other form of punishment instead of custodial sentence". So what do the probation services do? They set up community work and all the other kinds of clinics and centres for those who habitually drink. Now the probation service is costing just over £6 million in the West Midlands. We are being asked to do this by the Home Office. We are encouraged by the Home Office and by the DOE, but they say we cannot have any money to do it. That is just not on. It is in these instances where Her Majesty's Government pull in two different and distinct directions.

I will say quite quickly that mention has been made of business having no voting power. Well, it might not have any voting power but it has plenty of muscle power, not only in this place and in the other place, but in all the other places where power resides. So while it may not have a vote in local elections, and while it might not for a lot of good reasons want to sit on local authorities, it has plenty of political clout.

I apologise for speaking for longer than I intended, May I say in conclusion that not everybody in business wishes to cut back on public expenditure. This is my final quotation. This again is from a moderate supporter of the Government, the Birmingham Evening Mail of last night. It is a statement from the National Federation of Building Trades Employers; from Mr. Bruce Chievers, the federation president, another well known man, I suppose, in business circles. He says: We are deeply concerned by the downturn in new inquiries and by the sluggish performance of output. it is particularly depressing that for the second quarter in succession, we have seen a fall in new inquiries from the public sector". He warned: Any further cuts in public capital spending would do irretrievable damage to prospects of a sustained recovery and would seriously undermine earlier Government initiatives on housing improvement and in the inner cities which are only now starting to bear fruit". So perhaps we have somebody in industry—and I would have said that perhaps the building industry is one of the industries we ought to be thinking quite seriously about—saying, "Do not cut back on your public money". So while it is true to say that there might be some people in manufacturing who say cut back public money, there are others equally vocal in saying, "Let us start spending it".

I want to say one word about recalcitrant authorities, the naughty boy authorities not accepting what the Government tell them; these are all the naughty Labour boys, of course. There were a lot of naughty Conservative boys as well when the Labour Government wanted comprehensive schools as an education policy, but we did not decide that because they would not toe the line we would change local government and the system. We decided that time would tell. If I could use an analogy which I wrote down earlier when the noble Lord, Lord Alexander, was speaking about school teachers, I was thinking of the police when they go to football matches and there are a few hooligans. It would be very easy to say, "Everybody in that stand, come on, willy-nilly; we will get the lot of you". That would not be justice. They have to single out the people who are naughty and give them the just punishment.

I will close by saying that there is concern on the part of all the local authority associations; they appear to be unamimous in condemnation of the Government's proposals. May I say to the Government: you did not listen to us in 1974; make quite sure you listen in 1983.

6.39 p.m.

Lord Sandford

My Lords, I am sure that the noble Baroness, Lady Fisher of Rednal, should not apologise in any way. She has given us a very lively and spirited speech. Although we are having a splendid debate today, it will be some months before this House and the other place are required to take decisions on the legislation envisaged in the two White Papers that we are discussing. Nevertheless, I think it is useful to have this opportunity for a preliminary skirmish and to reconnoitre the ground over which quite a few battles have yet to be fought. We are grateful to the noble Lord, Lord Beloff. For instance, I am sure that my noble friend the Minister will be glad to know from the noble Baroness, Lady Fisher, that he has both sides of Birmingham City Council rooting for him. As the debate goes on we shall discover how the land lies in other directions. We do not need to come to decisions yet. I shall keep my powder dry.

I sometimes reflect in your Lordships'House the views of the Association of District Councils. Its views on all this are well known to most of your Lordships taking part in the debate because you have our literature. There is no need for me to repeat them. All I wish to do is briefly to say something about the strengths and weaknesses of the two White Papers, and to talk about some of the ungrasped nettles to which my noble friend Lord Ridley has already referred.

It is not true to say that none of us on this side of the House can ever compliment my noble friend Lord Bellwin. I am about to pay him a compliment. There may not be many more to follow. We are pleased to see in the White Paper on rates that rates are to stay. It was clear from the debate initiated by my noble friend Lord Boyd-Carpenter about 18 months ago that the rates were going to stay. It is a pity that it has taken the Government quite so long to come round to that conclusion. The rates are not to be abolished; they are now recognised as one of the best forms of local tax, and they are staying. That is not to say that they cannot be improved. We all know that they can. It is nice to see some small signs in the White Paper of the improvements that are to be made. One of the most useful will be some modification of the precepting system, so that when the rate demands are presented to people the separate bills will be presented separately so that the ratepayer can see who is charging him what, and why, and why such-and-such a rate is going up.

As a London ratepayer in central London I get rate demands from four authorities: the Metropolitan Police, the Inner London Education Authority, the GLC and Westminster City. Unless the demands are separately distinguished one has no means of knowing that the rate increases come from the GLC, ILEA and the Metropolitan Police. They do not come from the rating authority. It manages to keep its rates fairly steady.

What is really wrong with the rates is that they are severely overburdened. Far more is being asked of the rates than they were ever designed to produce. That topic must be tackled, and I shall come back to it in a moment. But we are grateful to my noble friend the Minister and the Government for coming at last to the decision that the rates must stay.

I turn now to the subject of the metropolitan county councils, the topic of the second White Paper. Here one sees the dilemma posed to the Government. On the one hand, we have the extravagances, irresponsibility and defiance of Mr. Livingstone, of the Greater London Council and others like them. The extravagance must be curbed, the defiance dealt with, and the irresponsibility stopped. The behaviour of the GLC and its satellite authorities which behave in a like manner has got the whole of local government the bad name from which it now suffers. That must be dealt with. It has made all the work of local government enormously more difficult.

On the other hand, if one looks at Mr. Livingstone, and others like him, the fact remains that when it comes to elections he is probably the Conservative Party's greatest single electoral asset. It is he who has provoked so many of the party opposite to form another party; it is he more than anything else who has damaged their prospects in the polls. While he is in office he is of enormous benefit to the Conservatives. But I am afraid, balancing one thing with another—and as we have now just got through an election with a considerable Conservative victory due to a lot of other factors besides Mr. Livingstone—he must be dealt with. The Government have come to the view that the loss of at least some of the highest spending, most irresponsible metropolitan counties is the remedy that they have to adopt. In the other White Paper they have taken the view that selective rate curbing and the reserve power to cap all the rates are other measures which they must lay before us. This they think is the least that they can do.

The judgment that we have to exercise in some months' time, after much more debate of all this, is to ensure that the cure being commended to us is not worse than the disease. That is the judgment we have to make. It will require a great deal of debate, discussion and lobbying to ensure that we get that right. But that is the decision that we have to exercise and which it is Parliament's duty to exercise. A great deal of damage has already been caused by these miscreants. The whole nexus that we are discussing today of relationships between central and local government has been appallingly damaged, but there is serious fear that even more damage—we have had much already—is coming in the form of excessive interference in local government affairs from Whitehall. We have had to stop one Government Bill which sought to interfere with our affairs too much. Our role over these new few months in dealing with this Bill must be to seek to remedy the damage that has already been caused and not to allow too much more in the field of local government and of local and central government relations.

As my noble friend Lord Ridley has said, the whole arena is littered with ungrasped nettles. There are very real long-term problems still waiting to be dealt with while the Government grapple with the short-term problems. They are all in the field of local government finance, and they need radical, fundamental, long-term approaches, which they are not getting. It can be put in two ways. There is a jack of clear accountability by local authorities to their electorates. We are far too accountable to central government. There is also a lack of access to their own single, independent sources of finance,

On the first point, I would say to my noble friend Lord Mottistone that the arrival on the scene of the Audit Commision, which we were discussing only yesterday, will give local authorities and their electors a much better picture of the performance of the authorities in terms of efficiency, economy (value for money) and effectiveness. I think that we can pin a fair amount of hope on the results of its work. Anyway, I think that we should wish the Audit Commission well.

Three factors impair the accountability of local government at the moment. One is the precepting business, which my noble friend Lord Beloff mentioned. The mention in the first White Paper of the Government's intention to require local authorities to present bills to ratepayers divided up to indicate clearly which authorities are demanding what, and why, will be very useful. There is also the rate support grant. The way in which that interferes with the accountability of local authorities has been clearly spelled out by the noble Baroness, Lady Stedman. I hope that your Lordships and the Government will take what she had to say on that point to heart. It is quite impossible for an authority half of whose finances come from the centre to be properly accountable to its own local electorate.

The third factor which confuses the issue and damages local accountability is the rate rebate, as the noble Lord, Lord Beloff, mentioned. With rates as high as they are, it is inevitable that large numbers of the poorer ratepayers will have to have rate rebates. I am not arguing against that. But it produces the effect that very large numbers of the voters can happily vote for this, that, or the other service, and for higher and higher standards, because there is no prospect of their having to pay for them.

Those are all areas that must be dealt with. There must be separate billing and exclusive use of one source of local revenue for each tier of local authorities. As the ADC has already indicated in an earlier paper, it would be possible for them to have exclusive access to the rates, and thus move 330 of the 450 units of local government into a position of being wholly accountable to their own electorate. It leaves problems for the higher spending authorities, but it is at least then reduced to that much smaller number.

Another change which would be very helpful and of which there is no mention in the White Paper, though I hope that there may be some mention of it in the legislation, concerns authority being given to local government to adopt more flexibility in regard to which services it charges for. There are a number of sacred cows in local government which do not really deserve to be as sacred as they are, and it would do no harm at all if local authorities were allowed to impose charges, with suitable rebates and so on, for some of these services.

However the most important point, which has been mentioned by my noble friends Lord Ridley and Lord Mottistone, is to work away—and we are all working at it—to get more local businessmen in local government. I salute those who are already there, because the burden is very considerable and the job satisfaction is not all that great (and not much that the Government are doing is designed to make it greater). We must all work away hard at getting more local businessmen on local councils. The saddest thing about all of this is that it is such a major distraction from the actual work of local government and the positive long-term issues that we ought to be tackling.

6.52 p.m.

Lord Evans of Claughton

My Lords, I agree with a very great deal of what the noble Lord, Lord Sandford, has said, and indeed what the noble Viscount, Lord Ridley, has said. I think that I have one advantage over them, in that, according to the prescription that the noble Lord, Lord Beloff, gave us, I am at least entitled to talk about the metropolitan counties, because I was a metropolitan councillor for eight years. The noble Lord, in one stroke, as it were, excluded virtually the whole of his own side of your Lordships' House, with the exception of the noble Lord the Minister and I think the noble Lord, Lord Marshall. I think that they should be given a dispensation and be allowed to talk about metropolitan counties.

The point has come up quite frequently from several sides about involving businessmen in local government more than they are involved at present and other people who live very busy lives. I think that there are two points here. I go back to the good old days of the unitary authorities, the county boroughs. We had on them a lot of businessmen in leading positions in their communities. We had small wards. In those days I represented a ward of 4,000 people. Subsequently, after reorganisation, I represented a ward of nearly 20,000 people, which, if one is reasonably conscientious, takes much more time.

Much more important, I suspect, is the point that meetings, instead of being disposed of in a civilised way between the hours of half-past five in the evening and eight o'clock at night, would go on and on until two and three in the morning; and in very many areas they still do. People who do not suffer from insomnia and who have other things to do find this—in all political parties, I believe—a grave disadvantage and a serious problem.

When I used to attend the General Purposes Committee of Birkenhead County Borough the agenda was on one sheet of paper, and we had verbal reports. Now in authorities that are not much larger councillors have 300 or 400 pages, which very often they receive only 12 hours, or less, before the time of the meeting. These small, or perhaps quite important, administrative points that we ought to be thinking about and that local authorities themselves should be thinking about.

As I said a few moments ago, in my earlier years I served in a county borough, and indeed I managed to get myself on the long service panel there. So it is not just the noble Lord, Lord Bellwin, who has been in local government a long time. That to me was the ideal form of local government, though I think that at the time of reorganisation we all recognised that there were many services, in particular in inner cities, that had to be organised on boundaries wider than those of the county boroughs. It was unfair that a big city such as Liverpool was providing many of the services enjoyed by smaller county boroughs such as Birkenhead or Wallasey.

So while we on these Benches have fought the metropolitan county council elections as being opposed to metropolitan county councils as they were, we never said, in all the period when we were fighting the elections, that they should be merely abolished. What we said was that they should be replaced by bodies with a regional role and probably still wider boundaries than the county councils, because some of the matters—such as economic planning and so on—covered wider areas than those of the metropolitan counties.

What I find reprehensible is the concept of returning to joint boards. These were Victorian institutions. I know that the right honourable lady the friend of the Minister believes in Victorian values, but the Victorians themselves disposed of joint boards because they thought that they were anachronistic and useless and were not serving the best interests of society at the end of the nineteenth century.

During the course of the discussions and in the White Paper the Government have tried to give the impression that all is going to be well because the lower tier authorities in metropolitan areas are going to get most of the services which will be run by elected councillors. But when it is borne in mind that police, fire, and transport services are all going to be run by one form or other of joint body, I would not call them quangos: I would call them qualgos, which is an equally offensive, though more accurate term, because they will be quasi-autonomous local government bodies, since they will have councillors on them. Seventy-two per cent. of the services—certainly in my area—will be paid for by the joint boards rather than by the district councils.

Recently I had the misfortune to chair a working party of the Liberal Party on reform of local government finance, which gives me such justification as I have for speaking on this particular subject. We took the view, which my noble friend Lady Stedman has put much better than I can put it, that rates should be phased out. I understand the arguments which several of your Lordships have put forward that rates are an extremely valuable form of fund-raising, et cetera. But we believe that one of the great things that we should be trying to do to make local government more responsive and more responsible is to reduce the level of grants received from central government. Therefore we should like to see local income tax introduced to assist in reducing the grant element in local government to perhaps 30 per cent., thereby giving us a little more independence. Indeed, I think that this is broadly the view which Layfield took. We would hope that local income tax would eventually enable local government to become fairly independent of central government. To me, as a person who has been in local government most of his life, the most important point is that the more independent we are of central Government the better, rather than being more dependent on central Government, which we regard as the very opposite to the correct attitude, and we reprehend the Government's views on that.

I am not going to join in the chorus of saying nasty things about the noble Lord the Minister. I think that he has a quite difficult job, which he does jolly well. Although he has served many centuries in local government, he has been misled. It is similar to a recent experience I had when staying in an hotel in North Wales. I speak Welsh. We were having a golfing holiday, and some of the members of the golfing party came down late for breakfast. The waitresses spoke about them in Welsh. I remarked that they were extremely rude to speak about people in Welsh. They told me that I was worse than them because I had sold out to them. In the same way, the Minister has sold out on the best interests of local government.

I am concerned about the point made by the noble Lord, Lord Beloff, that what Governments can do Governments can disband. There is a delicate constitutional settlement involved in local government that partly depends upon legislation but also partly depends on custom, habit and so on. I discern a worrying feature which should interest your Lordships because of the role of your Lordships' House. We should be concerned about the constitutional problems that are beginning to show themselves in the relationship between local government and central Government.

This debate is a wonderful opportunity to allow the Government to have second thoughts about some of their policies. Hardly anyone loves their White Papers. Hardly anyone goes around saying, "This is the most delightful piece of proposed legislation I have ever come across". The White Papers on rates or the streamlining of cities are, I am sorry to have to tell the Minister, rudely vilified in the rougher parts of the North of England where I come from. Local organisations, the serious press, whatever that is—it is perhaps the newspaper that I happen to be reading at the time—and all serious commentators seem to have condemned some parts, if not all, of the White Papers. The noble Baroness, Lady Birk, has referred to what appeared in The Times.

The problems with which we are dealing and with which as the noble Lord, Lord Sandford, remarked, we shall have to continue to deal over many months, concern two manifesto commitments of the Conservative Party. The first is the 1974 commitment to abolish the rates, which for one reason or another, the Conservatives have failed to implement. I gather that this has caused some upset to the Prime Minister and explains why the proposed legislation to control Metropolitan counties has been rushed forward as a replacement. Secondly, there was the 1983 commitment to dismantle the two-tier structure in metropolitan counties.

I cannot understand why the Government will not undertake an objective survey of what is wrong with two-tier local government in metropolitan areas. As the metropolitan authorities themselves have been forced to undertake such a review, I would have thought that the Government would welcome the opportunity to examine the whole issue to see if there were any ways in which costs could be saved and benefits increased rather than taking a piecemeal and sudden decision to abolish one tier or part of the two-tier system. There is not really much evidence to support the claim by the Government that 9,000 jobs and £120 million would be saved by abolishing the metropolitan counties.

There are seven functions, as I count them, which will require inter-district co-operation after abolition, and a further seven requiring joint committee arrangements among the remaining authorities. Added to this will be Government control over council budgets, which your Lordships will be discussing, control over structure plans and TPPs. We see control passing almost entirely to Whitehall. As many of your Lordships have remarked, what possible purpose exists for businessmen and other people to take an interest in local government that has been emasculated in so many areas?

It is my opinion that rates are not a serious problem. I am sorry that the noble Lord, Lord Mottistone, has left; I know that he is concered. However, in macro-economic terms, to use an appalling phrase, only 3.5 per cent. of the retail price index is accounted for by rates, while 7.9 per cent. is accounted for by alcohol and 3.6 per cent. by tobacco. A much more savage effect on there tail price index occurs when the Chancellor of the Exchequer increases the price of drink or cigarettes. A 10 per cent. increase in rates only results in a 0.35 percentage increase in the retail price index. It is almost a law of nature that as rates come down rents for commercial properties go up. One has only to look at enterprise zones. They are free of rates but the rents, speaking generally, are fairly high in many, although not all, of these areas. This is the complaint that comes back to me.

It is a fact that relations between local authorities and the Government could hardly be worse. My complaint basically is that there has been a lack of consistency in Government policy towards local government. Instead of re-designing the main edifice in a way that could be planned ahead and considered, the Government seem to keep building inadequate and ill-considered lean-to sheds on existing rather parlous structures. I shall conclude with these somewhat bitter remarks. There has been a lot of talk of democracy. The case is made for proportional representation. It is made in local government. There is no need to go through the details; they are too apparent to be repeated. This will be accepted, I believe, by many of your Lordships on both sides of the House. I recognise the difficulties behind the argument that, once it is introduced for Merseyside, it is the thin end of the wedge. Frankly, however, PR is probably the best kind of legislation for local authorities. It makes them more responsible and more answerable.

I hope that the Government, in their wisdom, will consider this as one of the reforms that they should be studying. I believe that it should be considered in a much greater context than merely piecemeal. How many bits of local government legislation have appeared before your Lordships over the past few years? How many vast chunks will appear in the next few months? Would it not be better to review the whole of local government, perhaps taking a year or 18 months to do so, instead of trying to involve ourselves in so much instant politics? I hope that the initiative of the noble Lord, Lord Beloff, in initiating this debate will assist the Government in reconsidering one or two of their views.

7.8 p.m.

Lord Irving of Dartford

My Lords, I find myself in some difficulty. I was a member of the Procedure Committee that recommended to the House that the practice of every member congratulating a maiden speaker should cease because of the time it takes. I would, however, find it discourteous and even churlish not to be able to congratulate my noble friend Lord Graham of Edmonton, whom I have known for many years, on a splendid speech.

Unlike the noble Lord, Lord Beloff, I am a local authority man. In fact, I am in my 32nd year as a member of a local authority, although I am bound to say that it gets more like hard labour as each year goes by. We are grateful to the noble Lord for giving us an opportunity to discuss this matter, although I think that I should say to him, with the greatest respect, that only a person without experience of local government could be so out of sympathy with the whole of local government as he was.

I receive considerable satisfaction in serving local government, which I regard in many ways as one of our finest achievements: local government as the guardian of public health; local government in its development of local amenities; local government as the embodiment of the pride and the democratic participation of local people. I have also for some time been a vice-president and executive member of the United Kingdom branch of the Council of European Municipalities, and what I have seen elsewhere merely enhances my view of what we have achieved in this country over the last 100 years in the control of local affairs and its independence within a framework of law.

What we are discussing tonight is a real threat of the destruction of this system in which many of us take pride and to which all local authorities and almost all experienced conservative councillors are opposed. I personally thought that The Times put it very well in its leader on 16th September. It said: One of the constant elements over a long period of history has been the power of local public authorities to determine for themselves the level of their expenditure by virtue of their power to levy a tax on the occupation of property". Then The Times pointed to this exraordinary paradox. It said: Now, in 1983, a government which is rhetorically committed to respect for the constitution, the diffusion of responsibility in society and the reduction of the role of government to its essentials, proposes to substitute its own discretion for that of individual local authorities in setting their levels of both spending and taxing. The proposal is not only a breach of constitutional custom; it throws on to Whitehall and Westminster a mass of local detail and complexity which they are not, and ought not to be, equipped to handle". So the first question that I put is the one that has been put by the Association of District Councils, of which I happen to be a vice-president. The question which should be put to everyone in the country is as follows: Do you wish your local affairs to be determined by remote civil servants and computers in Whitehall rather than by your democratically elected local councillors who are directly answerable to their local electorate? Their vice-chairman, Councillor John Morgan—and there is no more loyal conservative supporter than Councillor Morgan—said: We think these proposals are a fundamental breach of local democracy and in practice will be wholly unworkable". The Association of District Councils also expressed its disappointment that the Government have not accepted the association's constructive proposals for reforming local government financing. I propose to come later to both of these points—that is, whether the proposals are workable, and the question of rating reform.

What then can be the justification for what all the local authority assciations regard as a most damaging change? The Times leader again said that the justification for the Government's action is that they say they need the new powers in order to make effective their management of the economy; the case resting on the grounds of economic management in order to give effect to their broad social objectives of reducing taxes and public spending as a proportion of national income has not been made out. It says: The only local operations that directly affect either of those aggregates are capital expenditures and borrowing for that purpose. But central government has for long enjoyed strict control over both those items. On the other hand the local expenditures which Whitehall now characterizes as excessive can have little or no effect on the borrowing requirement or the money supply since they are necessarily covered within each financial year by revenue. For the same reason they can have little impact on the other domestic factors affecting the rate of inflation. Averaged over the recent past rates have risen more or less in step with the cost of living: that they have risen faster in the past couple of years is partly due to … the proportion of local expenditure met by central grants. The impact of rates on the cost of living index recently has been less marked than the impact of fuel prices over which Ministers have a more direct influence. Councils with expansionary spending plans do indeed exert a counter pressure to the government's large social objective of reducing the public share of the national income. But, again, The Times says that that matter ought to be kept in perspective.

The conventional methods of persuasion and grant manipulation by which Ministers have been able to lean on the local authorities collectively have not collapsed. What has happened is that councils are not as uniformly or immediately responsive as before in the face of very large demands for retrenchment at a time when they can see no diminution in the need for their major services". The Government have demanded too much too quickly. Indeed, Councillor John Lovell, Chairman of the Association of County Councils, went further and said, "We could find ourselves taken to court for non-compliance with statutory services".

Nevertheless, the overspending councils characterised as such by the Government amount in total to less than half a per cent. of the local planned public expenditure. I have no doubt that that figure could still be further reduced. The Government, however, are proposing a major constitutional change to deal with a problem for which they are as much responsible as the so-called recalcitrant councils. The ratepayers feel most hurt, not necessarily by the highest rated authorities but from those whose rates go up the most. I ought to point out to any Member of the House who thinks that the only cowboys are the Labour authorities that one of the worst offenders for increasing the rates is the Conservative controlled Wandsworth Council.

However, one of the worst features is that the Government, having proposed in two general elections, as a number of noble Lords have said, first in 1974, that: Within the lifetime of this Parliament we shall abolish the domestic rating system and replace it by taxes more broadly based and more related to people's ability to pay", and again in 1979, have on both occasions failed to keep their promises. The anomalies which exist in the rating system cause rates to be scrutinised in an entirely different way from that of any other expenditure. There are plenty of people who are aware of inefficiencies in government—and I am talking about any government—but they are not as obvious as they are in local government, and that is because of the impact and the way in which rates are levied.

The Association of County Councils points out that rate increases would be less than inflation but for Government grant cuts, and council spending as a percentage of national output has fallen from 159 per cent. in 1974–75 to 128 per cent. last year, while central Government spending had increased from 33.3 per cent. to 353 per cent. I do not want to follow the noble Viscount, Lord Ridley, because he explained in detail how this occurred.

The real Government failure is not to tackle the whole problem of local government finance. The problem is that only 29 per cent. of all adults pay rates, while millions use the services that local government provides. There has been no revaluation of property since 1973, leaving dramatic variations in the valuations of similar properties in different parts of the country. I am sorry that the noble Lord, Lord Mottistone, is not present, because this situation often penalises the non-domestic ratepayer as much as the domestic ratepayer. I still believe, like some other noble Lords, that there is a case for much more fundamental thinking about the whole position of the non-domestic ratepayer. However, I am glad to say that long before the White Paper came out my local authority met regularly with its chamber of commerce, and has done for some long time. I, as the Member for the constituency and a member of the council at the same time, served as a link over many years.

Another anomaly is that flats are rated higher than houses and cottages are rated lower because it was thought that all cottages were for farm workers, while many of them are expensive second homes. Central Government grants go to areas where ratable values are comparatively low. It may surprise some noble Lords that within the last decade the system has channelled more money to the South-East, leaving the Midlands and the North short. Anomalies mainly arise from a system where 7 million people have jobs and use local authority facilities, but make no contribution at all to the expenditure.

The Chairman of the Association of County Councils, Councillor Lovell, has accused the Government of relying on selective figures and inaccurate comparisons in making the case for new powers to centralise council rates. He said that rate increases were in large measure due to deliberate cuts in the rate support grant and the Government's refusal to make a realistic allowance for pay and prices. Those of us who are members of a local authority, and particularly chairmen of finance committees, know how desperately difficult it was in 1981–82 and 1982–83 to have a rate of inflation which was lower than that in other parts of the Government service and yet we had to find any difference above and beyond what had been set both for inflation in terms of goods and for pay.

The Government say that there is no alternative. The Association of County Councils does not accept that. It is prepared to co-operate fully—and I want the House to understand this—in achieving responsible expenditure and rate levels without making the fundamental constitutional change resulting in the centralisation of power in the hands of the Executive which the selective limitation of rates would produce.

For those who might be prepared to accept the Government's let-out for district councils, perhaps it would be well to realise that the £ 10 million spending threshold, which is meant to exclude nearly 200 district councils, could be changed by the Secretary of State. I would remind noble Lords that only last year Mr. Tom King, the then Secretary of State, said that local councils would retain power to fix rates, but within a few months Mr. Patrick Jenkin had changed all that.

I said that I would say something about whether the proposals would work or whether—as Councillor John Morgan, the vice-chairman of the Association of District Councils, said—they are unworkable. I do not think that one could consult anyone better than the Chartered Institute of Public Finance and Accountancy. They say: The Government plans to limit local authority rate rises but the legislation is not only likely to be ineffective; it might well have an adverse effect on the credit worthiness of local authorities". Those officers of local authorities who have to go into the money markets know how real a prospect that is. They also say: The specific scheme to limit rate increases of a few local authorities would not be enough to bring the aggregate local government spending in line with government targets. The general scheme would therefore have to be introduced". Therefore, on almost any reckoning—local government spending as related to central Government spending, the average rate levied as against taxation, the percentage of local expenditure as against the gross national product between local government and central Government, and the local authority percentage of total public expenditure—local government has a better record than central Government. Nevertheless, the Government are to make a major constitutional change without tackling the real problem of local government finance. If there ever was a case where this House should use its powers to say "Think again", this is it.

7.23 p.m.

Baroness Cox

My Lords, I should like to begin by offering my sincere congratulations to the noble Lord, Lord Graham, on his eloquent, authoritative and impassioned maiden speech. I would like to contribute to the debate on this important topic, which has been raised by my noble friend Lord Beloff, by discussing that aspect of local government which accounts for well over one-half of local government spending. I refer, of course, to education. I shall use as an example the Inner London Education Authority, as its future is currently under discussion. I readily acknowledge, of course, that some of its problems are associated with its own peculiar situation. However, they reflect wider issues and the problems are also important in their own right.

There is widespread concern over the education of the children in our nation's capital city. This concern has been voiced by many parents, by teachers, including some head teachers, and by Her Majesty's Inspectorate. There are at least three aspects of this concern: first, low educational standards; secondly, attempts to politicise the curriculum; and, thirdly, high levels of expenditure and lack of accountability.

First, I shall deal with low educational standards. I agree with the noble Lord, Lord Stewart, that of course there are still many good schools in ILEA doing a magnificent job for their pupils. I applaud them and have no wish to detract from their achievement or to denigrate the many conscientious and hard-working staff teaching in these schools. However, Her Majesty's Inspectors have found that in many schools all is not as well as it might be. For example, in their report, Educational Provision by the Inner London Education Authority, they say: too many secondary schools expect too little from their pupils at all levels … where schools choose to group their pupils without reference to individual abilities and achievements, teachers often fail to adjust their own approaches accordingly and pupils suffer … some schools view O-level as an inappropriate target … for any of their pupils. There is therefore a considerable tendency for many pupils of all abilities … to achieve less than they are capable of …Much A-level work is slow, narrow and unchallenging, with a considerable minority of pupils taking three years to prepare for the examinations and then performing poorly". Her Majesty's Inspectors emphasis that pupils' under-achievement is exacerbated by policies such as mixed ability teaching. I quote again: The retention of mixed ability grouping up to the end of year 2 or 3 for all or the great majority of subjects is not uncommon in ILEA schools and is often accompanied by a continuation of undifferentiated teaching. This frequently occurs at a level barely suitable for the middle of the ability range in the group, leaving the least able unheeded and the most able unchallenged. It is, therefore, perhaps not surprising that London's school children perform very badly in formal examinations. Lord Stewart's accolades notwithstanding, ILEA'S results are among the worst in the country. It is particularly worrying that they compare unfavourably even with other LEAs which also have high proportions of pupils from educationally disadvantaged backgrounds. Although ILEA obviously provides for many poor districts, it also contains some of the most affluent neighbourhoods in the country—such as Hampstead, Highgate, Chelsea and Dulwich. ILEA's dismal performance is highlighted by the fact that in O-level attainment its pupils fare worse on average than pupils in all the secondary modern schools in England, even though those secondary modern schools do not contain the most academically able children, and would not therefore be expected to obtain many O-level passes.

I turn from formal academic attainment to what is perhaps even more important, the basic skills of numeracy necessary for modern life. The findings of a survey by the Institute of Mathematics were alarming. For example, one quarter of ILEA's 15 and 16 year-olds could not even perform the simple multiplication 6 by 79; nearly one-third could not divide 243 by 9, and I would emphasise that this was not mental arithmetic but a written test. Over one-half could not write "one hundred and forty-nine pounds and nine pence" in figures. Such failures in basic numeracy among school-leavers must raise serious questions about the quality of teaching and learning in many ILEA schools.

I turn briefly to the politicisation of the curriculum. Many teachers are becoming acutely worried about recent attempts by ILEA to interfere in their teaching. They are particularly anxious about pressures to teach in ways which they see as unacceptably politicised. One example must suffice. ILEA has recently spent £49,000 producing glossy booklets on "race, sex and class" in an explicit attempt to prevail upon teachers to alter their curricula. The accompanying letter "instructs" teachers to take account of them in terms more reminiscent of a totalitarian state than a local education authority in a democratic society. Particularly worrying is the content of these brochures. For example, the approach to the concept of race is implicitly conflictual—the "assimilationist" and "cultural diversity" approaches to racial integration are set up as straw men and immediately destroyed, and a conflict model is put in their place. Many teachers are wondering whether this is the best basis for building an integrated, harmonious society.

A related development which is disturbing many teachers is ILEA's use of highly politicised staff, such as the manager with special responsibility for political education, Mr. George Nicholson. He has made his position clear. For example, in response to a question on whether ILEA would, "try to demand of schools that they introduce political education or would attempt to influence by such things as conferences", Mr. Nicholson has replied: A bit of both … a mixture of persuasion, arm-twisting and example….It's like a subversive campaign … we're not just talking about History or Geography, we're talking about subjects right the way across, from Maths to Music to English. I don't see that there is any subject that is untouched by politics". A number of head teachers have been querying whether such external pressure to alter the curriculum is ultra vires. Additionally, those head teachers who wish to resist such pressure are increasingly worried because many documents are now by-passing them and going directly to their staff. I suggest that there are clearly important matters of principle here which require serious consideration.

Although I have chosen ILEA as an example of these problems, they are not unique to ILEA. Other LEAs have experienced similar developments. In my own borough of Brent, the Education Committee has decided to press for mixed ability teaching in all secondary schools in all subjects throughout the first three years. Also large sums of money have been invested in new appointments of staff, with a remit to change curricula to take account of the alleged interests of the diverse ethnic minority groups in the borough. This is despite the fact that many parents in these groups have made it quite clear that they would prefer their children to receive a sound, "traditional" education which would enable them to obtain good jobs on equal terms with other applicants.

My third area of discussion was cost effectiveness. Education is famous as a "big spender". Therefore, it is reasonable to expect that education authorities should be accountable to ratepayers. However, all too often there is an unthinking acceptance of the idea that money spent on education is never wasted. The outcries about the so-called "cuts" ignored the fact that more is spent now per child, in real terms, than ever before in the history of English education. And it is relevant to note that the local education authorities which are particularly big spenders do not always have much to show for the burdens they inflict on their ratepayers. ILEA spends much more per pupil than the national average and its pupil-teacher ratio is amongst the lowest in the country. It spends twice the national average per child on books and equipment, and three times as much on support staff. Yet we have noted that its record in educational attainment is questionable.

In conclusion, my Lords, I suggest that the problems which I have mentioned indicate a need for more accountability in our education system, especially at the level of local government, where ratepayers foot such a high proportion of the bill. I will conclude with a few brief comments on how this might be achieved, first in relation to ILEA and then in a wider context.

As my noble friend Lord Beloff has reminded us, the recent White Paper recommends that ILEA should be replaced by a joint board. It will be clear from what I have already said that I would not be averse to the dissolution of ILEA in its present form—indeed, I would strongly support it. However, I share the concern of many others that the kind of successor described in the White Paper could be as disastrous as ILEA itself. Its composition could be just as politicised, and its accountability could be just as minimal.

By far the better alternative would be a directly elected body. Candidates would then have the opportunity to put their ideas on education directly to the electorate and the public could vote on these without ail the usual pressures of party politics. There is considerable evidence that many members of the public disagree with their own party on its education policy, but feel that loyalty requires them to support it notwithstanding.

A separate elected body could stand on a specifically educational manifesto and could be directly accountable for policy and for associated expenditure to its electors. That would be a truly democratic way forward and would help to ensure that ratepayers' money was spent in ways over which they had more control. It could also help to avoid situations where ILEA flouts the wishes of so many of those whom it should be serving.

This suggestion for a successor to ILEA need not set a precedent for other places. It is partly the size and complexity of the capital city which require special consideration. Many other LEAs are doing an excellent job and need no such reform. However, it could be argued that some of the principles which will have to be considered in the process of the reform of ILEA might also be considered elsewhere. After all, questions of accountability apply everywhere.

I finish with one radical proposal and suggestion which has been put forward by Professor Halsey, who was one of the original architects of the comprehensive system. Professor Halsey has himself called for the, demolition of the whole structure of administrative arrangement between Whitehall and the classrooms". He advocates, making every school a direct grant school". He goes on to argue for, A central national administration, but a slimmer one, [which] would remain with three main tasks: to administer the direct grant formula, to collect and disseminate information on the performance of the education system, and to inspect. The LEAs and the apparatus of administration, advice and control over finance and appointments would go. Such radical measures would certainly increase school accountability to parents and pupils; they could also cut the financial burden now carried by the ratepayer. I therefore find myself in the unusual but happy position of agreeing with Professor Halsey. I must thank my noble friend Lord Beloff for giving us, inter alia, a Motion to debate in which I can conclude on such a happy cross-party note.

7.37 p.m.

Lord Molloy

My Lords, I think that I should congratulate the noble Baroness, Lady Cox, for skilfully making a contribution to an education debate when we are really discussing local government. But I do not blame her for that, because I agree with what she said about ILEA. We said it when the Conservative party created it, as they created the GLC. All that we are talking about tonight has been borne out because of that massive interference by people who had no idea of what local government was about masquerading as a political party known as the Conservatives.

I also want to congratulate the noble Lord, Lord Beloff. The noble Lord, Lord Graham, and I have known each other for many years. He is a man who has made a massive contribution to local government and to voluntary services. We served together in the other House, and it has given me immense pleasure not only to know that he has entered this House but to be here when he made his excellent maiden speech. I thought that he was fortunate to be here to listen to a debate opened by the noble Lord, Lord Beloff, who is now entitled to be known as the Sisyphus of the Conservative party, as he takes upon himself the most hopeless tasks. He pushes the rock right up the hill knowing full well that it is going to come back, because what the Tories propose to do to local government I believe will be defeated by a combination of Liberals, Social Democrats, and Labour councillors and Conservative councillors. That is already on the cards. There is one hope, and I shall come to that at the end of my speech.

When the noble Lord, Lord Beloff, said that local government was illogical, I think he had a point. I suppose that all forms of government are illogical to a degree. When somebody once said that to Winston Churchill he agreed too. Buthe said that it is the best system we have, and it happens to be the best in the world as well. The noble Lord, Lord Beloff, talked about the small number of people and said that it was not real democracy; the small percentage of people who vote in local government elections in Great Britain hardly deserves the title of democracy. Mark you, my Lords, that percentage is much more than the percentage of Americans who elected President Reagan, so we are not doing too badly.

As the noble and gallant Lord, Lord Lewin, said we are not quite as bad as some try to make us out, and our youth these days is as good, if not better, than ever it was. I will ask the noble Lord, Lord Beloff to consider this. I have known many young men and women who work in social services or are nurses and do all sorts of things. They do not want to go out mugging, or dancing or to go to gambling casinos in Soho. They want to be proud to be known as councillors and stand for their local elections and become Conservative, Labour or Liberal councillors. Is that not a disgraceful thing, a most appalling thing, to work for a local authority and to get so involved in what one is doing, looking after the aged, the crippled, the deformed and people who are not very well off? There are many of these young men and women from our parties in local services. I know a bit about this. They get so imbued that when they see something going wrong they decide to become councillors. So often I have heard them say, "I'd like to get on to this local authority and become a Tory councillor. I would shake that lot up a bit". Sometimes they do a bit of shaking up because they know what they are talking about, having worked in a local authority. Until the day comes when we on this island say, "If you work for Woolworths, Marks and Spencer or your local council you can in no way be elected by your fellow men and women to become councillors of the realm," I hope I shall always win that argument against the noble Lord, Lord Beloff.

When one considers what is happening in other countries, we can be beaten by the Americans with numbers of gangs of muggers. They can blind us with numbers. We do not come anywhere near the Italians, with the development of their youthful Red Brigade. The Germans leave us standing when they can produce the Baader-Meinhof gang. Let us be a bit balanced and sensible about this because some keen young folk read our debates. I hope they will not think that we in this House believe that Britain's youth are not up to much, but that they will agree with me, and the former chief of the Defence Staff, Lord Lewin, that by and large they are a pretty good healthy bunch of young folk. We can thank God for that.

The Government White Paper on the rates (Cmnd. 9008) may become a nefarious paper in years to come. People will talk about it—"Fancy they even thought about implementing all this". It totally fails to grasp an opportunity that the Government could have had. It would have been a wonderful opportunity for constuctive reforms. Many of us have had experience in local government at many levels. I have held most chairs in local government; I have been a school manager and proud to be so. I hope the noble Baroness, Lady Cox, will not mind, but I was chariman of a comprehensive school in West London; a most remarkable comprehensive school, Holland Park. We had the children of 11 MPs, five Socialists, four Tories and a couple of independents; bishops' sons and daughters. We had a range from South Kensington of admirals' children, brigadiers' children, colonels' children and pilots' children. From the north of Kensington we had children from ethnic minorities. I can remember the headmaster asking me what we were going to do for Christmas because we had Moslems, Jews, Baptists and all sorts. We put on a Shakespeare play instead. We put on Othello and we were the first school to have an Othello who did not have to make up. He was quite natural. Somewhere there is a great lesson to be learned. We do not need to be told by all these geniuses that the fabric of local government is falling to bits. It needs reform. The Government will destroy it and that is what frightens me.

The Association of District Councils asserts its deep conviction that the maintenance of vigorous elected independent local government is an essential part of the whole democratic fabric of government in Britain. The ADC deeply regrets the unwillingness of the Government to reconsider their proposals to impose selective and general controls.

What I find amazing is that I should have thought that before any Government of any political complexion embarked on a massive change of a vital element of our democratic elected representation they would have talked to those who know something about it. They should have talked to the representatives of local government in all political parties. All parties are fairly well represented and one noble Lord said earlier that one can have a number of councillors—Labour, Liberal, Social Democratic and Conservative—and the great paradox is that the one thing that unifies them, and I am proud to be able to say it, is that they are dead against the Government's proposals. I should have thought that that was something that would make even this Government think again. No, I beg your pardon, my Lords, start thinking, because they have not yet started thinking at all, so they cannot think again. They have done something stupid and left it at that.

The Association of County Councils says that the Government's proposals are really political expediency. That may be going a bit too far. But, I smell something here and, if the Government were honest and fair, they would not talk about the democracy and efficiency of local government. They should say what they believe and it is that they do not want to spend the money on local government. They do not want to start spending more money on what the Royal Commission on Education called "half our future"; that is every boy and girl up to 10 years of age. They do not want to spend so much money on social services, but to reduce and cut. I do not understand why they have done it because what happened when they did that in industry? There was the highest level of bankruptcies in Great Britain's history and four million on the dole—a massive waste.

This is the biggest local government and education waste of all. I am sorry the noble Baroness, Lady Cox, is not here. The graduates with their high status university degrees spend their time in the dole queue to draw their poverty stricken couple of bob. There really is a waste. I think your Lordships will agree that that is an appalling waste. We have to take these things in to consideration.

Another thing that I find perturbing is that local government officials as well as their bosses, the councillors, and representatives in the associations fear that they will fall into the hands of the executive, not so much those of Parliament, and that that will really weaken democracy. The Government's proposal is a rotten means to a dangerous end.

Britain is a unitary and not a federal country. I am glad that it is. Our system of local government, with the little district councils leading right through to the county councils, is much to be preferred to having state boundaries, perhaps even with different laws. By luck or geography, or for some other reason, we have hit on the right answer. We have to consider that national government was born out of local government, local government came first. I believe that we should take full cognisance of that.

Here I should speak parenthetically, if I have not said it before; we must be truly grateful to the noble Lord, Lord Beloff, not only for the manner in which he opened the debate, but for picking on this subject matter. I am sure the House and ultimately the country will be grateful to him, but I hope that he will be unhappy and perhaps disappointed that he opened this debate. I like him very much, but I still have to wish him that because, at the end of it, we might have made a mark which will cause the Government to think again. The Government should use all the influence they can, as they have a right and a responsibility to do. Where they are overstepping their mark is where they start controlling. The moment they start controlling, a Conservative Government of all Governments should take a tiny bit out of Moscow and put it into our form of democracy and governmental behaviour in this country. I am afraid it has to be as serious as that.

People talk about the fact that they are paying rates and they find it appalling, but it is remarkable what services are provided. I am not going to say for one moment that there is not a need for an examination to look at how we can improve local government. What I am afraid of is this—and I beg your Lordships to listen to this. There was the experience, for example, of the town council of Merthyr in the late 1920s and 1930s. Nearly 90 per cent. of Merthyr were summoned and taken to court on the instructions of the then central Government, which could not understand that if you are out of work for 13 weeks your dole stops; that there is nothing coming in. And then in that great Christian era, along would come the means-test man. I know. My grandparents went through it. This is the story of the means-test man coming in. "How many children do you have?"—"Four". "There is you and your husband; that is six. You have eight chairs; two will have to go". The most awful thing was when the valleys of Wales, they say, were littered with pianos being hidden from the inspector.

I am telling your Lordships this story because local government said to the town of Merthyr: "If your inhabitants on the dole have no entitlement to normal dole, you must provide it out of the rates". It was called "going on the parish". But the town had no rates coming in. This was because nobody had any money. This was a senseless thing. We all know what happened when the men got indignant, when there was the great march from Tonypandy. I am sure that if the noble Viscount, Lord Tonypandy, were here he would back me up. We all know what happened. It was a sad incident in British political history: and it started through central Government not understanding local government because nobody had any knowledge of local government. That, to me, is very very important.

Of course, I believe that there are dangers in limiting expenditure, on the one hand, and there are dangers, on the other hand, in letting some incredibly irresponsible councillors embark on schemes which are not merely frivolous but a complete waste of time, energy and money. Both are wrong. There can be a way, I should have thought, of stopping it without the situation that a noble Lord earlier described by saying: "When two or three children are bad, you do not want the teacher to cane the entire class, so that, in the end, one has to get rid of the teacher". Surely we can find a better way than that.

The difficulty, as I understand it, is that local authorities—and I do not argue that it is right; of course, it is right in the end—have to be accountable to central government both for financial control and to carry out those functions that central government tell them they must carry out. But where are you going when we have a situation where central government says, "If you do not send your children of school age to school, you can be prosecuted and you can be taken to gaol"? Your defence will be nothing even if you can say, "But my local authority provides no schools; there are no schools to send the kids to". That is an absurdity. This is what is going to happen in many other ways and in many other services, because many of the services that local authorities provide have to be provided by them because Parliament says that they must provide them.

Are they going to change this entire fabric and say that Parliament will no more tell the local authorities what they can do but the executive of a particular central Government will issue their diktat? That is what I meant when I said there can be this appalling alliteration—the two CPs, the Conservative Party and the Communist Party! I find it most remarkable, but it happens to be a fact.

I think that we can reform even the rating system. I believe—and I have said so for a number of years—that there is a need for reform and that we ought to set up a committee to examine it—a committee of people with experience in high finance, of people with experience in business and commerce, of people with experience in working on local authorities and of local councillors of all levels. I am convinced that if this were done we could reform the rating system without scourging local government or local government democracy.

I think we ought to acknowledge that local authorities are wealth-creating. In education, they are responsible for all our future. The Royal Commission which was set up reported on the education of children up to nine years old as "half our future" but that from then onwards it is all our future. Look at the skills that are taught. There are so many skills which are taught initially by local government. There is enough knowledge given to youngsters for them to become skilled apprentices in trade, commerce and industry. Let us not forget that that is a contribution to wealth creation. That could never exist without many of the essential local government services which, as I have said, the nation demands through Parliament that local government must give.

I believe that in this whole business there has been a lack of consultation. Too much, too quickly, has been demanded of local authorities by the Government. Many aspects of local authority work have not been taken into consideration. I do not believe, for example, that there has been enough examination of the demographic changes, of the increase in the elderly throughout the land, of the increase in unemployment and of the problems of single parents, of the blind, of the handicapped. They all find their way to the door of the local authority. We have to acknowledge that.

I speak very briefly on the importance of grant-related expenditure. I know that sometimes it can be irritating when one realises the amount of money that goes to some local authorities through the GRE and what goes to others. But that will be so as long as we have boroughs like Hackney, on the one hand, and Bromley, hardly 12 to 15 miles away, on the other hand. There are the gallant efforts of the council in Hackney, where in this year, 1983, you have grinding poverty, you have ethnic problems, you have clashes with the police and you have the local authority spending night after night trying to solve the problems.

I know that Lord Bellwin will understand this, as will the noble Lord, Lord Stewart. Very often there are the various groups, such as the Conservative Party group, or the Labour Party group, in a local council; and as much time is spent in those groups deciding how to react to Government legislation as is spent in the council chamber itself. I would say just this. One would think that those British men and women, the councillors at all levels of our local authorities, through their keenness and the endeavour they give, were earning a couple of hundred pounds an hour. In my day, it cost one money to be a local councillor. It was sometimes a little expensive to be a local government councillor. Thank goodness we have changed some of that. I hope that this will continue and that the Government will really look before they start implementing the proposals, and perhaps even abandon some of them.

There is much to be done in many facets of local government; it is by no means perfect. On the other hand, it is by no means imperfect. I think that its ideas and ideals are really first class. As with every human organisation, you will get some little bits which do not measure up to the proper standards. I think it was Bernard Shaw or Oscar Wilde—I do not know which—who said: If you want to find out what is wrong with any village quartet, ask any one of the four privately". That applies also to local government. I do not think it should be beyond the wit of the Government, through Parliament, in liaison with representatives of local government, involving their associations, to produce answers that will increase the efficiency of local government, promote its efficiency and spread its civilised social functions and work. If we can do that properly and not threaten the fabric of local government, then I believe that from this threat of the central Government something will emerge which will enhance local government, to the happiness of all of us.

I should like to say this in conclusion. There is one man who can make a big contribution. Many Ministers go into their jobs without ever having been in that sort of thing before in their lives. There are some Ministers who are given their jobs because they were expert in that line long before they came to Parliament. Such a person is the noble Lord, Lord Bellwin. We appreciate his knowledge and we also very much appreciate how he got here. We know of his great work in local government and I would say, on behalf, I think, of all parties and of none in this House, that he carries our full confidence—for he, if no one else, can go back to the Government and not necessarily say, "Chuck it" but at least say, "Let us start again and see if we cannot get a better answer which will encourage all our councillors, Conservative, Social Democrat, Labour and Liberal".

The main thing is that, whatever reforms we have to bring about, it ought to be possible for us to do it without causing alarm and despondency among councillors, and perhaps damaging irreparably the democratic fabric of local government.

8.3 p.m.

Lord Raglan

My Lords, I agree with the noble Lord, Lord Molloy, over the importance of local government. I also think it right that those who criticise local government should be aware of how much more is expected of it now than used to be the case. Some mention has been made of that today, but I think it is worth underlining. My father was a county councillor for 25 years and it took him about a day a week. When he retired in 1960 it was beginning to take longer, and I think that is perhaps why he retired. Since that time central Government has heaped ever more functions on councils, and particularly on the new districts. Some councillors make their work pretty well a full-time job.

The strictures of the noble Baroness, Lady Fisher, notwithstanding, I think these duties are mostly good and useful: a devolution of a useful and practical kind. However, one result of all these duties is that, first, it is difficult to find people who are willing to be councillors and to give all the necessary time. Secondly, as the noble Lord, Lord Sandford, said earlier, because the increased work has to be funded, the method of financing is under strain. Thirdly—and this is what I particularly want to speak about—the old framework is not adequate for the increased load which local government has to bear.

On the question of finance, I see the virtue of rates. It has been said today that they are difficult to evade and easy to collect, but that does not make them a just tax for present circumstances. They are, I suppose, a survival of the property rate. I still own a tiny cottage which was bought by a great uncle to give himself a parliamentary vote. In local elections you can still have a vote in another district if you have a home there, but if you have a business in another district from that in which you live, then you pay taxes without representation and are in a way a sitting duck for those councils which know not what they do, some of which have been mentioned this afternoon. So businesses are vulnerable, but so are ratepayers because those who actually do pay rates, as distinct from those who are scheduled to pay rates but are exempt from them, hardly make up a sufficiently large proportion of the voters to affect the outcome of elections.

I would shy away from a local income tax, not just for the reasons given by the noble Lord, Lord Beloff, but because the proponents of this kind of tax may not be aware of the large and increasing number of people who pay big sums to accountants to haggle with the Inland Revenue. The prospect of haggling with two inspectors I find dismaying. It seems to me that as an alternative to rates, or at any rate as a supplement to a lower rate, a sales tax would be best. All the states in the United States of America operate one and seem to do it quite simply and, moreover, they were doing it long before the days of computers. Now that everyone likely to be affected is fitted up for the payment of VAT, I do not see that a sales tax would be difficult to implement.

Nevertheless, I believe that local government's main weakness is the way it is organised, and I think that the current problems over the rates are very likely something to do with that. The whole set-up is that of the original model of 100 years ago, when local authorities were primarily sanitary authorities and the medical officer of health was the most important person. The councillors gathered every so often for their needs to be ministered to by the clerk, who was left to run the council.

The public face of the council, then as now, was the mayor or chairman, who was chosen by the councillors under "Buggins' turn" to perform the necessary ceremonials, but with no power because he had no need of it. Nowadays, because of the much greater number of functions which a council has to undertake, the clerk has overtaken the MOH in importance, and this has been recognised by calling him the chief executive, no less. He still in effect runs the council because somebody has to, as local government is very largely a service industry, doing things which Parliament says that it must.

However, modern councillors, some of whom are around all day and every day, feel the need to exert political influence over the executive, often of a kind which is difficult to translate into practical administrative action but which may well be expensive in outcome. As your Lordships know, they do this through the leader of their political group; and the leader of the majority group is called the leader of the council, who has also increased greatly in importance.

So here is this triumvirate, which is expected to be responsible for running the council. There is the chief executive—he is in for life, which I do not know is healthy—and he has most of the real power: that is, the administrative power. But he has to make it look as if he has not, because he is not elected. Then there is the leader, who has the political power. He is essentially a "smoke-filled room man", a grey eminence whom the public do not know unless he is something of a self-publicist. Last and least, there is the mayor who wears the chain of office, who gets himself in the news, who has his picture in the papers and who the public are led to believe is important but who really is not.

It seems to me that in the matter of public accountability, of encouraging public accessibility, of knowing who is in charge, of seeing who is responsible, this is a defective arrangement. I am sure that it worked well 100 years ago, but I believe that it is not suited to what the public need today. Neither is it suited to what central Government is responsible for securing for the public, which is a political and administrative structure which is strong enough to take, and practically capable of taking, the burden of modern local government.

For a number of years I was privileged to be able to watch the workings of local government from very close quarters, and to deal with it frequently. It seemed to me that its mechanism seized up very easily because of the diffuseness of authority at the top. The clearest need is for the roles of mayor, chief executive and top politician to be rolled into one—to have one person in charge who the public see is in charge. After all, this is what one finds in some other countries where a mayor or lord mayor is elected under direct franchise for a term of five or even eight years, which encourages continuity of policy and allows continuity, but not too great a continuity, of employment.

This change of bringing the political and administrative functions together at the top in one person would be tremendously helpful in several ways, in addition to the ones that I have already mentioned. It would enable local government to be more effective, and in a more acceptable way than it is now. Power would be less in the hands of officials and of councillors who are faceless or difficult to identify. I am sure that there would be more effective management, because responsibility would be more focused. Because of that, local government would be able to take more responsibility and, at the same time, take more responsible initiatives than it can take, or does take, at present.

At the same time, one might with some confidence hope to see develop stronger links of a more constructive kind between central and local government, more man-to-man than they are now, because at present, although central and local government are tied closely together, one gets the very strong impression that the ties are of necessity very like apron strings. A change at the top such as I have described would allow local government to grow up, and there would be fewer problems with it because of that.

There are some big men in local government, but we badly need more of them. We will get them only if there is a position at the top where their talents can be used and adequately recognised. No measure which this or any Government could take would do more to improve the quality of local government than this, or better help to improve relations between central and local government, or do more to award better recognition to the importance which local government has for everybody.

8.14 p.m.

Baroness Faithfull

My Lords, first, may I thank my noble friend Lord Beloff for initiating this timely debate. Secondly, I join the noble Baroness, Lady Fisher of Rednal, in paying tribute to my noble friend Lord Bellwin, but at the same time offering my sympathy because I cannot agree entirely with the two White Papers. But he is so charming and so kind that I am sure he understands that we must each follow our star and say what we believe.

As one who has served in two local authorities, in one as a chief officer, and who has worked as a permanent civil servant in two ministries, I speak in this debate with deep feeling and concern. But I am speaking not only with feeling and emotion, because I have consulted not only with all the local authority associations but with colleagues and staff in three universities—Birmingham, Warwick and Oxford— and have read relevant literature lent to me by the staff, for which I am indeed most grateful.

I have been involved in two reorganisations of local government, first in 1970, when the social services were reorganised, and, secondly, in 1974, when the local government was reorganised. I believe that the reorganisation of the social services was right, although at first the managerial structure was perhaps not as well thought out as it should have been. The Seebohm Committee sat for two and a half years, and there were consultations for at least another year, so that by the time the Local Authority Social Services Act was passed in 1970, although there may not have been total agreement throughout the country, there was a consensus of agreement among those who had to administer that Act.

But, alas!, in 1974 came the reorganisation of local government. The members of the Redcliffe-Maud Committee exhaustively examined every aspect of local government, but the Government of the day did not wholly accept the committee's recommendations. They produced a scheme for reorganisation which was not thought out on a long-term basis, and there was not a consensus of agreement. I suggest that the reorganisation was carried out against a backcloth of disagreement among chief officers, local government employees and, indeed, the electorate, and perhaps we are suffering a great deal from that today.

In the two White Papers which have been referred to throughout this debate we read of further reorganisation only eight years on, which certainly has not the consensus of agreement of either officers or staff, or of the local authority associations. I state quite clearly and categorically that I agree with the policy of Her Majesty's Government, that there must be pruning of local government expenditure in order to deal with the rates. I agree that there must be curtailment of overspending. Perhaps, after all, I can tell my noble friend Lord Bellwin that I find myself in agreement on one point.

But I am bound to ask the Minister various questions. Does he not consider that we are doing the right thing in the wrong way and with undue haste? There are many questions to ask. In the White Paper Streamlining the Cities, the present expenditure of the metropolitan authorities and of the Greater London Council is referred to. But may I ask whether reliable and detailed estimates have been worked out, giving evidence that the abolition of the metropolitan authorities and the shift of work to metropolitan district councils and joint boards will result in a reduction in the short term and in the long term, and in the overall expenditure in the country, bearing in mind that many people may find themselves out of work? What evidence is there that the metropolitan district councils will be, or can be, more economical than the metropolitan county authorities? Is it not true that some of the metropolitan councils have also overspent? Will there not be an unequal financial burden on district authorities?

With regard to the Greater London Council, the GLC will be disbanded before the next election. Should not the people of London be given the opportunity to keep or to dismiss their councillors? Will Mr. Livingstone, if removed by, as it would appear, central Government, not then be regarded by some as a martyr?—a strange role, indeed, for Mr. Livingstone.

Has the effect of disbanding some divisions of the GLC been given well-considered thought? I wish to mention just one example—a small, non-political department, the Historic Buildings Division. No political implications are involved and expenditure is small. There are 30,000 listed buildings in London. No single district authority could afford to take on this highly technical division with its small staff, each with a specialised area of knowledge which, combined, gives a service to London that safeguards our heritage. This will go, to the detriment of not only London but the United Kingdom and, indeed, the world. Many doubt that joint boards are a feasible proposition managerially, politically or financially. I suggest that they will be very costly. But how can we tell? We do not know what the cost will be.

Turning to the White Paper on the curtailment of rates, it is agreed that the ratepayers of England and Wales must be safeguarded, but is not the curtailment of rates by central Government a fundamental constitutional change of policy? Are there not other methods whereby, for instance, elected representatives can be made accountable to the ratepayers—perhaps by more frequent elections? Imperceptibly, there is a drift of power from local government to central Government. Is this what Her Majesty's Government really want? In the last five years there have been five Acts of Parliament on finance and eight different grant systems. This was, I believe, referred to by the noble Lord, Lord Graham of Edmonton, whose speech we much enjoyed.

In a study of Local Government, the Law and Constitution, Martin Loughlin writes: Local authorities are subordinate to but not the agents of central Government. There should be partnership, not overlordship.". Would not our present Secretary of State for the Environment and the noble Lord, Lord Bellwin, both men of persuasiveness and peace, welcome partnership rather than overlordship?

Finally, should we not pause to consider the relationship between central and local government? This country needs both stability and—dare I say it?—happiness. Only happy people work well. Any change we make should, in my view, cover the whole realm of local government. It should be able to stand the test of time and be so rooted that it will not need to change with changing administrations. At this stage again I say that one supports the reduction of rates and one agrees that some form of reorganisation is necessary. But I say—and I say again—that it will not succeed unless there is agreement.

There is a mass of existing evidence on local government. I support the call by the noble Lord, Lord Evans of Claughton, for a detailed survey of what local government should be and the structure that it should take. I agree with the noble Lord, Lord Raglan, who in his delightful speech said that we need to look again at the structure and, maybe or maybe not, think of something quite different. Would the noble Lord, Lord Bellwin, and his right honourable friend the Secretary of State consider referring the reorganisation of local government either to an independent committee or, better still, to a Joint Select Committee of the House of Commons and the House of Lords so that an overall review can be carried out and a structure formulated which is acceptable both to central and local government and to the electorate and which will be of lasting and permanent value to the country?

8.27 p.m.

Lord McIntosh of Haringey

My Lords, I am one of those, of whom a number of noble Lords have spoken, who have to stifle back the words "Mr. Mayor" when rising to their feet in public. I have served on the largest local authority in the country. I have also been an advocate for many years of the small local authorities in the country—the local councils. I am delighted to have had recently the assurance of the support of the noble Lord, Lord Mottistone, when I seek leave to introduce into this House a Bill to extend to urban areas the rights which villagers have in their parishes.

I am not going to make a speech of reminiscence. Instead I am going to make a much more boring speech. I am going to take very seriously the wording of the Motion moved by the noble Lord, Lord Beloff, and the Government's response to it, although I am disappointed to see that neither of them could resist the ritual sticking of pins into Ken Livingstone and the ritual references to lesbianism, babies against the bomb or whatever it might be.

In his speech, the Minister referred to local authority expenditure in the management of the economy. He asserted, in my view quite rightly, that it is central Government which has the responsibility for the management of the economy. He said that the Government were not going to let their policy of reducing inflation be put at risk by local authorities. I want to examine that proposition—the threat which the Government claim comes from local authority expenditure. I want to examine whether local authority expenditure is in fact out of control, as is asserted, or at least whether it is more out of control than central Government expenditure. I want to examine the proposition that local authority expenditure damages business and employment in the various areas of each local authority. Finally, I want to say something, although this has been covered much more fully, about the adequacy of the remedies that are proposed.

First, I take it that it is agreed that local authority expenditure is a special case of public expenditure, and it is public expenditure about which the Government, according to their own economic theories, are concerned, particularly the public sector borrowing requirement, which is a constant obsession of Treasury Ministers. The interesting thing about the PSBR is that our PSBR is perfectly comparable with that of other industrialized nations—our competitors—who do not seem to suffer the same sort of economic difficulties which the Government claim we suffer as a result of excessive PSBR. It is also true, if we accept Conservative economic theory that inflation is closely related to money supply, that no attempt has been made by the Government to claim that there is a relationship between PSBR and the money supply. Indeed, it can be firmly stated that in only one of the last 10 years has PSBR been a major component of changes in money supply. Therefore, the claim of the noble Lord, Lord Bellwin, concerning the effect on inflation and the Government's economic policies simply does not stand up to argument.

Let us look at the nature of the borrowing of which it is claimed that local authority expenditure is a part. First, it is seldom realised that the public sector borrowing requirement has for virtually every year in the past 20 years been in surplus. In other words, money is being used for investment and other spending, and is being repaid at less worth than the amount first borrowed; in other words, at less than the rate of inflation. It is also true that in this country the national debt is falling in real terms. That is in stark contrast with the situation in countries such as the United States, Japan and above all West Germany, where the national debt has doubled in real terms in recent years.

I have referred to the surplus of the public sector borrowing requirement. That surplus in the last year for which we have evidence—and I refer to the Bank of England quarterly report for April 1981—was around £600 million; nearly as much as the so-called overspend of which the Government make so much. This means that the public sector borrowing requirement is only one part of the total gamut of public expenditure. The same sort of expenditure, when used for private companies—when used for new industrial activities in the same way that local authority expenditure is used for services, to serve the people who create the wealth—is actually encouraged by the Government with the purchase, for example, of commercial bills. There is nothing wrong in borrowing itself; it is the purpose to which that borrowing is put which is really important. So the argument that public sector expenditure itself is something wicked and that local authorities as a component of that have to participate in an endless series of cuts and a cascade of controlling legislation does not hold water.

Now let us look at a comparison between local authority expenditure and central Government expenditure. I tried to get the noble Lord the Minister to say in his opening statement what the comparison was. He told me that he would, but then he did not do so. I will tell him what the comparison is between the years before his Government came to power and the current figures. If one looks at the years 1978–79 and 1983–84, central Government expenditure rose by 101 per cent, and local government expenditure rose by 80 per cent. Central Government did not control their expenditure as effectively as local authorities did,

Lord Bellwin

My Lords, if the noble Lord will permit, can he point out what percentage of that local government figure was capital spending and what was revenue?

Lord McIntosh of Haringey

My Lords, I do not have the Minister's resources available to me but I am sure he can find that figure more easily than I. The comparison I wanted to make was not between capital and revenue but between the taxation levied by local authorities in comparison with expenditure. Here, central Government taxation rose by 94 per cent, and local authority taxation rose by 125 per cent. The conclusion one arrives at is inescapable; that the increase in rates is not due to an increase in local authority expenditure, whether on capital or revenue, but is due to an overall reduction in central Government finance available to local authorities. In other words, it is the direct result of deliberate, conscious Government policy and is not in any way due to overspending by local authorities.

If one returns to the issue of public expenditure for just one moment, and puts local authority expenditure in context, subsidies by central Government to private companies in various ways for investment—including regional policies and so on—amount to about £13 billion; subsidies to council tenants amount to something more than £2 billion a year; and subsidies to owner-occupiers in the form of tax relief amount to something like £5 billion a year. These are very large figures compared with the amounts of expenditure on local government.

I will now turn to the supposed relationship between high rates and industrial and economic decline, and the decline of employment. The first point to be made about that is that rates are high in proportion to other forms of taxation on corporations, not because they are high in themselves but because corporation tax and other forms of corporate taxation have declined—from a figure of 18 per cent, of total taxation in 1946 to about 5 per cent, at the present time, according to the Economist last month. Therefore, it is not surprising that companies complain about rates, because rates are the only form of taxation which they cannot avoid or pass on to their customers.

Even if we accept that companies complain about their rates, they do not complain about their rates all that much. I call in evidence a document published by the Department of the Environment, Industry and Employment in the Inner City, which examined the motivations of inner city employers and their incentives for moving away from supposedly higher rated areas. They told us—and I say "us" because I wrote this report for the Department of the Environment—that rates were only twentieth out of 31 factors which might induce them to be unhappy with a location in the inner city.

Lord Beloff

My Lords, can the noble Lord let us know the date of that report, which so strikingly contradicts the reports referred to by my noble friend Lord Mottistone, from the chambers of commerce?

Lord McIntosh of Haringey

My Lords, the date of that report was August 1979. I accept that it is not as recent as I would like it to be, but CIPFA in its response to recent Government White Papers has produced very similar results. I believe it would be constructive to compare those with the rather more anecdotal evidence produced by the noble Lord, Lord Mottistone.

A much more recent piece of evidence is the Department of the Environment's publication on monitoring the enterprise zones; the Year 2 report published this year. Again, I produce this with some confidence because I had some part in the field work. This report shows that the objective of reducing rates, which was indeed achieved, if very selectively, in enterprise zones did not have the effect of encouraging business. What happened was that rents rose to meet the reduction in rates. Therefore, it was the landlords and not the businesses who received the benefit of reduced rates. I put that to the Government as a serious possibility if they are considering what might happen if they forcibly capped rates in inner city areas.

If we look at rate expenditure in relation to the economy of our private industry, it is easy to see that it cannot—despite the loud cries of employers' associations—have the effect that is claimed for it. Again, I apologise to the House for producing figures which are not as up-to-date as they ought to be, but in 1979 rates were 0.6 per cent. of gross output; they were 1.6 per cent. of gross value added; and they were 3 per cent. of wages and salaries. Therefore, it cannot effectively be claimed that any of these measures are required because of the effect of high rates—particularly in the inner city areas; those which the noble Viscount, Lord Ridley, called "the naughty boys".

I am saying that we have had a phoney problem put to us. It is exaggerated for political reasons and it does not have the economic substance which it would need to justify the very substantial disruption which is proposed by these measures. I want to say only two or three words about the inadequacy of the measures proposed for a problem which has been exaggerated. I want to refer first of all to the claim about overspend. This really is the most ludicrous piece of Aunt Sally. What the Government do is to say, "We will decide entirely on our own in Marsham Street what each authority should be spending. We will have complicated formulas: sometimes they are multiple regression analyses and sometimes not. We will say that what you ought to spend—and we will probably have two or three measures for it—is so and so. If you go above that, you have overspent." Not that there is any evidence that those local authorities in total are spending more of their ratepayers' money, or indeed of public money: simply, they have offended against arbitrary rules produced by Government. Then the Government say, "We have produced these arbitrary results; now we are going to make a great fuss about the fact that we have an overspend"—which the noble Lord, Lord Bellwin, has now given us as an up-to-date figure of £850 million. As Lord Evans told us earlier, even that is only 3.5 per cent., as revised, of the gross domestic product. It is hardly an economic catastrophe, but it cannot be claimed either that it is based on any sound or analytical judgment about the necessity for local authority expenditure, or on any true comparison of local authority expenditure with public expenditure.

I want to say only one final word about joint boards. This seems to me to be the most utterly ludicrous and counter-productive way of reforming local government that one could possibly have, going back 100 years and learning none of the lessons available to this country over that period. I myself served on joint boards; I seved on the Lea Valley Regional Park Authority, I served on the Metropolitan Water Board, as a representative of other local authorities. The first thing I must say is that the decision-making on joint boards is the most protracted, tedious, inefficient thing it could possibly be, because each representative has to go back to his constituent authority in order to get a decision on every issue. That is what it means in practice. And what that means is that in fact the chief executive and the permanent officers run the show and local democracy goes out of the window.

If that were the only complaint, that would be bad enough. But, of course, the issue is much more serious than that. In a multi-purpose local authority, the claims of different departments and services are considered together and the wicked "no-man", the chaiman of the finance committee, or the borough treasurer, or the chief financial officer, has the responsibility of achieving some sort of consensus as to priorities to be given to each service. Under a joint board, which is a single-purpose authority—and the evidence is that there are going to be an awful lot of these single-purpose authorities—there is no way for that assessment of priorities to be made. The people concerned very rapidly become institutionalised, if I may put it that way. They very rapidly, quite understandably, look for the best that their service can provide; if it is a hospital board they want the best hospitals, if it is a fire board they want the best fire services, if it is an education board, a school board, as we know from the United States, they want the best education service. There is nobody to say to them, "you must balance the claims of education against those of the fire service and those of the other authorities". This is the lesson that I would have hoped would have been learned by members of the Government with the experience of local government that the noble Lord, Lord Bellwin has, and I would have hoped that he would have been able to give that message to his colleagues in Government. The effect of this is that we have a phoney set of solutions to a phoney problem. I am grateful to the noble Lord, Lord Beloff, for introducing this debate, and I hope that it will go some way to clarify the Government's mind in the months to come.

8.47 p.m.

Lord Hatch of Lusby

My Lords, my first duty is to apologise to Lord Beloff for not being able to be here for his opening speech, and secondly to apologise also to the noble Lord the Minister for having to be absent when he spoke on behalf of the Government. I am quite sure that both noble Lords will forgive my absence when I tell them that I was away on a speaking engagement the result of which I have no doubt will be that they will transfer from that side of the House to this at a fairly early date.

Not having been able to hear the Minister's opening speech, I do not know whether he took the opportunity to deal with a question which I know is causing a lot of concern in his own party, as well as in the rest of the country, that whereas 10 years ago the right honourable Peter Walker spent a great deal of public money in creating the metropolitan authorities and in reorganising local government in this country, now his successor is apparently going to spend even more money in reversing what the Conservative Government did 10 years ago. If the noble Lord did not deal with that point, I hope he will do so in winding up.

I am particularly sorry not to have been here for the opening speech of Lord Beloff, because I should have liked to have been able to take up the cudgels with him on historical grounds. I believe that he did mention the historical background, as he sees it, of this country. My central text would be that one of the principal first priorities in the development of the British constitution has been the phrase, "No taxation without representation". I am quite well aware of the fact that Lord Beloff may, and I believe does, argue that central government representation will fit that bill. I take a totally different view. I believe this is a matter of important political, historical and philosophical argument. If we simply accept that representation is fulfilled in Westminster, then we are taking away a great deal of the personal contact that runs right through our local government traditions, right from the hamlet to the town and the city. I believe that the force of that principle, no taxation without representation, is not fulfilled simply by parliamentary government: it has to extend to a whole web of contacts between local people and local representatives if the superstructure of parliamentary government itself is to be sustained. Perhaps there may be another opportunity for the noble Lord, Lord Beloff, and myself to argue this case. But it is really crucial to the whole of this debate and to the whole of the future of the British constitution and the path within that constitution of both local government institutions and parliamentary institutions.

However, I do not profess to be an expert on local government, but I have been astonished since this debate was announced at the amount of literature I have received on the subject, and the real reason that I felt I ought to speak tonight was because my own local authority, the Lincolnshire County Council, has asked me to do so. I believe part of my responsibility is to represent local interest when I have the opportunity to do so. The Lincolnshire County Council has sent me a document which states the reactions of the Association of County Councils to the Government's proposals, and I intend to quote from those who have examined these proposals in a professional way.

The first reaction runs as follows: The proposals will result in an unacceptable centralisation of power, in practice in the hands of the Executive not Parliament, and the further weakening of local democratic control. Final 'political' decisions on rate levels will in practice be determined by Civil Servants". Later on the Association of County Councils has this to say: The ACC agrees that the way forward is to increase the accountability of local councils to their electorates". That is the central text of what I want to add to this debate.

I ask the noble Lord the Minister who is to reply whether he recognises the following quotations. First, to add to what the noble Lord, Lord McIntosh of Haringey, has been saying about finance, does the Minister recognise this: As a percentage of public expenditure, local government expenditure overall has fallen by over 3 per cent. from 1977 to 1983"? Secondly, does he recognise this: As a percentage of gross domestic product it has fallen by over 3 per cent, from 1974 to 1983, when in the same period central government expenditure rose by 2 per cent."? Does he further recognise this quotation, which also seems to bear out the central theme that I am putting to the House: The real problem is surely to increase control by those who elect their local representatives and pay the rates. Local expenditure must reflect local priorities, and local policies considered in detail by those with real knowledge of local problems, if they are to be solved with maximum economy"? Let me give the noble Lord a clue by a further quotation, in case he has not already recognised the source: Whitehall setting local needs centrally with admitted rough justice, and then capping the rates, surely ill-accords with our Conservative philosophy of getting government off the backs of people.". I am certain that by now the noble Lord has recognised that those quotations come from Mr. Lewis Moss, leader and chairman of the Policy Committee of the Conservative-controlled Association of County Councils, speaking at the Conservative Party Conference in Blackpool. If he has not already answered those points in his opening speech, would he care to do so when he winds up?

I have also received correspondence and documentation from the Association of District Councils which seem particularly apposite to my theme. At Clause 2.7 it has this to say about the Government's proposals: The Association rejects the Government's claim that there is only a system of limited accountability' in local government. Whilst there are admittedly some weaknesses in the chain of accountability, local government remains the only fully accountable and democratic local institution in the country… It is accountable to the man in the street daily not only for the level of its expenditure, but for the service it provides … Its members are accountable by election". I am sorry to see that the noble Lord, Lord Sandford, is not in his seat, as when he made cracks about Ken Livingstone and suggested that he had been losing votes for those of us on this side of the House I wanted to point out that he is, at least apparently, still supported by the electorate. He is the elected leader of the GLC. Whether one agrees or disagrees with him, he represents his electors.

Lord Beloff

My Lords, I was under the impression that at the last GLC election the leader of the Labour members was the noble Lord, Lord McIntosh of Haringey. He was the person whom the electors of London expected to lead the council after the election.

Lord Hatch of Lusby

My Lords, that is surely not a valid point. Ken Livingstone was elected—

Lord Beloff

Who by?

Lord Hatch of Lusby

By his constituents.

Lord Beloff

My Lords, he was elected to the council; he was not elected leader. The people of London were not told that he was to be leader if they voted for Labour candidates.

Lord Hatch of Lusby

My Lords, I am very sorry, but Ken Livingstone was elected by his constituency and he is representing his constituency on the Greater London Council. Whether he is elected by his constituents as Leader of the council has nothing to do with it. The constituents of Finchley do not elect Mrs. Thatcher as leader of the Conservative Party, and the Conservative Party does not consult its constituents before it elects a leader of its party. The question of whether Ken Livingstone is leader has nothing whatsoever to do with the issue of whether he is an elected representative of the constituents within the constituency that he represents.

Lord Beloff

My Lords, am I not right in thinking that at the election on 9th June, of which we were reminded earlier, it was made clear to everyone voting for a Conservative candidate that if the Conservatives were successful Mrs. Thatcher would be Prime Minister? It would have been thought very odd if some other Conservative had suddenly appeared on 10th June and gone to Buckingham Palace.

Lord Hatch of Lusby

My Lords, that is a totally different case. The electorate of the country was not consulted when Mrs. Thatcher took Mr. Heath's place. This had nothing to do with the electorate. The same is true of the deliberations in County Hall. I do not want to delay the House much longer. If any other noble Lord wants to challenge me on this issue, I am very willing to take up the challenge. It seems perfectly plain to me. Certainly members of the Conservative Party have very thick skins if they are going to talk about the democratic election of leaders. How do they elect their chairman? Who elects the chairman? Who has decided that Mr. Cecil Parkinson is no longer fit or suitable to be chairman and should be replaced by Mr. Gummer? It is not the electorate.

Lord Bellwin

One man, one vote.

Lord Hatch of Lusby

My Lords, no member of the electorate has been consulted. In the Conservative Party it is one man, no vote.

However, to get back to the subject, if I may, I want to draw the Minister's attention to one further issue which is raised by the Association of District Councils. When it put the Government's proposals into their European context, this is what it had to say: In a wider context, the Association also draws attention to the draft European Charter of Local Self Government adopted by the Conference of Local and Regional Authorities in Europe in October 1981. This set out the basic constitutional principles of local self-government including the right for local authorities 'to have adequate financial resources of their own …and to dispose freely of such revenue within the framework of their powers". The Government's proposals are in direct and fundamental violation of the terms of the draft Charter and in the Association's view need also to be scrutinised in the wider context of Europe". I should be grateful to the noble Lord the Minister if he would address himself—again assuming that he has not already done so—to the proposals so far as they relate to the draft European Charter.

Finally I cannot do better than sum up what I have been trying to say in the words of a leading article in The Times of 16th September of this year. The Times had this to say: At all periods of history power in the kingdom has been dispersed, and discretion in its exercise has belonged at many points nearer to the circumference". In a later paragraph The Times summed up its view of the Government's proposals in this way: Now, in 1983, a government which is rhetorically committed to respect for the constitution, the diffusion of its responsibility in society, and the reduction of the role of government in its essentials, proposes to substitute its own discretion for that of individual local authorities in setting their levels of both spending and taxing. The proposal is not only a breach of constitutional custom; it throws on to Whitehall and Westminster a mass of local detail and complexity which they are not, and ought not to be, equipped to handle". In my submission, that is the belief of the Labour Party. We believe in the dispersal of power. We believe in local initiatives, local responsibility, and local accountability. We are not rhetorical in our pretensions.

The party opposite has been elected on false claims as to what it was going to do. Ten years ago it decided to reorganise the whole of the local authority system. This year it decides to "re-reorganise" it. How much of this has been put to the electorate, and what will be the effect in the localities, in the intimate and important relationship between local electors and their local councillors at all stages?

I would ask the Minister, as each of the three authorities that I have quoted is doing, to think again and to think of the historic structure and development of the British constitution before he attempts to do what members of his own party have begged him not to do, and what those authorities controlled by Conservatives have also asked him to refrain from doing, because of the importance of local democracy.

9.3 p.m.

Lord Beaumont of Whitley

My Lords, we are indeed grateful to the noble Lord, Lord Beloff, for introducing this debate. We are grateful because of the immense importance of this particular subject at this particular time, and grateful, I think, because of the fascination that a great many of us find in it and in the whole subject of how democracy should work at a local level in this country and in the Western world in the future. We are also grateful because of what seems to me the high quality of the speeches that we have had in the course of the debate, matched only possibly by the considerable length which comes from long experience of the council chamber.

Although I am grateful to the noble Lord, Lord Beloff, as I think we all are, I am rather glad that we have not felt it right to follow the ground rules which at one moment it seemed he was suggesting to us. It is absolutely right that, as he said, we should examine the cost and the quality of the services that we receive and the relationship between the two as a hard bargain. But I also think it important that we should look at the quality of our democracy and at how we manage to give people as much power as possible over their own lives. Both those points are important.

In dealing with local elections and local government, it is true to say that turnout is very low in most local government elections. As the noble Lord pointed out, it is also true that people tend to vote according to their view of the central Government at that particular moment. But it seems to me that there are ways to correct those faults. There are ways to improve matters. One way, for instance, is to give to councils more power so that they can actually do more for the voters and be seen to be more relevant to the lives of the ordinary inhabitants of the districts in which they operate.

It seems to me that another way of increasing the amount of interest which people take in local government, and in particular of meeting the objection that people vote accoding to their views of central Government, would be the introduction of proportional repesentation. But the Government propose to take power from the councils, rather than give more power to them, and they have announced their intention of not being prepared to touch proportional representation with a barge pole. It seems to me that that is a very odd way of going about remedying the faults that we all see in local government at the moment.

The trouble is that the grip of central Government is a debilitating influence and historically has always been eschewed by the Conservative party. It is sad to see the change that has overcome that party, and it is good to know from the debate today and from the speeches that we have had from the Benches opposite, that there are still Conservatives who protest against the change. We are seeing what the noble Lord, Lord Alexander of Potterhill, in a notable speech, called the deliberate destruction of local government. This is particularly sad at a moment when there seems to be a greater call for devolving power from the centre down to where people live. We live in an age of growing influence over our lives by international bodies. We have examples today of worry over the power that is exerted by our fellow members of an alliance. Many of us are worried by the power of multinational companies. All of us are agreed that we cannot live in an island. We cannot live to ourselves any longer. We are part of a world that grows smaller every day as communications improve. To a certain extent, this is not to be belittled. To a certain extent it is to be welcomed.

As a member of a party that includes in the preamble to its constitution a belief in world government, I must welcome it. But if that is happening, then it must be balanced, not by the strengthening of the central state but by the fashioning of a continuous chain of responsibility giving powers to people as appropriate. In fact, as power moves up it is appropriate that it should also move down the chain. The answer, surely, to the criticisms that the noble Lord, Lord Beloff, rightly put forward, is to give local government more control over what happens and to make it more responsible.

Let me give a couple of examples of developments that would be worth exploring and which I do not think have been touched upon today. The greatest problem we have to deal with in this country on the home front at the moment is unemployment. I do not think that there would be any debate about that. There is general agreement about what will be the future of employment to a large extent. There is general agreement, I think, that one of the ways in which we are going to find employment is by creating real environmental wealth through employing people to do things which improve their surroundings and the bit of the world where they live. That is as good a way of producing wealth as exporting machinery. Both are necessary for different reasons, but both are absolutely necessary.

The big bureaucracy of the MSC is probably not the best approach. If you really want to know how to improve your locality, it is the local people who know. Every single member of this House can find, within half a mile or a mile of where he or she lives, things that need to be done and things that would be worth investing in to improve the lives of the people who live there. Most Members of this House—I am not talking about Chatsworth—also can probably discover not only things that need to be done in their neighbourhood but also the people to do them. You can discover the people who are out of work. Most people, in the areas where they live, could evaluate what should be done, one project against another, how it should be amortised and how much money can be put into it. All this is of the essence of local government. These are the tasks that local government may have to tackle in the future.

Another way of looking at this matter was put in an interesting article by Barry Cooper in the April issue of Town and Country Planning, which some noble Lords may have seen, in which he suggests that we should try in local government to divide responsibilities increasingly by areas rather than by functions. Instead of having a roads committee and an education committee, the local village should be able to weigh up ways of spending money on roads as against the closure of its local school. I am not suggesting that these are immediate reforms that can be put into operation now. I am, however, saying that, with the problems we have to face in the country, it is in the direction of giving people more control over their lives at local level that we need to be moving, and not further away from that and more towards central government.

This is something that the Liberal Party has discovered over the last few years and that our allies in the Social Democratic Party are also discovering in the revival of community politics. It is a revival of that kind of approach to the electorate of which the Labour Party had a very strong record in the past. When you canvass and talk to people about something which does not immediately affect them, or over which they feel they have no control, like unemployment, you do not get much response on the doorstep. However, if you talk to them about paving stones—we are always criticised for talking about paving stones—their eyes actually light up. They start to talk about paving stones because someone down the road fell over and damaged himself in the course of the last week and had to be taken off to hospital. What is more they suspect that you can do something about their paving stones, whereas they know very well that you cannot do a thing about their unemployment. So it is at that type of level that local government must be able to take off.

Those are the developments at which we should be working. Instead of which it seems to me that we are seeing totally irrelevant cure-alls—sledge-hammers to kill gnats. I thought that the analogy of the classroom put forward by the noble Lord, Lord Alexander, was brilliant. I did not agree with the noble Lord, Lord Mottistone, when he said that it did not hold up because the whole business of local government was more complex than a classroom. In my view the classroom seemed a very good comparison indeed.

The cure for overspending authorities is very simple—namely, proportional representation. On the last occasion when I mentioned this matter to the noble Lord, Lord Bellwin, he told me that it had been tried elsewhere and had failed. I challenged him to produce the evidence for that. I hope that he has it tonight, because I have not yet had the evidence. However, if councils were elected by proportional representation I suspect that we should have none of the rogue councils that have been mentioned this evening. All the rogue councils that we have talked about are single-party councils. If we had proportional representation and electoral reform at that level, we should not get such councils. That is the democratic way of curing the situation. If the noble Lord, Lord Bellwin, indulges in any more of his sarcastic laughter and suggests—as I think he possibly is suggesting—that this is merely another Liberal Party ploy, let me point out that we do not any longer need proportional representation in order to gain council seats because we gain them all the time in by-elections every week under the present system.

The cure for the overspending authority is simple and it is not the gradual strangulation of local government as a whole: what is needed is the revitalisation of local government by an increase of powers and possibly by the abolition of ultra viresamong other things, and the improvement of the mechanism. If that were done then finance would fall into place. It is interesting that not many noble Lords have spoken about finance in the course of our debate this afternoon and this evening. The noble Baroness, Lady Stedman, was a distinguished exception. I think that what she said was largely accepted by many speakers. However, finance will fall into place once we have got rid of the high spending rogue authorities. I certainly appreciate that point.

How you will raise the taxes and what form they should take is a fascinating subject. It is the type of matter in which many of us can become extremely involved. But it does not go to the root of the matter. The root of the matter is local democracy in this country. The White Paper strikes at the root of that matter. The relationship between central and local government, to which our attention has been drawn by the noble Lord, Lord Beloff, today, should not be one of destruction; it should not be one where domination by central Government over local government is the rule It should be one of a healthy and developing symbiosis. That seems to me to be what most of the speakers this evening have been talking about.

We are delighted to find that there is so much general agreement. We hope that that agreement will be reflected in action in this Chamber and in another place over the coming months, because there is a great challenge not so much by the party opposite as a whole but by the Government, by the leaders. They have put out a challenge to local democracy and it is one which must be resisted wherever possible. There probably is enough agreement for us to be able to resist it, and I certainly hope that your Lordships will be able to play your part. We will certainly do our best to play ours.

9.19 p.m.

Lord Underhill

My Lords, I, too, wish to thank the noble Lord, Lord Beloff, for opening this debate today. Whether it has had the results that he expected is another matter, because what has happened is that noble Lords from all parts of the House have expressed their views sincerely on the position of local government and in general not from any party political point of view. They have put forward what they regard as best in the interests of local government, local communities and local action.

I should also like to thank and congratulate my noble friend Lord Graham—yesterday I had the honour of being one of his supporters—for bringing into this House further local government experience and the ability to express it in a way which will command respect. We look forward to his contributions on this and other subjects in the future.

I am certain that the noble Lord, Lord Beloff, did not intend it, but I feel sure that when he reads the Official Report he may reflect that what he actually said could be interpreted as a sad denigration of those who serve as elected representatives in local government, and also as a condemnation of local government as such. That was the impression that was given. Knowing the affection (if I may use that word) which the noble Lord, Lord Bellwin, has for local government, I hope that he will distance himself from any such interpretation about local government.

The noble Lord, Lord Beloff, referred to the public as having no sense of affection for local government. Of course, the public has no affection in that sense for Parliament or parliamentarians. There is a love-hate relationship. But heaven help anybody who suggests that they will interfere with the franchise and remove the public's opportunity to vote for their elected representatives!

The noble Lord also said that what concerns people is not the right to vote but the quality of services and economy. I am certain that he did not mean what those words convey, but they are the words that were used; because they would be opening the way for central Government to do what they liked, to have no reference at all to local needs or to local democracy. The noble Lord seems to argue for more central Government control and appears to ignore the accountability that there is for local government representatives.

Local authorities must be responsive to local needs. Not only is there regular accountability through elections—which, incidentally, usually come far more frequently than those for Parliament, and therefore, there is greater accountability—but other factors are involved. Representatives meet electors as "the man in the street"; local authority representatives conduct surgeries. Therefore, there are many ways in which local authority representatives are accountable.

The noble Lord, Lord Beloff, also said that constitutional issues are not involved in this matter and in this debate. That depends on the interpretation of constitutional issues. But all three local authority associations are critical and believe that there are constitutional implications. We have the responses from all three of the local authority associations. A consultative process is supposed to be taking place. I should like the noble Lord, Lord Bellwin, to say that there will be a thorough response to all the points contained in these three responses from the AMA, the ACC and the District Councils Association. That would be real consultation.

I do not intend to quote from those documents, although there have been some quotations already. We have heard views expressed by the respective presidents of the county councils and the district councils. Although I am speaking from the Opposition Front Bench, I can also speak as president of the third body, the AMA. The noble Lord, Lord Bellwin, said that the issues involved the question of the relationship between central Government and local government. That is why so many noble Lords who have spoken tonight have expressed their concern at the Government's proposals, and that is why all three associations have expressed concern and criticisms. I shall content myself with just one quotation from the AMA: It is difficult to recall a time when relations between central and local government have been so low". That sentiment was echoed by the noble Viscount, Lord Ridley, on behalf of the county councils, by the noble Lord, Lord Sandford, on behalf of the district councils, and also, if I may pick out one in particular, by the noble Lord, Lord Alexander of Potterhill, who expressed this concern based on his long experience.

We know that local government can do nothing for which there is not permission from Parliament, either mandatory or permissive. But there has up to recent years been an accepted relationship. Despite what the noble Lord, Lord Bellwin, said in his opening remarks, a central decision on rate levels inevitably removes the right of a local authority to determine local service needs. This is a point that some of us argued on the 1983 Transport Bill. Once you start to have a protected expenditure level, once the Minister decides what shall be the expenditure, then local services, local needs, go out of the window.

The noble Lord, Lord Bellwin, said that the Government must concern themselves with total local government expenditure. I and a few of my noble friends said, "Yes, total local government expenditure". But the Government under their proposals will be taking powers to lay down spending and rating limits for individual local authorities without taking any responsibility whatever for the effects that may have on local communities and local needs.

I hope that the Government, and the Minister in particular tonight, will take heed of some of the points which have been mentioned. There has been a considerable drop in the proportion of local authority expenditure financed by rate support grant. Put another way, there has been a substantial increase in the amount of local government expenditure which now has to be met by ratepayers. It is clear that the Government themselves have contributed in no small way to the rate rises by cutting their grant from time to time.

The alternative to rate increases would have been the destruction of many local services. This was a point made by a number of noble Lords, and again in particular by the noble Lord, Lord Alexander. I hope that the Government will keep in mind that the rates as a proportion of GDP—I am emphasising this because repetition may make the Government appreciate this fact—fell from 15.9 per cent. in 1974–75 to 12.8 per cent. in 1982–83. It cannot be ignored that there has been this increase in central Government expenditure as a proportion of GDP, and yet the blame for financial problems is being laid at the door of local government.

My noble friend Lord McIntosh gave a number of financial details. I should like to ask whether the Government accept that rating finance has only an insignificant effect on public service borrowing requirements. Local authorities contribute to PSBR mainly on capital schemes, and as we all know that type of expenditure and borrowing are strictly controlled already. We would argue that local government expenditure as such, apart from capital schemes, has no real effect on PSBR.

The White Paper indicates that the Secretary of State will decide the criteria for selecting authorities for control. The White Paper goes on to suggest that the main criterion for determining local rate levels will be the grant-related expenditure assessments. It was never intended that GREs would be used for this purpose, and various Ministers gave assurances that the GREs would not be used for such a purpose. Why? Because these assessments cannot be objective, and in practice they produce greatly misleading results, and as a number of noble Lords have said—and it was particularly emphasised by the noble Baroness, Lady Fisher—this assumes that the needs and demands for services are common throughout the whole of the country. We could give examples of where this has been shown to be foolish and ridiculous. The suggestion is artificial, being based on some 60 statistical indicators. I am not criticising civil servants, but inevitably this is a decision that can be taken only by permanent officials in Marsham Street. The accountability of Parliament must be strictly limited to be able to deal with such matters.

A number of noble Lords emphasised that any expenditure for industry was a cause for concern. It must be emphasised that rates are only a small proportion; just 1 per cent, of manufacturing cost. That cannot be disagreed with. Other decisions taken by central Government, financial or otherwise, bear far more heavily on industry than rates.

Some local authorities already have regular consultations with industry, but, if it is right and proper that we should lay down a statutory requirement that one section of the community must be consulted before certain decisions are taken, there are other very important interests which have no statutory right of that kind.

I shall now deal with a few points that have arisen from the proposals for abolition of the GLC and the six metropolitan counties. These proposals show signs of rather hasty decision, not clearly thought out when the original statements were made, and arguments brought forward subsequently. The proposals have been soundly criticised by a large section of the press and other responsible bodies.

The noble Lord, Lord Bellwin, in his opening remarks, commented on the savings that could be secured by reorganisation. On a previous occasion the noble Lord said that before taking a decision on reorganisation we needed to collect all the facts and figures and we must approach the matter responsibly. Yet, when Members challenged the noble Lord on this, he argued that one could not get the figures at this stage. However the White Paper suggests that there will be considerable savings. My noble friend Lady Birk said that the AMA had decided to commission Coopers and Lybrand to conduct an independent survey as to the actual effects. Everybody trusts Coopers and Lybrand because the DOE uses that firm itself. I should like to ask the Minister whether, if that independent report shows that there will not be much in the way of savings, the Government will accept that. If not, then I say the same as I did on the question of the three responses from the three associations: if it is supposed to be a consultative process, that must be done.

There are many detailed points that could be raised on the proposals for abolition. I am sure that noble Lords would be surprised if I made no mention of transport. London Transport is to be reconstituted on the pattern of a small holding company to be renamed London Regional Transport. The White Paper dealing with transport in London uses quotations from the Commons Select Committee quite freely to justify its decision, but strangely makes no reference to that Select Committee's proposal that such a regional body should have representatives of the GLC, the London boroughs and the shire district councils concerned. Strangely, when we come to the metropolitan areas there is to be a limited type of representation on the joint boards that are to be established; but, apparently, that sort of local government representation is not considered suitable for the vast London regional area. I would ask, why?

Instead of revenue support, which is now given by precept from the GLC, in future revenue support will be a grant from the Secretary of State and a further very detailed document has already been issued which shows how to continue contributions from the ratepayers of London by a very complicated system of readjustment of the rate support grant. There is no explanation at all as to why, when a body is directly controlled by the Secretary of State—and that is what the White Paper means—there should still be a contribution made by the ratepayers, who will have no local government input into the new body and no representation on it. Those who live in the London area will know that, if nothing else has been achieved in the last two years, what is appreciated by a vast number of ratepayers—and I am certain that some of those are noble Lords in this House—is the concessionary fares scheme for Greater London, which has enabled many old people to have mobility they would not otherwise have.

We do not know what will happen to the concessionary fares scheme. All that paragraph 20 says is that the Government will consult representatives of London boroughs on the development of a joint scheme to be operated when the boroughs take back responsibility for concessionary fares for the elderly from the GLC. There is no guarantee that there will be a good scheme.

Just a word on the position of transport in the metropolitan area. There we find that there will be a limited form of local government representation on the joint board, as for certain other services; but the White Paper says that this body will take major decisions on revenue support, and I quote: hence, on fares and services and the power to precept district authorities". Yet we find also in the White Paper that, for the first three years, there will be special control by the Secretary of State including approval of the precept. It goes on: The Secretary of State will also have power to specify the levels of manpower or manpower expenditure". The same will apply to the other joint boards. One cannot have that power and yet say that the Secretary of State's decision will not have any effect on local services and whether they will meet local needs. That is absolutely impossible.

It is inevitable that, with this type of transport board, decisions will be taken in isolation from other services; and the same will apply to the other policies to be dealt with by the joint boards. This is a point that was made emphatically by my noble friend Lord McIntosh. It is further emphasised, because the White Paper makes it clear that it is intended that the joint boards shall have power over their expenditure and power to levy precepts. So we would have policies for certain services being discussed in complete isolation from any other services. That will happen with the abolition of the metropolitan counties.

In conclusion, I hope the Government will listen to what the three associations have said, to what has been said from all parts of your Lordships' House, and, as has been urged by the noble Lord, Lord Evans of Claughton, and repeated by many other noble Lords, will have second thoughts. What is essential is that anything that is done must improve the present bad relationships between central Government and local government; and the proposals that have been before us which we have been considering will not do that. We must leave local authorities with the power to levy rates to meet local needs and not a determination made without any regard to the special local circumstances.

Finally, the abolition proposals affect a population of 18 million people and I believe it is being done hastily and without proper thought. Any change in local government structure, as a number of noble Lords have emphasised, should be the subject of most careful review. That has been the practice for local government reorganisation in this country. That is what we ought to do now. We ask the Government to listen to what noble Lords have said tonight, to listen to the associations, and to take back these proposals and have a second look at them.

9.40 p.m.

Lord Bellwin

My Lords, I am faced with a great dilemma. How, after some six and three-quarter hours and 21 speeches, can I really respond, as I would dearly like to do, to all the points that have been made? I can only say that I ask forgiveness from the beginning if I do not take on this impossible task. I will certainly try to cover much of what has been said, and certainly the major points; but to do anything else—unless my noble friend Lord Denham will give me permission to speak for not less than one hour, and preferably for two hours—is an impossible task. And, of course, my noble friend Lord Beloff has yet to come.

May I say, first of all, that some noble Lords have said that we have not consulted fully but have rushed in with this matter; but the history of this whole thing shows that this is not something which has been rushed. This has been going on for years. The Government have moved step by step in an attempt to carry local government with us. We have reformed the grants system and have sought to work through it. We have used targets and holdback, and that approach has had some success. Many authorities have accepted it, or made genuine efforts so to do. The fact is that a significant minority continue to spend, employ and tax with total disregard of national policies and priorities, and, if I may say so, with not the slightest scruple for their own ratepayers.

Several noble Lords have tried to say, "Rates are not important; they do not matter". I should like them to go and talk to the people who are concerned. I want them to come and see the shoals of letters—that is not an exaggeration—that reach my desk and those of my colleagues about this whole issue. Really, it is sad to think that Members of your Lordships' House are prepared to stand up and say, "It doesn't matter". The noble Baroness, Lady Fisher, said that in regard to various reports she had people in Birmingham and elsewhere had said that what mattered was not rates. It was not an imposition on business, she said; but loss of orders was what mattered. What does the noble Baroness think leads to loss of orders if it is not excessive rates?

I could develop this at great length, given the time, and I could adduce an absolute mass of evidence—not merely anecdotal or just hearsay, but a mass of evidence—from company after company and from individual after individual—to show that rates do matter. And if rates do not matter, then why did we receive such an overwhelming —

Baroness Birk

My Lords, may I intervene?

Lord Bellwin

I have just started.

Baroness Birk

My Lords, I think I must say this in the absence of my noble friend Lady Fisher. I listened very carefully to what she said, and I think she was saying that rates—many of them—did not play as important a part in the costings of businesses as the Government have made out. More businesses are in trouble or have gone bankrupt because of the financial and monetary policies of the Government than because of rates.

Lord Bellwin

My Lords, I would expect the noble Baroness to say that, and let me say straight away, so far as the noble Baroness, Lady Fisher, is concerned, that I absolutely welcome her support for our intentions to abolish the metropolitan counties. She made that point categorically clear. I welcome it, and I would have said many more nice things about her had she been here, but she did drop me a note to explain why she could not stay on. Nevertheless, the point about rates is absolutely valid. The fact is that it is not fair to pretend that it just does not matter and it is not important. It does matter and it is important; and those who pay will confirm that very easily. Even more, do those who would like to say otherwise seriously believe that higher rate increases do not feed into the retail price index or do not feed inflation or do not put up industry's costs and destroy jobs? All I can say is, "Come back to the real world and talk to those who are on the receiving end of the imposition of rates".

I ask the associations, which I hold in the highest regard—and, indeed, I ask anyone who opposes our proposals on this—will they tell us what they would do to stop the overspenders? What suggestions will they make? What steps will they take? Or do they not care? And if they do not care, then let them tell the public, the domestic and industrial ratepayers. Let them tell them. Tell the vast majority who showed at the general election—because we spelled it out loud and clear and it is there for everyone to see—that they support the Government and what the Government will do to protect them.

The noble Lord, Lord McIntosh, was very anxious, as were one or two others of your Lordships, to draw comparisons between central Government and local government spending. When they say that local authority spending has fallen as a percentage of the gross domestic product and total public expenditure in real terms, let me remind them that the only reason for that reduction is the fact that local government capital spending has fallen dramatically between 1977–78 and 1982–83—in fact, by more than half. But these problems with which we are faced are all about spending on current account. That is the whole basis of the problem, because local authorities' current expenditure in cost terms increased by 11 per cent, between 1977–78 and 1982–83. Indeed, it is very sad to think of the effect of the reduction in capital spending. It is so dramatic. As I recall, it is almost a quarter of what it was at the time of reorganisation. That has a significant effect. The noble Lord, Lord McIntosh, wants to interrupt me. I shall sit down and let him do so, but I beg your Lordships to remember that I did not interrupt and would ask that the same applies to me after the noble Lord has interrupted this time.

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Lord the Minister. I only wanted to ask him whether, with his vastly greater resources, he could give us the same figures of capital versus revenue for central Government.

Lord Bellwin

My Lords, I shall be very glad to write to the noble Lord and give him information about that. But when they try to compare, I shall have to ask the noble Lord, and anyone else who makes this same point, how they would assess the liability of local government to spend on defence and how they would assess the liability of local government to spend on the National Health Service. You cannot draw exact comparisons. I do not seek to make my case by doing that. I seek to quote figures which are genuinely fair. It is true that you can take all kinds of figures, and shuffle them around and make a case, but I do not want to do that. I want to make our case, because I believe in it, on genuine grounds of fair comparisons.

We mean to discharge our responsibilities to the electorate as a whole and to protect the ratepayers in the way that I have just said. But it does not have to entail confrontation. My noble friend Lady Faithfull was very kind in her remarks about me. I have heard of damning with faint praise, but she praised me so much that I must be totally and utterly damned. Nevertheless, I am appreciative. Her contributions are always worth listening to. They are sincere and based on knowledge, and if she expresses apprehensions then it is up to us to assuage those apprehensions, which I am sure we shall in due course be able to do. But the fact is that those authorities who are in the position of being likely to become selected under the rate limitation proposals still have the chance, by making sensible decisions as to their rates and expenditure next year, of getting right out of that altogether. I am sure that some, at least, will try to do that.

The noble Baroness, Lady Birk, asked: why the general scheme at all? Why the reserve power? I said that I would make a further comment on this, although I spoke to it in my opening speech. All I can say is that after our bitter experiences in the last few years we just dare not risk, and the country does not expect us to risk, relying only on selective limitations and its wider influence. We feel that it is essential to have a fall-back reserve power of broader application but we are well aware of the implications of implementing such a power and we would not do so without the express agreement of Parliament. I hope that that will at least assuage that concern.

May I refer to the noble Lord, Lord Hatch, at this point, although he spoke late in the debate. He said that he was not experienced in local government matters and he went on to prove it by all that he said. But he was hot very kind. He was very sarcastic about the Government, which he said was elected on false claims of what they wanted to do. All I can say is that all we wanted to do we put in our manifesto. There are no false claims and no false anything else.

I would remind the noble Lord, Lord Hatch, that the Labour Party put its proposals into its manifesto. We saw the result they got. I think that speaks for itself. But I will say to him, because he raised the point of the European charter for local self-government, that our position on this is plain. We in this country do not have a written constitution into which this kind of charter, hitherto in draft, could fit. We could not sacrifice in any way the principle of parliamentary sovereignty. This does not mean that we are opting out of work on the draft charter. We have already devoted much time and effort to helping to produce in the Council of Europe a document to which we could subscribe. We shall continue to do so but we cannot accept that in the process we should compromise our basic principles.

I turn to some of the other remarks which have been made. The noble Baroness, Lady Birk, said that there would be appointed members to joint boards from the Secretary of State in Marsham Street. That is not the position. Appointed members to joint boards will come from the elected members of the borough and district authorities. The noble Baroness shakes her head. If I misunderstood her I am sorry, but I give that information in any case. The noble Baroness spoke about the reduction in the totality of rate support grant from 61 to 53 per cent. I would only remind her that I served in local government at a time when that same rate support grant was reduced from 65 to 56 per cent.—an equally if not more dramatic drop. I trust the noble Baroness was making complaints to her Government when they were doing that. Certainly I was not making much complaint about it; we just lived with it, because we felt that it was all that the Government could afford and that we had to get on with it and make it work. And we did.

Whenever Members of the Opposition appeal to your Lordships to forget party loyalties, to me that means only one thing: vote against the Government. The noble Baroness, Lady Stedman, appealed to everyone to do that. I have great respect for the noble Baroness, as she knows. She made a very interesting speech which contained some constructive suggestions. On another occasion I should like to take up with her, and others, their reference to local income tax as an alternative to the rating system. The noble Lord, Lord Raglan, mentioned a sales tax. I have many thoughts about it but I have to ask to be excused tonight for not going into the matter. It is complicated; it is not easy. I ask your Lordships to take it from me that we spent not hours, not days, but weeks and months (and I can go back years) considering these alternatives. For reasons which on another occasion I shall gladly dilate upon, we felt, not without some reluctance, that they were non-starters.

We were asked if we would set up an inquiry into the whole system of local government and its finance. Of course we could do so, but what would be the benefit? We believe that we need change speedily in the metropolitan areas. An inquiry into the whole of local government, whatever else it might produce, would take a long time. Your Lordships would surely have to concede that one could put off every decision if one sent it to a Royal Commission. Would not many people say that doing that in the past on many occasions led to many unhappy and unsatisfactory situations? I would say, however, because the noble Baroness, Lady Birk, also mentioned it, that we have been asked to set up an inquiry on the basis of the cost of abolition.

Then, as the noble Lord, Lord Underhill, said, there was mention of the Coopers and Lybrand Report because the Government said that they would not set up an inquiry. The noble Lord, Lord Underhill, will surely concede that although it is true that this is an independent body—I am the first to concede it—you can nevertheless get from surveys and reports the results that you want, depending upon what you feed in, depending upon the assumptions you tell the inquirers that they must start from, and everything else. That is not to denigrate all reports. Clearly there are situations where a report is essential, but I feel that here we do not want to put it that way. We believe sincerely—I am entitled to ask to be received in that way, as I received what everybody else said they believed—that there is an opportunity here for savings.

We really believe that there is opportunity here for savings. Of course, as I said in my opening remarks, it could be done so that it will cost more—of course it could. But some of us lived through the 1972–73 situation; were involved in it and learned a lot of lessons. The noble Lord, Lord McIntosh of Haringey, said he had served on a joint board and that it had been awful; that it took ages to get decisions. Let me tell the noble Lord that I, too, have served on joint boards and have chaired joint boards. The particular joint board I have in mind was remarkably successful.

Lord McIntosh of Haringey

Successful only because of its chairman, my Lords.

Lord Bellwin

The noble Lord is too kind. Quite seriously, my Lords, a joint board does not need to have a big bureaucracy and does not need a lot of premises. It can be made to work effectively and smoothly. I will talk privately with the noble Lord and tell him a little more, and hope that I can persuade him that there are some joint boards which can be really effective.

I should like to join other noble Lords in paying tribute to the maiden speech of the noble Lord, Lord Graham of Edmonton, and I mean that seriously. I really did enjoy his speech. I felt that he was someone who really knew what he was about—which is no reflection on anybody else. Clearly, the noble Lord has a special experience, and I welcome it. I look forward to many discussions with him, even though I am sure we shall rarely agree. Nevertheless, it is not a game that we play and I look forward to the noble Lord's future contributions.

I will take up only one point that the noble Lord made, when he commented that people should decide the issues and that they should get the just deserts—that was his term—through the ballot box. If it was like that, then there would be no need for any legislation. The unhappy situation, as the noble Lord knows, is that the percentage of people who pay full rates is small and the interest is relatively little; and those who pay the most rates—in industry and commerce—just do not have votes. Therefore, the ballot box in this case is not able to bring the equity and justice that it ought to do; that is the real problem. The noble Lord knows this, as do many other noble Lords who have made this point previously.

With regard to my noble friend Lord Ridley, I hope that his speech this evening will not be the last that we shall hear from him in this House. My noble friend will realise that I do not say this to patronise him, but his was a very well reasoned speech and very fairly put. I know that he has the concern of the ACC at heart and that the ACC, for which he speaks, is concerned. I can only say that we do not agree with that which the association is saying. We believe that they, of all people, should want to help the Government in dealing with this awful problem of overspending. Indeed, if I were still in local government, I should resent very bitterly that I was trying to do all the things I could and that here I was in a whole new scene and panoply of the kind we see these days, because others were not prepared to play their part. I should resent that very much indeed.

That is the history of local government as it used to be and we discussed today what has happened to the relationship. We were told that it has deteriorated. It has deteriorated, but I do not accept that that is the responsibility of Government. When we came to office in 1979 we asked local government to reduce its spending by 5.6 per cent, from the levels it was projecting to spend then. May I remind the noble Lord, Lord Alexander of Potterhill, that the Labour Party in its day had the highest figures ever? He will remember Crosland's "the party's over"; he was having the problems then. It was not we who deliberately set out, as the noble Lord, Lord Alexander of Potterhill, said, to destroy local government and local democracy. Not at all. We asked for what was not unreasonable. We asked for a 5.6 per cent. reduction over three years.

I would remind your Lordships that in 1976 the then Chancellor of the Exchequer, Mr. Healey, asked local government to reduce spending in one year by 3 per cent. That was the only time it did so. It did so, because it then believed that the Government of the day had to govern. Although it was difficult, and had to be achieved by a lot of cutting of capital spending, it has to be said that—and I guess that is the truth of it—we did it because we were asked to do it. We did not like it, but we did it; that was what local government was all about.

Now we have a new situation entirely: a number of authorities—and only a number; not a great number, but a number—where,unhappily, the totality of what they spend is large enough to be significant, despite what the noble Lord, Lord McIntosh, said. I cannot simply shrug my shoulders at a mere £850 million. When I think how we used to agonise over spending £ 100 in Leeds City Council, and here we are talking of a mere £850 million, which is only X per cent. of this, that or the other! Whatever it is, it is still £850 million. You cannot as a Government turn your back on that because of all its implications.

The noble Lord, Lord Stewart, said that local authorities should be concerned with the redistribution of wealth. May I remind him that the Government's policy, insisting on giving tenants the right to buy their council houses, is the greatest single redistribution of wealth this country has ever seen, and I challenge him or anyone else to deny that. He said that authorities concerned in this likely selective exercise will be those in the inner cities because their needs are greatest. I make only two points: first, that the rate support grant is there precisely to make adjustments for their greater needs; and, secondly, I would ask him to compare what happens in Wandsworth with what happens in Lambeth. Only one street divides them, but the situation there is that one authority achieves so much and the other so little. So there must be something in good management and willingness to face up to the reality of what it is all about. The noble Lord made many other points to which I should like to respond, but we would be here all night if I did.

I thank my noble friend Lord Mottistone, who, as usual, was very helpful. He is right about more businessmen being needed on councils. I was one myself in my day, and I have always tried to encourage this. When he expresses concern for certain small towns and villages might I remind him that our proposals do not apply to authorities of that size; they will not be in the picture at all.

My noble friend Lord Sandford welcomed the audit commission. I thought that was a good point, and I am glad he made it. I have very high hopes for it. I really believe, listening to the serious concern expressed by noble Lords, that they, too, in the end, will be pleased with what this very independent body will achieve. Time alone will tell. My noble friend said it was a pity it had taken so long for the Government to decide that rates are here to stay. That is the price of putting out Green Papers and doing other things. We did, and here we are now. His point about who votes and who pays is really the whole nub of the validity of the local mandate argument. I had better not get into that, tempted though I am.

The noble Lord, Lord Evans, made his usual constructive speech. I am sorry he is not in his place. He said that hardly anyone loves White Papers. As he is not here, perhaps he will forgive me, when he reads Hansard, if I do not devote too much time to what he said. Nevertheless, I always enjoy listening to him. He really is a man of experience in this field, and has a lot to contribute.

I also enjoyed the contribution from my noble friend Lady Cox. I thought it a very interesting and serious contribution. Her points on ILEA were well made and I am sure will be well read. I look forward to that.

The noble Lord, Lord Molloy, is very sincere. There are those on my side of your Lordships' House who do not always take kindly to the rather forceful way in which, if I can put it nicely, he makes his case. But he is sincere and he knows about local government. I only wish he would put it in a more temperate way, which might be much more effective. But then he has his own style. He said that the Government do not want to spend the money. All I can say is that we are putting up nearly £12 billion of taxpayers' money. If that is not spending, I do not know what is.

I enjoyed the contribution from the noble Lord, Lord Raglan, who made an amusing yet thoughtful speech. I loved his reference to the leader of the council in the smoke-filled room. It took me back. His town mayor concept is fascinating. I have looked at it many times. It has all sorts of minuses as well as pluses, but it is interesting.

I have referred to my noble friend Lady Faithfull. I say again that I respect her views. We shall look at them carefully.

The noble Lord, Lord Beaumont of Whitley, asked whether I would yet again give him an example of why I say that PR is not the solution. PR leads to hung councils and minority control. I have served on minority councils; I have served in minority opposition and minority control. Everybody in the council said that without question it could not operate as effectively as when somebody had the responsibility and had to answer and be challenged. When a council is hung, it is easy to fudge and put things off. I did not mean in any way to belittle what the noble Lord was saying. His was a sincerely held view which I respect, but I equally sincerely give the reason why I feel that it is not the effective way to work.

I shall have to take up with the noble Lord, Lord McIntosh of Haringey, many of the points that he made. He obviously sincerely believes them. I equally sincerely think that he is wrong. It is too important for us to leave it at that, and I shall approach him with a view to discussing matters with him. His remarks about the enterprise zone report are not quite fair. This report referred only to the first year of the enterprise zones, when they had to come off the ground. There were certain reservations, but since the time of the report all that has happened in the enterprise zones has been very encouraging. I am sure that he is as anxious as I am that the scheme should be successful. I hope that he will find that that is so when he comes to look at the issue once again.

My noble friend Lord Beloff talked about what was happening in certain local councils. I ask the noble Lord, Lord Underhill, and every other noble Lord who has spoken in the debate and who is concerned about local government not to shut their minds to what is going on in local government. I have many friends who are leaders of Labour councils who are as concerned as I am at some of the things which are going on and which nobody can be proud of. I beg local government itself to look at this, talk about it and act upon it. I shall not give examples tonight, but, believe me, I have a very thick dossier of things that would make the noble Lord, Lord Underhill, very unhappy indeed. Without going into more detail, I merely ask that people do not turn away from the issue. It would not be good for the future reputation of local government.

We have an obligation which we must carry out. Despite what has been said today, we believe very much that the public, the hard-pressed world of industry and commerce and the domestic ratepayers—those who pay at the end of the day—welcome our intentions. They overwhelmingly approved them at the general election. I reassure them today that we shall not let them down. Our many manifesto promises will be kept.

10.9 p.m.

Lord Beloff

My Lords, it is customary, and on this occasion a pleasure, to thank all noble Lords who have taken part in a debate largely directed towards my education. There are only two persons I should like to single out, if I may. One is my noble friend Lady Cox, who, by giving the grounds for my suspicion and dislike of its present management, saved me from the necessity of explaining at length my views on why I believe that ILEA should find a directly elected substitute. In particular, I hope that the noble Lord, Lord Stewart, whose speech I attended to, as usual, with great interest, will, since he was out of the Chamber at the time, do me the favour of reading the speech of the noble Baroness, Lady Cox, because I think that he will then better see why I was making that particular point.

The other person I should like to mention, as so many other noble Lords have, is the noble Lord, Lord Graham of Edmonton, who made his maiden speech. It is not so much because I welcome someone so robust as to defy the normal conventions about being non-controversial: it is rather because he brings to our debates, as one can see, a freshness and an innocence, which are doubly welcome in this jaded assembly. Here is someone who comes from a place—I do not know where Enfield is; it must be a very long way away—where people seek to serve the community as councillors without a thought of preferment, and where officers seek to serve their fellow citizens with no inclination to absorb further authority. That is the ideal world in which all of us would like to live, and it is good that we should have it represented here at last.

Finally, the noble Lord, Lord Underhill, challenged me on my remarks towards the end of my speech. It is indeed possible that the double interruption of his noble friend the noble Lord, Lord Mishcon, put me off my stride, and that I did not adequately represent what was in my mind. If I may put it very briefly, it is this. It seems to me that there is a difference (to which my noble friend the Minister has alluded in another context) between what the ordinary citizens think about local government, what they believe it should do and what they see as its limitations—as is shown by their unwillingness in very large numbers to take the trouble to vote in elections—and the views of local government itself, whether it be the councils or those employed by them, who see themselves, as it were, as a separate estate of the realm. After all, if we include not merely the policy-making officers in local government but all the employees, we are talking about an estate of the realm; we are talking about over two million people.

It is extremely important that when we are told, "The localities will not stand for this; the citizenry demands democracy or representation; the citizenry wishes to have responsibility", those who make these claims should be quite sure that they are not confusing their natural interests as a group or class with the interests of the country as a whole. It is a danger for all groups that have authority in our society, and I think it is worth pointing out that the very rapid growth of local government has made it a particular concern in that area. That is what I was trying to say, and no more. With those concluding words, with your Lordships' permission I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.

House adjourned at fourteen minutes past ten o'clock.

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