HL Deb 05 March 1984 vol 449 cc115-32

9.39 p.m.

Lord Harris of Greenwich rose to ask Her Majesty's Government what action they propose to take if Liverpool City Council, or any other local authority, decides to fix its level of rates substantially below the level needed to finance its projected expenditure, in contravention of the law.

The noble Lord said: My Lords, I have tabled this Question following the well publicised statements made by Mr. Derek Hatton, the deputy leader of the Labour majority on Liverpool council, and a number of his colleagues, that they are contemplating fixing a rate substantially below their projected level of expenditure. As many of us know, rather over a week ago Mr. Hatton and his colleagues met the Secretary of State for the Environment to ask for £30 million extra of Government grant, which it was suggested would avoid the necessity of their taking such action. As we know, Mr. Jenkin told them that he was not prepared to make such money available to the authority.

If I may, I propose to deal first with what I believe the law to be—and I shall wait with interest to see whether the noble Lord, Lord Bellwin, agrees with me on that—and then with the character of the situation that has arisen in Liverpool. First, I think it only fair to say that the amount of case law on this issue is fairly limited, because very few local authorities have been prepared even to contemplate taking action of this kind, whatever may have been their feelings about the government of the day.

However, notwithstanding that fact, I do not think that there can be much argument about what is the law. Under the General Rate Act 1967, as amended by the Local Government (Finance) Act 1982, every rating authority is obliged to make such a rate as will be sufficient to provide its total estimated expenditure, including sums payable under a county council precept. Various other statutes empower the relevant Secretaries of State to issue direct directions through commissioners if a local authority fails to carry out its statutory responsibilities. I believe that there is not much doubt that a Secretary of State could apply for judicial review in advance of actual detriment to the services arising, and of course any refusal to obey an order from the court would be a clear case of contempt.

There is also the position of creditors. Creditors could. I believe, apply to the courts if there was a danger of the authority having no money to pay its bills. It also seems fairly clear that members of an authority involving themselves in conduct of this character would be liable to personal surcharges for any losses arising and ultimately to disqualification.

So much for the law. I now turn, if I may, to the character of the situation that we all know has arisen in Liverpool. The Labour Party in Liverpool has an overall majority of three on the city council. Mr. Hatton and a majority of his colleagues are associated with Militant Tendency, an extremist Marxist organisation, which controls a number of the constituency Labour parties in the city. As we all know. Militant Tendency is an organisation which is contemptuous of Parliament, the judiciary and the rule of law. It is of course unlikely to take the slightest notice of an N thing said in this House this evening.

However, notwithstanding that, I believe it is right that we should debate this situation tonight, for the position of Militant Tendency in no way represents the majority of those people who live in Liverpool, or those who work in the public service there. At the last elections, for instance, the majority of those who voted cast their votes against the present Left-wing majority on the city council. As for those who work in the public service in Liverpool, there have I think been two very important developments in the past few weeks. First, the district committee of the National Union of Public Employees has announced that it has no confidence in a policy that brings the council into conflict with the law. Secondly, members of the National Union of Teachers in Liverpool have voted not to support the one-day strike which is being called by the joint shop stewards' committee for 29th March, which is the day of the council's rate-fixing meeting. The National Union of Public Employees, too, has decided not to support that strike.

It is also right to say that concern about the policy of Mr. Hatton and his colleagues has been expressed by a small minority of Labour councillors in Liverpool. It is only fair to say that Mr. Kinnock has, as I understand it, made very clear his anxieties and his opposition to the course which is being proposed; though it is also right to say that a local Labour Member of Parliament on television last Thursday denied that Mr. Kinnock had done any such thing.

It appears, however, that, notwithstanding the very serious concern which has been expressed in Liverpool —and certainly outside it—Mr. Hatton and his colleagues will be in no way deterred from the course of action which they are thinking of following through. Labour councillors who are believed to be hesitant about supporting him are being threatened by their constituency Labour parties with being removed from the council. There is thus a real risk that on 29th March the council will decide to fix an unlawful rate and set in hand a chain of events for which there is no precedent in the history of English local government.

I must say at the outset that I do not propose today to discuss in any detail the policies of the present Government in relation to the inner cities. My noble friends and I have made it clear on a number of occasions that we believe that many of these policies have been profoundly mistaken and the Government have failed to recognise the serious situation which has developed in many of those inner city areas. There are undeniably grievous problems in Liverpool. There is poor housing (a great deal of it post-war public housing); there are serious educational problems; there is the grave situation with inner city dereliction: and there is, as we all know, an appalling unemployment situation, and it is particularly grave so far as younger people are concerned.

I believe that, given the gravity of this situation in Liverpool, we are going to see problems of this kind resolved only if there is a joint and effective partnership between central government and the city council, and I find it deeply depressing that Mr. Hatton and his friends clearly have not the slightest interest in developing such a relationship. In any event, having touched on this central question of the very serious problems that exist in Liverpool, we have to recognise that this is not the central issue which is before us this evening: it is whether a local authority can be permitted to pursue a course of blatant illegality. I am sure that we shall be told by the noble Lord, Lord Bellwin, that the Government will not allow Mr. Hatton and his colleagues to escape the consequences of any unlawful behaviour on their part. That, in my view, will not be enough.

What I believe the House will expect is that those consequences will be spelled out publicly now well before the council's rate fixing meeting. What precisely do the Government intend to do if the council fixes an unlawful rate? What, for instance, do the government consider are the responsibilities of the council's chief officers in these circumstances, and particularly the council's chief finance officer? Could he attempt to levy a rate which he knew to be unlawful? Would the Government in those circumstances think it right themselves to initiate immediate action in the courts to deal with this situation? If not—to take only one illustration—what would be the position of those who have lent substantial sums of money to the city of Liverpool? What do the Government believe would happen to the market in local government loans if a major local authority were to default?—clearly if Liverpool had simply no resources after 1st April of this year it would be in just such a situation. I hope we shall hear some answers to these questions this evening from the noble Lord the Minister. I think that the public interest requires that he should give those answers and I believe, too, that the people of Liverpool deserve that they should be clear answers, as do those who work in the public service there, who are fearful that from the beginning of next month they may be cut off without receiving any pay whatever.

I hope that the noble Lord, Lord Bellwin, will be able to meet some of those anxieties this evening and also those of that devoted group of men and women who are working so hard to encourage the development of new business in Liverpool, and who are deeply concerned at the growing risks to future job prospects there because of the antics of Mr. Hatton and his friends. They have, I believe, already succeeded in doing great damage to the reputation of their city, although I believe they are clearly indifferent about their responsibilities there and to their own employees. I hope that the Minister will indicate tonight in the clearest terms what will be the direct consequences to them if an act of gross illegality takes place on 29th March. That. I am sure, is what the House will expect from him and what I believe the people of Liverpool deserve.

Lord Sefton of Garston

My Lords, before the noble Lord sits down, will he refer again to the point made in his speech about the majority of Derek Hatton's colleagues?

Lord Harris of Greenwich

My Lords, I am not quite sure of the point that the noble Lord is making. I mentioned Mr Hatton and his colleagues, yes.

Lord Sefton of Garston

My Lords, the noble Lord mentioned the word "majority" in relation to Militant Tendency.

Lord Harris of Greenwich

My Lords, rather than indulge in question and answer now, I should be glad to hear what the noble Lord says on that particular point. But it seems quite clear to me that Mr Hatton does have an overwhelming majority of support in the Labour group in Liverpool.

Lord Sefton of Garston

My Lords, I apologise to the House, but I did not quite understand what the noble Lord said about how many Militant Tendency members there were in Liverpool City Council. As his speech is already written down no doubt he will be able to refer to it.

Lord Harris of Greenwich

My Lords, I do not wish to persist in this cross-examination. The noble Lord has not troubled to put his name down to speak. The fact is that I have made my position quite clear on what Mr Hatton stands for and the degree of support he has in the Labour group in Liverpool. I do not think that it is appropriate to say any more.

9.53 p.m.

Baroness Birk

My Lords, the noble Lord, Lord Harris of Greenwich, has asked a completely hypothetical Question—what I would call in more informal language an "ify" question. I cannot believe that, as he put it, public interest requires an answer to such a hypothetical Question. I do not think that it is the Government's job—and I hope the Minister will agree—to answer questions of this hypothetical nature.

At the present time there are 411 principal authorities in this country which are all in the process of fixing their rates or precepts. The interest in Liverpool and the focus on its council and their day-to-day doings, have, as we know, created a great deal of publicity. But it is beyond me why we should be debating this matter tonight at this time. I had always understood that the Alliance parties were in favour of the local decision-making process. But the noble Lord seems more intent on giving publicity to the very busy Mr Hatton The difficulties inherited last May when the Labour majority came into power were appalling, and this was acknowledged by the Secretary of State who in February said that the problems of Liverpool were of a very special kind. The incoming Government had inherited a Tory-Liberal budget cut of £6 million which was not allocated to any service areas and it was not indicated in March 1983 where the cuts should fall. I find that quite understandable. I am not particularly criticising them for it because they had inherited it, but they had also, unfortunately, under-budgeted the year previously.

The incoming Administration were committed to the maintenance of services and, as the noble Lord has pointed out, to no increase in unemployment, which is running at 20 per cent. in Liverpool, and to improving and increasing housing, which, as is generally acknowledged, is appallingly bad in that area. They could not levy a supplementary rate. They have suffered enormous losses in grant since the Government came to office. For example, if they were to increase the 1984–85 budget by only 5 per cent. over that for 1983–84, allowing for inflation, in cash terms there would be an £11 million increase for 1984–85, which would incur penalties in the order of £21 million. Even to sustain the Tory-Liberal budget would incur enormous penalties. They would have had to cut services drastically in this deprived and in many ways wretched area.

As I pointed out, the Secretary of State was fair enough to recognise this. The areas of deprivation and high spending in this country are practically all inner city ones which have the most gigantic problems. I think I am right in saying that originally the noble Lord tabled his Question with just a reference to Liverpool and that he has now included other local authority areas.

Lord Harris of Greenwich

My Lords, perhaps I may put the noble Baroness right. The form of the Question has in no way changed since I first put it down.

Baroness Birk

My Lords, I apologise to the noble Lord. He is right, because it is not unique, but it is also not on any of the Government's hit lists of high spenders. The council is locally elected and is locally accountable. At the present time a constant debate is taking place in the council. It is going on between members of the council, between the council's employees, between the council and the Government and, as the noble Lord pointed out, NUPE and the NUT have dissociated themselves from any illegal action.

The shadow environment secretary is currently involved in discussions with Liverpool and also with other local authorities which have suffered in the same way in the inner areas. I should have thought that these are the ways in which to try to solve some of these problems. On these Benches and in this party we do not support unlawful action. It does not help the problem but only exacerbates it when the noble Lord raises a Question in this way. I could hardly believe he wants to do this. Does he really want to do it? I should not have thought he would. Is he trying to throw down a further challenge to Liverpool before decisions are made? I must confess that it seems such an extraordinary thing to do. There are times when public speeches of this sort are inflammatory and counterproductive. I believe that much more can be accomplished more quietly behind the scenes. Confrontation does not produce conciliation.

Lord Tordoff

My Lords, will the noble Baroness give way?

Baroness Birk

My Lords, no, I shall not; I am just coming to the end of my speech. It is no good the noble Lord laughing about this; he knows as well as I do that this sort of thing and this type of publicity only acts as an incentive to those people who probably take a very much more extreme view than many other people. Confrontation does not produce conciliation, and hypothetical questions are dangerous and irresponsible. I am very sorry that someone who was once a member of my party should table such a hypothetical Question. I am not talking about his political views now, for everyone has the right to change; but I am talking about his sense of timing and, if I may say so, his common sense in doing something like this.

9.59 p.m.

Lord Evans of Claughton

My Lords, at this moment the position in the City of Liverpool is extremely serious and unless certain members of the Labour Party have the courage to vote against the Marxist leadership of that party, I am afraid that it can only become more serious. It is apposite for my noble friend to raise the subject this evening. There are one or two points that I should like to clear up. In fact, I fear that my speech may be largely a question of rebutting certain ideas that have been promoted by the Labour Party about the activities of the Liberals in the City of Liverpool. For instance, and first of all, there has never been a Liberal-Conservative coalition in Liverpool. Perhaps there ought to have been one. Perhaps there ought to have been a Liberal-Labour coalition. Perhaps there ought to have been a recognition that people should co-operate in various parties to look after the benefits of the city.

I apologise for bringing this subject up because I know it is a dirty phrase to members of the Labour Party and the Government; but if we had a PR system we would have had to accept a system of co-operation and support. But there is this constant belief that under the first-past-the-post system sooner or later the Liberals would go away, and then they could go back to their old Tory-Labour rows and run the city as badly as it was run in the earlier part of this century and the earlier part of the last decade. I believe therefore that there is a strong case for co-operation; but since no co-operation exists, I must underline the fact that there has never been a Liberal-Conservative coalition. The Conservative party is a small rump, and I take great pleasure in your Lordships' House in pointing this out, because it is not a small rump in this House although possibly a rather unruly party.

Secondly, I feel that the present Labour-controlled council is not in a position—and I suggest that the noble Baroness is not herself in a position—to talk about approaching this matter in an atmosphere of coolness and quietness, when the deputy leader of the city council is talking about rioting in the streets, and threatening, as I understand it, the Secretary of State and indeed the Labour party's own spokesman who fails to agree with him—I must not mention his name here; the Labour party spokesman on the environment in another place—with violence, or something of that nature, because he takes a more moderate view, as the noble Baroness does, about the activities of the council. Therefore, I do not think we are in a position where we can dismiss the concept of the violence being substituted for debate in the City of Liverpool. I am sorry and regretful, as a Merseysider, that I should have to say that.

I could spend some time giving your Lordships a history of the past few years in Liverpool, but I shall try to do it in the form of brief references. The facts are that the Labour party refused, though they were the largest party, to take office in Liverpool in 1980. After a period when nobody would take office, and Liverpool was described as "Toy Town", the Liberals took over though they were a minority party. They found a budget £10 million in deficit left to them by the previous Labour administration, yet by the end of that financial year they had a healthy outturn and a position where there was no problem about a deficit. They did this without massive cuts. They did it without massive sackings. They did it by reducing the administrative burden on the city, but developing the caring services, the social and welfare services.

We should recognise that, in spite of some years of Liberal administration, in spite of the alleged Liberal destruction of the services, Liverpool still has more council employees than almost any other authority. It has 10 per cent. more than the socialist republic of Sheffield. It is the need to remove unnecessary jobs—and I am sure that the noble Lord the Minister will agree with me here because this is what he did in Leeds—in the bureaucracy which will prevent rocketing rates and will also therefore prevent loss of jobs in the private sector. This is what the various Liberal administrations in the city of Liverpool tried to do, and tried to do it against a background of cutbacks by governments since 1979 with the rate support grant of about £120 million. In spite of this and in spite of having no overall majority, the Liberals kept rate rises in Liverpool to a minimum and pursued progressive policies.

A number of Labour Party apologists—I am not including the noble Baroness—have suggested that Liverpool deprived the less well-off, the poorer, of benefits, but in fact during the period of Liberal administration in Liverpool we increased the money spent on social services; we increased the money spent on home helps—we are one of the few authorities which provide a free home help service—and several small council estates were built . Indeed, 1,200 houses to rent were built in the last year of Liberal administration and £11 million would have been spent this year if the Liberals had been in control.

I apologise for going into some detail on this, but we have been subjected in Liverpool to a policy of harassment, half truths and lies by our political opponents suggesting that we have behaved in an extremely Right-Wing and unsympathetic way. More than anything else we have primarily spent money in Liverpool on improving older houses. Over 50,000 houses have been improved in eight years through Liberal activity. This is the biggest improvement in the private sector of rented houses that has ever been carried out by any local authority.

Since the Labour party took office it has put a brake on this. It is reluctant to tell anyone, be they members of Parliament or councillors, why it has refused over 800 improvement grants in the last few months. This is not open government. It has refused to explain why 800 applications for improvement grants have been refused and why it has stopped the promotion of housing co-operatives and building for sale.

I could, but your Lordships will be delighted to hear that I will not, go on for a long time about the virtues of Liberal administration in the past in Liverpool. But briefly I must say that, quite frankly, the present administration in Liverpool, which I do not believe is in the normal run of traditional Labour policies, is hell bent on destroying the kind of society in which we live. Having destroyed it it is trying to promote a saving of it by saying, "This is the way our Marxist policies would put the whole thing together again". That is classic Marxism. It is an extremely dangerous matter.

With great respect to the noble Baroness, it is untrue that the Liberals underbudgeted. They budgeted for £2½ million more than Government guidelines in their last year in office. They left their Labour successors with £27 million of capital receipts. It seems to me that unless we hear evidence to the contrary—I am glad to learn that the noble Lord, Lord Sefton of Garston, is to speak in this debate as a late entrant—why the Labour government of the City of Liverpool appears to have involved itself in deliberate incompetence. I cannot believe that the incompetence was not deliberate because it was so extreme. Why have they involved themselves in the classic Marxist policy of destroying the present system and then claiming that they would save the city?

Over the years Liverpool has slimmed down quite a number of jobs, but not nearly as many jobs in the public sector as some other authorities. Your Lordships are entitled to ask what, if there had been a Liberal administration, we would have done in the present difficult circumstances that are provoked by present Government policy. I think we can say that in the City of Liverpool we would have produced a budget that was solely in line with inflation, provided—and this is very important—that the unions agreed to change their restrictive practices, agreed to amend their bonus schemes and in certain cases agreed to the provision of early retirement for some union members. There would then he no need for compulsory redundancies or a cut in services, and the increased cost could be funded by the selling off of the very, very large number of freeholds retained by the city council to get over the short-term problem presented by the Government's policies.

I should like to know whether the noble Lord the Minister can confirm whether approaches have been made to any persons to see whether they would be willing to be a commissioner if the Labour-controlled council persists in its proposal to go £70 million over its budgeted income.

I think that the noble Lord the Minister will be able to confirm that there is some disagreement between barristers and counsel as to what the results would be if the council were not able to meet its commitments. I do not think a local council can go bankrupt but it can fail to pay its bills, which amounts to the same thing in the end and will create unhappiness and disaffection in the city. I believe it can default, but it cannot go bankrupt. Also, I should like to know whether a court decision would quash an illegal budget or whether that budget would still remain in operation. Again, I gather that there are advices which go either way.

I apologise for having spoken at such length so late in the evening but I am proud, and always have been, of being a Merseysider. I have worked all my professional life in Liverpool and I hate the idea of Liverpool being seen to be a city in decline: but I do tell the House with the greatest possible sincerity that, if the present Labour administration are allowed to continue with the massive proposed increases and bankruptcies that have been threatened, they will not increase the number of jobs available for the people of Liverpool but will grossly decrease them, and create a city which is even more seriously in trouble than it is at present. As a Liverpudlian, I should find that a matter of great sadness.

10.12 p.m.

Lord Sefton of Garston

My Lords, I apologise for not putting my name down on the list of Speakers and thereby causing some people to think that the debate would be shorter than it will in fact be. I have no intention of apologising if I take longer than any of the other speakers. Let me first clear up the point about the majority of Derek Hatton's colleagues. I understood the noble Lord to say that the majority of his colleagues (I assume on the city council) were in fact members of Militant Tendency. Let me refute that right away and say that is completely untrue. However, perhaps when his speech is printed in Hansard and he sees it there he may take steps to correct it—or he may not.

I listened to the speech of the noble Lord, Lord Harris of Greenwich, up to the ninth minute before I realised what was the intention of the Question. I thought that in a moment of adulation for the Liberals' ideal of freedom and democracy he was perhaps trying to help out in a terribly difficult situation. It is ironic, because the last time I had a conversation with the noble Lord was when he was a junior Minister in the Labour Government and accepted completely from me at that time that the economic and social situation in Liverpool was so bad that the Home Office should alter their planned budget and bring forward the building of a police station. Does the noble Lord think that the situation in Liverpool is any better now?

When the noble Lord, Lord Evans, said that he would want to draw our attention to the situation in Liverpool and how serious it was, I thought that was what he was about to do; and nobody could be more disappointed or regretful than I am that he did not do any such thing. What he did was to carry on the calculated piece of mischief-making that was initiated by the noble Lord, Lord Harris, in order to try to demonstrate that the Liberal Party were above reproach in Liverpool and that the only people to blame were the Labour Party. The noble Lord nods his head. That is what he intended to do. I have not been long in this House, but I know that, if it has a tradition, it has a tradition that it is not parochially minded; it does not bring domestic squabbles into a place of this kind and, when it is talking about serious problems, it discusses them in a statesmanlike manner and seeks to get to the root cause of the trouble.

So there are some extremists in Liverpool. It is beyond belief to me that the situation in Liverpool has not thrown up extremism to such an extent that there is a danger to democracy. But there is not. It has not yet arrived. I do not believe it will arrive, and I urge the Minister not to fall for this claptrap that we have heard from the SDP and Liberal Benches, and not to respond now by saying what dire threats and punishments will be meted out to Liverpool if it transgresses the law. But will that help Liverpool, will that help Merseyside, and will that help the north of England? Of course it will not. It will exacerbate the situation, and it will drive people who are normally very moderate into the militant camp.

The voice your Lordships are hearing from Liverpool is not just the voice of Derek Hatton, and the noble Lord, Lord Evans, knows it. If your Lordships will read what was said by the Archbishop of Liverpool you will see the despair that is coming to the ordinary people of Liverpool. What are we to do? Since the last war, we have had a continous period of rundown in Merseyside that has not been matched anywhere else in the country and yet not once did I hear that referred to by the noble Lords.

What is the real problem of Merseyside and Liverpool? It is not just a question of what rate will be levied this year; or what the Liberals did when they robbed the building maintenance fund until there was nothing in it in order to meet their budget aims, to get cheap popularity and to get votes; or what happened when they robbed the book fund until it was completely empty at the time the Labour Party went in. Those are the answers to the statements that we have heard tonight, and there are many more But I shall not burden the House with them, because there is a more important task to be done.

There are not many noble Lords here, and some, including the Minister, have heard me say this dozens of times before. Twenty-five years ago, a generation ago, the leader of the Liverpool City Council and the leader of the Labour Party made representations to central government that it was no use giving us grants for industry; that it was no use giving us industrial assistance only, and we needed something more. We had to transform the economic life of Liverpool. The reason for the existence of the economic life of Merseyside and Liverpool had gone. It was founded upon the national lines of communications between one continent and another, and the need for that had ceased to exist. But nobody listened.

We pleaded with the Government to give us grants for service industries. We pleaded with them to bring in those jobs from the South-East of England that should be in Merseyside. We asked them to reduce the competition in London for the office space, the secretaries and the clerks, which has mounted to such an extent that the rates of pay and the payments to keep offices manned in London have now reached the stage where they will even drive them out of London, perhaps to the continent. We were saying this a generation ago. The people who were being born then have now reached adult life. They have gone through the whole of their lives, and see no hope in front of them. Good, moderate, working-class folk are being driven into a situation in which everybody calls them extremists. Of course, the Archbishop is right; we do not want extremism. But those who mouth their oaths against extremism should ask themselves this question.

During the past four years, 200,000 jobs in the private sector have disappeared. In addition, 5,000 jobs in local government have disappeared. Those who now shout about the extremists, expressing the despair of ordinary people in Merseyside, ought to ask themselves whether we ought now to sack another 5,000 people. The noble Lord, Lord Evans of Claughton, said that if Liverpool's budget went forward just on the basis of inflation, this is what would happen. The budget for 1983–84 was £218 million. The rate support grant amounted to £117 million. These are simplified figures. Just to stand still, with no increase in services, which is not an unreasonable attitude to adopt, and allowing 5 per cent. for inflation, would require a budget of £228 million and a rate support grant of £122 million. In fact, it will be £27 million. Is it any wonder that those who were elected to the city council on the basis of an electoral promise that the situation in Liverpool would not be allowed to deteriorate any further now voice despair because they have not received encouragement from those who ought to have given it to them to stand up to some people who say some very unwise things in an infantile way? Of course it is not, if anybody appreciates and understands the problems of Liverpool.

Nobody could have been more sorry than I when I heard the noble Lord, Lord Evans of Claughton, speak in the way that he did tonight. Nobody should speak to me about extremism and about obeying the law. When I was the leader of Liverpool City Council I had to stand up and say that although we had fought the battle against the Government's attitude over rents, the Finance Act had been passed and therefore we should obey the law. I meant that I was almost crucified. It is one of those things which has got to happen. I was involved in the battle of getting justice for Liverpool until the Finance Act became law. I was not harried and harassed by people like the SDP and the Liberals. They kept quiet in those days because they believed that what was happening to Liverpool was unjust. One senses, although they would deny that there is Liberal-Tory coalition in Liverpool, that there is a coalition here now. All they want is somebody to stand up and say, "Liverpool, you will obey the law, or else".

What is needed in Liverpool? What do we need in Merseyside? As I have already said, the fundamental problem of Merseyside is that nobody down here understands what is wrong with it. There is nothing wrong with the people. The people of Liverpool laid down their lives in the war. The dockers of Liverpool laid down their lives in order to keep the flow of goods and material from the United States to fight the war. There is no difference between the people of Liverpool and the people down here. It is just that the inexorable force of economics means that they are gripped in a siutuation in which the reason for the existence of Liverpool's economy has now ceased. The Tory leader of Liverpool council did not ask for money 25 years ago. We did not go to the Government and ask for a larger grant. We organised an exhibition when Heath was the Prime Minister. We pointed out in that London exhibition that all Liverpool was asking for was a redistribution of the resources on an equitable and just basis.

That is all. If the Government—and I am not referring to a Tory Government, because I had this argument with a Labour Government—will realise that something has to he done about the maldistribution of resources in this country and will direct some of the resources to Merseyside and other places, then we shall be on the road to recovery. If only they would say now to the people of Liverpool, "We are not just going to tell you arrogantly that you must abide by the law. We are prepared to enter into a dialogue and are prepared to talk about the problems. We are even prepared to talk once again about restoring to Merseyside 3,500 Civil Service jobs". Those jobs were snatched away by this Government in an instant in the same way that they decided to abolish county councils, because some foolish politician made a pledge to destroy the rating system and had to substitute something else. The Government snatched 3,500 Civil Service jobs away from Merseyside within the first few short months of entering government. What a difference it would have made to Liverpool if those 1500 Civil Service jobs were now sited on the Albert Docks.

In the late 1960s we had a not in Liverpool. Everybody has forgotten that. Remember the Brixton riots? Remember the Toxteth riots? But everyone forgets the riots in 1964. I have not done so because I was the leader of the council. At that time I was saying to central government, "Unless you realise the fundamental problems of Merseyside, this will happen again". It happened again, but this time there is a new approach. I am not disguising the fact that I welcome the Merseyside Development Corporation to Merseyside, and I am boasting about the fact that I was the first person to propose a Merseyside Development Corporation to central government—albeit a Labour Government, and they did not take it up.

I am not disputing the necessity for that liaison between Merseyside and central government. What did we get this time? Fundamentally, we got a rose garden. It is going to be a fine thing and I hope that everyone goes to the exhibition next week or the week after. I hope that the International Garden Festival will be a success but I hope that the Government do not allow it to cover up what is still the fundamental problem of Merseyside; you cannot bury that under a bunch of roses.

When it gets worse, as it will, the problem will arise again. There is talk about people who are incited to riot, but there is no such thing. After all, a young person living within the inner area of Liverpool knows that eight out of 10 young people have no job and practically 10 out of 10 have no prospects of a decent life. The Government cannot forever imagine that these people will go on being content with their lot in life. Of course they will not be content. Of course the problems will arise again and again and again.

Are we asking for much? In the period of real trouble in the last decade, one should have looked at the city of London. There is a Home Office occupied by civil servants. If one walks down Victoria Street, one sees a new building on the left side occupied by the Department of Industry. Of all things, the Department of Employment occupies another massive building in Tothill Street. What are they doing there? There is no necessity for them to be there. In these days of modern communications it would be much easier and cheaper to have them sited in Liverpool. Movement between one office and another office in London is already too expensive.

Let me give an example. When I was Chairman of the North-West Economic Planning Council, central government and the region issued leaflets. We had ours out in two days to all the customers. It took the Government seven days because it takes them that long to get through the welter of offices there are down here. If they had given us the job we could have done it quicker. What would be the consequence of moving that amount of work out of London for the private sector? We have never disguised the fact that we did not want branches in Merseyside because one of the major problems is that the parent companies snatch them back in times of trouble, as they did with British Leyland. We did not want that. If that Government activity were to be moved from London to Merseyside the consequences to the private sector in London would be very great indeed. The problem here is: how do you reconcile the demands of the people of London for better and cheaper housing and a better environment with the almost insatiable demand to build office after office after office?

Mr Heseltine, the Minister of State for the Environment as he then was, was talking about an international festival in Liverpool at the same time as he was granting planning permission for offices in London which would only add to the number of offices already here that the people of London did not want, with all the consequences to the traffic, and so on.

I said I should not apologise if I spoke for some time. I do not often keep this House up. I do not often speak in the place, partly because I almost sense that if you come from north of the Wash it is no use opening your mouth. I thought that tonight I would have another try at convincing people down here that there is a life north of Watford Gap; that it is worth living; that people there do not have horns; that they are not all wicked and not all militants. Just a few of them have been granted the opportunity to take power in a good democratic movement. They have been granted their opportunity not by wicked people but by good men who decided to do something about a fundamental problem that affects not only Merseyside but the whole of the nation.

For God's sake, if not for the people of Liverpool, will somebody down here—particularly, if I may address these Benches—stop the petty squabbling and seeking to gain capital for political parties, which are not important? That is all they ever did in Liverpool and all they ever do down here. Will they concentrate and join with me? Will the noble Lord, Lord Evans of Claughton, join me in leading a deputation once again to central government to persuade them that in Liverpool we have some valuable people and that the vast majority of Liverpudlians—quite apart from their football skill—are good people who are worth fighting for? For God's sake, stop this mischief-making and get down to finding a real solution to the problems in Merseyside.

10.34 p.m.

The Minister of State, Department of the Environment (Lord Bellwin)

My Lords, as another who lives north of the Wash, may I first of all say that I am sorry that this subject has had to be raised at all? Whether this is an appropriate time and in an appropriate form is for your Lordships to decide. For myself, I am saddened that we should even be considering a situation of this kind.

Let me say at once to the noble Lord, Lord Sefton of Garston, with whom I have discussed, and do from time to time discuss, the situation in Liverpool, that whatever I may say I am not without some knowledge of the problems. I shall not use the word "sympathy" as that would sound much too patronising and I do not intend to be that. I frequently go to Liverpool, probably more than anyone in your Lordships' House who does not live there, and I am aware of the problems possibly much better than most as well.

There is a Question on the Order Paper which has to be answered. I intend to say nothing at all to exacerbate what I know is a sensitive situation. At the same time I think it is only right that I should at least put the record straight on a few facts and statistics. That will do no harm at all to the situation.

Your Lordships may not be familiar with the city council Labour group's line of argument. In fairness, I should like to say exactly what it is. The group claims that the Government have turned their back on the problems of Liverpool and withdrawn grant indiscriminately. It claims a mandate from the May 1983 local elections to reduce rents, create jobs, as it says, and increase expenditure. It claims that the budget for 1983–84 which it inherited from the Liberals was impossible to balance. It concludes that the city must receive £30 million in extra grant from the Government—though it does not mention the tree on which this cash is growing. It says that the alternative is to face either a 200 per cent. rate increase or job losses of 5,000. It says that it will accept neither of these alternatives and is left—and I put it that way deliberately—only with the option of rating illegally in 1984–85. That is not what I say; it is what the Labour group says. I hope that noble Lords will agree that I am presenting the position fairly.

I have to confess that the logic of this escapes me, but I imagine that the Labour councillors believe that if they repeat their story often enough somebody will believe it. Let us look at it closely. I say again that I have no intention at all of exacerbating the situation. I think that it is right that I should take your Lordships through those arguments point by point and let the facts speak for themselves.

In his very impassioned and I thought in many ways very splendid speech, the noble Lord, Lord Sefton of Garston, said that we should direct some of the resources to Liverpool. Speaking for the Government, I am entitled to say, first, that they most definitely have not turned their back on Liverpool. The evidence of our very considerable efforts to ease the social and economic problems of the city is there for all to see. The situation involves more than money, and I shall come back to that. But money is not without relevance.

The fact is that over the past three years, from 1981–82 to 1983–84, capital expenditure on Merseyside—I accept that that is a greater area than just Liverpool—under the Department of the Environment's main programme has reached £650 million. This includes about £140 million specifically for Liverpool through the urban programme and the Merseyside Development Corporation. The Department of Trade and Industry have given an average £110 million a year in the last three years to companies within the Merseyside special development area. The Mersey Docks and Harbour Company has received a total of £134 million in financial assistance and the Manpower Services Commission is expected to spend £90 million in Merseyside this financial year.

On top of all this, Merseyside is the only area of the country which has a special departmental task force assigned to it.

Secondly, Liverpool has not been singled out for specially tough treatment under the rate support grant system. Distribution of grant is made on principles which apply to all authorities. For 1984–85, Liverpool's expenditure target implies a relatively small reduction in spending. Other authorities face a much higher reduction.

Thirdly, while the Liverpool Labour group gained an overall majority of three at the 1983 local elections, no council can claim a mandate to spend money which it just does not have. I am sure that the Labour group cannot be seriously suggesting that it has a mandate to undermine the finances and services of the city of Liverpool. Fourthly, the group may or may not have inherited a tight budget which required savings to balance the books. I make no comment as to that. But they were elected to take such decisions, that is the point: you have to take decisions. If you want the responsibility and control, then you have got to make the decisions. I do not know whether the noble Lord, Lord Sefton, knows or not, but the fact is that during 1983–84 they have done nothing to help themselves. They have not only failed to find any savings but they admit to having increased expenditure, and over £1 million pounds, £16 per council tenant, went as a decoration allowance, a veiled method of reducing rents. Finally, on this, the group certainly does not need to increase its rates by 200 per cent. or make 5,000 people redundant to balance its books in 1984–85. We invited the deputation that came, to send in the detailed particulars of exactly how they came by this figure. We are two weeks on, and so far it has not arrived. I live in hopes that it will.

The noble Lord, Lord Evans, made the point—and the noble Lord, Lord Sefton, must acknowledge this—that the one thing which has not been mentioned by them at all, but which to me is the crux of so many of the problems in local government, is that they have a total unwillingness—one might almost say a pathological determination—to seek in any way to provide the services, not at a lower level but at a lower cost. Not one single suggestion did they ever make about, "Maybe we could do this better. Maybe we could provide the service in another way." There is no dialogue of any kind on that. If a local authority, coming and claiming that it needs help and assistance, is not willing, itself, to contemplate ways of doing things better, I know the noble Lord, Lord Sefton, would not justify that at all, nor would anyone else who is seriously talking about this, as a problem that needs to be resolved, to help make people's lives better without having, if you like, to add on the extra costs of what rate increases mean.

I do not want, as I say, to utter things that it is very tempting to say; this is not the time nor the occasion to do it. I read things that are said by Councillor Hatton, about going bankrupt, and all the rest of it. I prefer not to go into that at all. They may or they may not. If they do, then clearly the Government have to look at situations as they then arise but to anticipate is not for us. I feel this is not the way at all. I think this also should go on the record and I take this opportunity tonight, I think it is fair for someone to tell the people in Liverpool to realise just what the consequences will be. The fact is that what should be said, however: is that it is not a question of saving 5,000 jobs or making them redundant. The fact is that in the event that these things take place, dreadful things will happen to Liverpool and those who feel for the city, as has been said earlier on, must feel as I do; that it is almost beyond contemplation, not least for the work force itself, the people who are working within the authority. This is no way. If you need it, you do what the noble Lord. Lord Sefton, says; you sit down and have a dialogue about ways and means. He expressed some interesting thoughts which I have heard from him before, so they are not new to me. I do not know whether they are starters or not; maybe they are not, but certainly one can talk and that is what I would respectfully suggest has to be done.

There is great concern about what is happening to Liverpool itself. I happen to believe that the only answer lies not in just what the noble Lord, Lord Sefton, said though that may well be a factor. If you do not find a way to bring into the city on a permanent basis the people who will provide the jobs, the private sector, which is the only way—if you look at the public sector there is a contribution, of course, and maybe the one that the noble Lord says—and if you do not have the confidence of the people who will come in, where will the jobs come from? It is true there has been this whole change in the emphasis of what was and what will be Liverpool; but if you do not recognise that fact, then we are living in a nonsensical pipe dream. Here we have to say—and I am not, if you like, clobbering the people there—although I was at the meeting when my right honourable friend was there, I was the only other Minister present, but I am not going to say anything about that tonight.

What worries me much more is what the council do to the confidence of people they want to attract to the city; or do they want to attract them there? Do they really want to attract them? I ask that because, if one wants to attract private industry, one does not close down the development agency, which is there solely to attract the private sector. One does not talk about being bankrupt. My goodness me, the last thing one says when trying to attract people who will provide support is that one might be bankrupt. One does not do that. One tells them how good one is and what great prospects there can be. That is what one does. But that is not what these people do, and that must be a cause for concern to the noble Lord, to whom I am addressing so many of my remarks, since I felt that his speech was very much on the subject and to the point.

I do not want to speak for much longer, and if the noble Lord. Lord Harris, will bear with me, I shall conclude in the following way. The noble Lord asked me some specific questions. He wanted to know what would be the Government's action in certain circumstances. The Question on the Order Paper refers to "any other local authority". First of all, I know of no other authority that is talking of such action. Secondly, I repeat that it is not for the Government to say how they would react to a hypothetical situation. It is the city council which has to make the decisions. It has to take the responsibility. It is its duty to raise a sufficient amount of revenue to meet its budget. I maintain that it has scope to produce a lawful budget and rate. However, I am not going to rise to the bait and I ask the noble Lord not to feel that this is in any way a shortcoming. I hope, and I believe, that he has tabled the Question because he, too, is concerned about what will happen in the future. He is concerned about the implications. The noble Lord, Lord Evans, and other noble Lords, spoke about Liverpool specifically, while the noble Lord Lord Harris, spoke about the implications of the issue: that was his concern.

I have given the Government' response. We do not want to enter into a discussion on a situation which we hope we shall not reach. Like the noble Lord, Lord Sefton, I have confidence that in Liverpool there are enough people who are not so extreme as to want to see these dreadful things happen, and who are concerned about the future of their city. If we do not have overnight solutions to the problem—if they were there, they would have been used long ago—let us at least talk constructively about how we might develop the various arms that are now spread out there to help. I think that that is the way to go about it and I feel that that must be the only response that the Government can make tonight to this Question.

House adjourned at twelve minutes before eleven o'clock.