"Paying for Local Government": The Welsh Approach (Hansard, 29 January 1986)

Viscount Long
My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Wales on Paying for Local Government—the Welsh Approach. The Statement reads as follows:
"With permission, Mr. Speaker, I should like to make a Statement.
"The Government's proposals for a fundamental reform of the way in which we pay for local government were presented to Parliament yesterday by my right honourable friend the Secretary of State for the Environment.
"While the Government's objectives and the principles underlying the proposals for reform apply to the whole of Great Britain, the structure of the reforms has been tailored to the particular circumstances of each country.
"The major differences between the proposed package of reforms for Wales and those for England are as follows. The relatively low level of domestic rates in Wales, and the fairly small variation between authorities, will allow rates to be eliminated earlier in Wales than in England. It should take only six years. And in half of Wales they are likely to be phased out within three years.
"The smaller range of domestic rates in Wales also allows us to consider two options for the transition to the community charge. The first—a common percentage reduction in rates—is the same as in England. The second involves using the community charge to cut rates by a standard cash sum within each district area. We are seeking views on these two options.
"The relatively compact range of non-domestic rate poundages might make it possible to move to a uniform non-domestic rate in Wales in only three years.
"The smaller variation in average non-domestic rateable values in Wales also offers the prospect of allowing Welsh local authorities the freedom to 'top up' the yield of the uniform business rate by—at some stage—10 per cent. in Wales, rather than the 5 per cent. flexibility proposed for England.
699 "On the capital expenditure front, the Green Paper suggests that the control regime need not be exactly the same as that in England. My preference—at present—is for authorities to continue to have direct access to their capital receipts, within a thoroughly overhauled control system.
"Chapter 9 of the Green Paper sets out these proposals in more detail".
My Lords, I have lent my copy of the Green Paper to the Opposition, but I have it in Welsh! The Statement continues:
"A Welsh language version of the chapter is available from my department on request.
"The need for councils to be made fully accountable for their decisions has been dramatically highlighted by the succession of reckless rate increases proposed by county councils in the last week or so. The Government's proposals would significantly reduce the risk of such irresponsible action. They would ensure that authorities would need to go to their entire electorates to find extra cash, not just to the minority who now pay domestic rates. Furthermore, industry and commerce would be secure in the knowledge that they could not be used as a milch-cow for excessive spending.
"The Government hope that the Green Paper will be carefully considered and commented on not only by the major interests and representative bodies in Wales but also by individual tax and ratepayers; those whose contributions actually pay for local services.
"The consultation process provides a unique opportunity for all those who feel aggrieved at the present unacceptable situation to make their views known in writing to my department. I urge them to do so."
My Lords, that concludes the Statement.

§ Lord Prys-Davies
My Lords, Carwn ddiolch i'r Gweinidog am ail-adrodd y datganiad.
We thank the noble Viscount the Minister for repeating the Statement made in the other place by his right honourable friend. I do not propose to invite the House to embark on a third debate on paying for local government services. It has been said that the Welsh Office has been one of the power houses behind this Statement. If that is so, I find it odd because I am not aware of any great demand in Wales for the reform of the rating system. I should have thought that the Welsh Office might have addressed itself to more relevant issues for the Principality. Because the Statement foreshadows changes which are unwelcomed and uncalled for, it obviously has great significance for the Principality.
I should like to ask the Minister five questions: first, will he confirm that the Welsh county councils have not embarked upon a succession of reckless rate increases, so that his Statement has no relevance whatsoever in the Welsh context? Next, given the eagerness and the keenness of the Welsh Office Ministers to design a new rate formula for England, Wales and Scotland, can he assure the House that their keenness will not be allowed to affect their judgment as 700 to whether the formula is to the advantage or to the disadvantage of Wales when the round of consultations is completed?
Thirdly, will the Minister assure the House that any new rating system that will emerge will not be applied in Wales before it is applied across the board in England and Wales? I ask that question because three times in this short Statement the Minister has suggested that it might be possible to introduce the new scheme in three years' time. We have no wish for the reforms to have a trial period in Wales.
Fourthly, the new uniform business rate represents an enormous piece of centralisation. We in Wales have an ancient attitude of looking suspiciously at centralising forces. So in determining the business rate will the Minister assure the House that full regard will be paid to the particular and to the distinctive social and economic needs of Wales, even if that should mean the introduction of a separate uniform business rate for Wales?
Finally, will the Minister confirm that all the Welsh local authorities, including the community councils and their associations, will be given adequate opportunity to present their views to the department and that the Secretary of State himself will meet their representatives if a meeting is requested to discuss the proposals? Will he give the assurance that there will be time for consultations, that the consultation will be genuine and that there will not be created an impression on the lines of: "Look, this represents our thinking. This is the way it will be. We have made up our minds and we are sticking to it"?

§ Lord Tordoff
My Lords, it may come as a bit of a surprise to noble Lords to see me rising to deal with Welsh rates. I regret that none of my Welsh colleagues is here. The only claim I can have is that I am a Mancunian and one of the greatest Welshmen of all time was born in Manchester; a former Leader of the Liberal Party, David Lloyd George.
I apologise to those people who are taking part in this important debate that we keep interrupting. I look forward as much as anybody to hearing my noble friend who will speak next, but there are a couple of questions I should like to ask the Minister. First, on the industrial rate, as the noble Lord, Lord Prys-Davies, has said, this appears to be a centralising measure. Is there any way in which distinctions can be made in the future between what might be described as industrial green-field sites, or the newer industrial areas, and the older derelict areas in Wales? It seems to me that this system will impinge unfairly on the older and more rundown areas of industrial Wales.
Secondly, I noticed yesterday that in another place the right honourable Minister was able to give my honourable friend the Member for Bermondsey some specific figures of the impact of local income tax on people who live in his constituency. The Minister was apparently unable to give any figures for the impact of this system on the English counties. Now that the Government have had another 24 hours to think about it, can we have some idea of the differential impact upon various Welsh counties of the proposals that are made? I cannot believe that these figures are 701 not somewhere in the Ministry. If they are, can we have them on the table here and now?
What compensation can be given to those areas of Wales where the local authorities have sparse populations, because it appears to me that they will be unduly affected by these measures?
Finally, on a subject which was also brought up in this House yesterday, are the Government yet able to say whether students will have to pay the community charge and, if so, whether there will accordingly be djustment to student grants?

Viscount Long
My Lords, I am most grateful to the noble Lords, Lord Prys-Davies and Lord Tordoff, for welcoming this Statement and appreciating that the Government are trying to deal with certain of the problems.

§ Lord Stoddart of Swindon
My Lords, my noble friend was not giving it a welcome.

Viscount Long
My Lords, perhaps I may continue with my reply. First, the noble Lord asked me four questions, if I may refer to them. He first challenged me to say which the reckless spending counties were and asked whether there were any in Wales. I have to say, "Yes". An increase of up to 28 per cent. has been proposed. Such rises are totally unjustified and newspaper reports suggest that one authority is responsible, South Glamorgan. The noble Lord might care to look into that. He will undoubtedly find that that is true.
The noble Lord then asked me about rating. Rating will go right across the board and will be a standard rating. Therefore both the domestic and the industrial side will know which way they are going. The system will be governed by the Secretary of State for Wales and not from England. It will go towards the different authorities in Wales.
The other point to which the noble Lord referred was the business side in relation to industry. The noble Lord, Lord Tordoff, mentioned this subject. The fact remains that industry at this stage is being revalued for valuation in the future. Therefore I cannot give a comment on what will be the outcome of that. The industrial authorities and other bodies will be consulted. However, what has been asked by the Secretary of State is that all bodies should now go away for six months, find out what they require in the new Green Paper, and then report back. This will take approximately six months and then at a later stage the Government will be able to know what they need.
The noble Lord, Lord Tordoff, mentioned students. Again, as the noble Lord would know, there is an allowance in students grants for housing costs. In addition, local authorities receive payments from universities in respect of students living in halls of residence. Students who live in private rented accommodation contribute towards rates in their rent. Students who live at home may or may not contribute to their parents' rates bills. The precise arrangement for dealing with this aspect of the community charge will need to be fully explored during the consultation period. I hope I have been able to answer those questions.

§ Lord Tordoff
My Lords, with respect to the noble Viscount, I do not think he has answered my question on the differential impact on the Welsh counties.

Viscount Long
My Lords, I apologise to the noble Lord. The areas of the highest unemployment, mid-Glamorgan and Clwyd, will benefit from the move to a uniform rate.

§ Lord Prys-Davies
My Lords, two of my questions are outstanding. I asked whether there ought to be a uniform business rate for Wales, specifically for Wales. I asked that question. I also asked for an undertaking or an assurance that the reform will not be introduced in Wales earlier than it will be introduced in England.

Viscount Long
My Lords, I am so sorry. I quite agree with the noble Lord. Yes: eventually, over the time, Wales will have its own administration on all these matters. Thus the answer to the noble Lord is yes.

§ Lord Parry
My Lords, it is possible that the noble Viscount the Minister read too much into the Welsh sentence with which my noble friend began his address. He did not in fact welcome the Statement; he commented on it and indeed specifically remarked that there was no welcome for it in the valleys or in the hills of Wales because there had been no demand for it.
It is therefore important that it should be said in this debate that there has been going on in Wales for the past 25 years a social, industrial and indeed almost diplomatic revolution. This has changed the nature and the face of the economy and indeed the domestic towns of Wales. If the noble Viscount on the Front Bench knew the degradation of some of the communities at the heads of the valleys in Wales, and if he knew the effect that there was now on the small market towns of Wales as a result of changing agricultural patterns and the effect of the EC upon them, he would realise that Wales and those who administer Wales—because we have now had a Secretary of State for the entire period that he has been in the Government and subsequently in the Cabinet—have been concerned to bring about as rapidly as possible a change in the basic economy. There has been some success but the communities have paid the price.
There has been a strenuous effort from the Welsh Office under successive administrations. There has been a strong and determined effort by the industrialists in Wales to head off the decline. However, there has also been a specific contribution by the local governments, knowing their own areas, knowing the necessity for investment within them, and a very strong participation in the change that has been taking place. I say almost apolitically that it has seemed to us that the ability of local government in Wales to recognise the changes and to participate in, for example, the redevelopment of tourism, the specific investment in tourism, to take up some of the slack that has fallen out from the industrial economy—

Noble Lords
Oh!

§ Lord Parry
I should like to finish this because I am not entering into a debate here.

Noble Lords
You are.

§ Lord Parry
My Lords, believe me, I am not entering into a debate. What I am saying here—and saying it with a Welsh accent, speaking for Wales for a moment—is that I want it to be understood that there is this considerable discrepancy. The Statement says in regard to Wales that at least partial reorganisation of its rateable base can take place within three years under an administration that does not have three years to run. The Minister then says, in answer to my noble friend, that he wants us to go away and consider it for six months. Thus six months of those three years are taken up. Indeed, the local authorities at the moment are under considerable pressure to measure up to their own burdens. I shall sit down because I am giving notice of my intention to follow this very carefully in subsequent reports to the House.

Viscount Long
My Lords, I am very happy to hear that the noble Lord is going to follow it up and I am very unhappy to hear that he is very unhappy about it. But he has not offered me or the Government any suggestion of any better form of rates at the moment. Perhaps I may inform the noble Lord that the ratepayers in Wales are as strongly in favour of a fundamental change as their counterparts in England and Scotland, particularly the hard-pressed business people.

§ Lord Sefton of Garston
My Lords, may I ask the Minister whether or not he can give us examples of the reckless spending to which he referred previously; or, like the rest of the Government, does he rely on newspapers as evidence of the need for change?

Viscount Long
My Lords, I have already done it.

§ Lord Sefton of Garston
My Lords, I am sorry. I did not hear.

§ Lord Cledwyn of Penrhos
My Lords, with great respect to the noble Lord, with regard to the Statement and its reference in particular to reckless spending in Wales, we understand that the noble Viscount was repeating a Statement made by his right honourable friend in another place and therefore is not responsible for it. However, will he tell the House that the evidence that he has produced of reckless spending does not support the contention? He named one county council out of eight county councils in Wales. Is he aware that the known reputation of Welsh county councils is one of very careful spending indeed? Will he now concede that to the House and assure the House that he will discuss this with his right honourable friend as soon as possible? Otherwise, the people of Wales will be less civil to the Secretary of State than they have been over the last six years.

Viscount Long
My Lords, perhaps I may say to the Leader of the Opposition that I shall take on board the latter part of his remarks. I am challenged on naming. I named one body and I apologise that I have not named more. However, I shall take it on board for the Secretary of State.

§ Lord Sefton of Garston
My Lords, I tender my apologies if I did not hear the Minister correctly. However, I checked with my noble friends and, like me, they did not hear any examples of reckless spending. They heard the Minister mention South Glamorgan and then go on to refer to newspaper reports on reckless spending. Does the Minister have any examples of reckless spending other than South Glamorgan?

Viscount Long
My Lords, I have just answered, so far as I can, the noble Lord the Leader of the Opposition.

§ Lord Sefton of Garston
My Lords, then, with all due respect, may I point out that it was not a very satisfactory answer?