Local Government Structure and Financing

HL Deb 27 February 1991 vol 526 cc975-1065

2.55 p.m.

Lord Rippon of Hexham rose to call attention to the need to review the structure and finance of local government; and to move for Papers.

The noble Lord said: My Lords, I must begin by declaring an interest as President of the Association of District Councils. To that extent I am associated with its views on making services closer to the people and more responsive to their needs. Needless to say, however, anything that I say today is entirely my own responsibility.

I welcome the Government's decision to review the functions, structure and finance of local government. I welcome in particular the indication given by the Secretary of State for the Environment that with all political parties there will be an attempt to establish common principles on the future role and direction of local government. The review is intended to find the basis of stability in central and local government relationships. Stability is an aspect that we have seen little of lately in this field.

We should realise from the outset that it would be hopeless to try and make major changes in the basis of local taxation or structure without a considerable degree of consensus—I understand that that is no longer a dirty word in politics —about the nature and purpose of those changes. Not all change is for the better, as we have learnt from bitter experience. Nor is change for the better accomplished without difficulty. But if, as I believe, local government's convalescence from the hammer blows that it has suffered in recent years cannot be hurried, some immediate action must be taken to remedy present ills.

Undoubtedly the Secretary of State has made a good start with his community charge reduction scheme. It will provide £1.7 billion in extra help for those who have suffered most from the poll tax. Again, I understand that we may now call it by that name. However, I do not believe that that goes far enough. The general level of charge will still be far higher than was originally envisaged. I take as my starting point a document that I hold in my hand and which may be of special appeal to some people. It was issued on Wednesday 28th August 1974 by the right honourable Margaret Thatcher, Shadow Secretary of State for the Environment (as she then was). She stated: in the medium term, we shall transfer to central government the cost of teachers' salaries up to a specified number of teachers for each local education authority. Expenditure on police and the fire services will qualify for increased grants from the Exchequer. We shall see that this saving is passed on to the ratepayer". I always believed that that was a very good first step that could be taken. We are talking about grants and not the transfer of administrative functions. That is quite different from the proposition advanced by some people: that the whole responsibility for education as well as its costs should be shifted to Whitehall.

Under the scheme suggested by Mrs. Thatcher, local authorities would still be responsible for the administration of the services that they provide. If the general level of local taxation and expenditure are reduced in that way, then funds must come from some other form of taxation but not to the extent of the total cost of the education service. That would be very high. As I see it, that is a short-term fix leaving the way clear, without prejudice, for a more general review in the future.

We must contemplate reversing the tendency to shift financial burdens from taxes to rates. I regard an increase in national income tax to meet nationally determined expenditure preferable to a system of local income tax which would be difficult to introduce. I regard as important the establishment of the principle that expenditure determined nationally should be paid for nationally, leaving councils to raise by local taxation the full cost of what they regard as being required locally including, for example, more or more highly-paid teachers.

Perhaps I may turn to the community charge or poll tax. It always seemed to me that the case for that rested fundamentally on one argument alone, although admittedly a strong one; namely, that it would make local councils more accountable to their electors. The principle of accountability was fatally undermined by the continuation of rate capping. Some of your Lordships may recall that when he was Secretary of State for the Environment Mr. Kenneth Baker put the matter quite plainly. He said: Community charge capping would be intellectually dishonest". It is also politically inept because rate capping leaves only the Government to be held accountable for any council's failure to respond to local needs. I am sure that our own Prime Minister would agree, as a former Lambeth councillor, that it should be left to the electors to judge whether Lambeth is or is not administered better than, for example, Wandsworth.

Having reduced the general level of the poll tax, I would immediately abolish rate capping. I would abolish also the present controls over spending capital receipts from the sale of council houses. In the Hexham Courant last week I read that in my old constituency of Hexham, the Tynedale District Council, which I know to be a responsible body, wants to spend some of its £8 million capital receipts on much needed low cost housing. It has received a letter from the department—and I shall not say from whom —that that cannot be done because any government must regulate gross public expenditure, including spending from receipts, in the interests of managing the national economy. That is nonsense. As long as central government control borrowing —which they do—spending those receipts has only a minimal effect, if any, upon the management of the national e appeconomy. Indeed, I should have thought that some much needed investment might be good when it comes to managing the national economy at present.

I want to see—and this is in line with the Secretary of State's objectives—the establishment of a better division between the responsibilities which rightly belong to Whitehall and those carried out by councils. I do not believe that anyone could deny that in recent years we have become an increasingly centralised society. We must halt and reverse that process.

Having said what I believe should be done now, I take a more cautious view about long-term reforms. Throughout my political life I have heard every political party pay lip service to local democracy. However, we have never faced up to the need to consider together financial matters, areas, boundaries and functions. As a result, we have staggered from one expedient to another with no clear philosophy or any sense of direction. At last we are invited to consider all those matters together and comprehensively. However, no one should underestimate the complexities of the situation or believe that there will be an easy solution. After all, the Layfield Committee Report on local government finance in 1977 contained 494 pages and the Redcliffe-Maud Royal Commission Report in 1969 contained 396 pages.

If one looks at that mass of evidence and ideas, it can be seen why I believe that only after real and effective in depth consultation right across the board can any progress be made. It is not good enough that the Secretary of State should sit only with his civil servants to try to work out what is the best solution and perhaps read a few statements made by various bodies. If we act without sufficient consent, we shall fail again. It is no good talking about consultation documents or White and Green Papers if comments invited by Whitehall are, as past experience has shown, frequently ignored.

It is worth bearing in mind that even those who opposed originally the principle of the community charge were nevertheless prepared to try to make it work as well as possible. The local authority associations and others were time and again frustrated at every turn by Whitehall's adamant refusal to listen to anything said by anybody who knew about the subject as to the cost of collecting the tax or about the anomalies or hardships which would be created. As a result of that, the remedial action taken by the Secretary of State, albeit very welcome, comes too late to save the poll tax, certainly in anything like its present form.

There is no time in which to dwell at any length today on the various alternatives which have been canvassed; for example, property tax based on capital values, which I have long favoured, or on floor area, which I consider could be no more than a factor in assessment, or perhaps there should be a combination of a property tax and a poll tax of up to a maximum of about £100, which has been derided already as two taxes in place of one. I believe that all those options deserve to be considered carefully and objectively. I reiterate only that we should go carefully lest we proceed from one disaster to another.

Finally, I should like to say something briefly about areas, functions and structure. I do not believe that Whitehall should ever again try to draw up a new national boundary map or arbitrarily re-allocate functions. I should like to see a more evolutionary process, avoiding dogmatic situations. Some changes certainly need to be made but they would be better made area by area, bearing in mind that the same considerations do not necessarily apply uniformly throughout the country.

In the process of making changes we must be careful not to create a fresh series of administrative problems such as the shuffling around of offices or finding that the council buildings are all in the wrong place. If three authorities are merged into one there are three chief executives: one takes the golden bowler; the senior one takes the top job; and the junior one takes the deputy job with a promise of being chief executive in the future and the salary is worked out according to population. There is a way of gaining support if you want it, but that is not necessarily the best way.

We should consider also the effect of changes on the quality of members. At every change which is made, some members leave local government altogether and others join the new authority and start all over again. We must have regard to the sense of individual interest in the local community. That is one reason that I have always had grave reservations about the uniform business rate, however that is calculated, because that draws businesses away from an interest which they should have in local affairs and administration.

We all speak personally on the matter of boundaries. I have my own views. I was born in Somerset and not Avon. Bath is in Somerset and not Avon. My loyalty is to Bath and Somerset and it never will be to Avon. I can equally understand why Humberside means little or nothing to electors who think in terms of Hull or Yorkshire. In that regard, I have a particular complaint to make about what has happened. A change was made in the Local Government Act 1985 to the Local Government Act 1972 which provided for a review. I regard it as absurd that the Boundary Commission is precluded from even considering the possibility of Hull becoming an all-purpose authority; in which case it might just as well not sit at all because that is the only option in which everybody is interested.

There is a strong case to be made for the unitary authority. The present structure blurs responsibility and accountability. While I favour an extension of the concept of the old county borough—the all-purpose authority—to many district councils, I would be reluctant to abolish all county councils.

Looking ahead we must remember that local authorities have been left reeling after the passing of more than 50 Acts of Parliament over the past 10 years which directly affect them. Against that background we must consider how we can reinvigorate local democracy and protect it against the increasingly over-mighty state. That is why there is some support for the concept of elected mayors. I can see merit in studying either the United States or the French systems, which vary in degrees of power and influence. If we adopted the French practice no doubt the Prime Minister would also be Mayor of Huntingdon.

However one adapted the American or French systems, an elected mayor would be a focal point of local pride, and with a sufficiently high profile to attract candidates who could have more than a local influence. I see them more as chairmen or leaders of the council than as executive administrators. That is the kind of change that could not possibly be imposed from the centre. There must be a degree of agreement, possibly giving local authorities some element of choice as to whether or not they would like to experiment along those lines.

Your Lordships may feel that I have raised as many doubts as I have suggested. That is because my instinct in these matters is to tread cautiously through the minefields, taking the local authority associations along with us in reforms which, if they are to mean anything, must last for more than one Parliament or generation.

I hope that I have thrown up some ideas for consideration, bearing in mind that we do not want to echo once again the famous words of Lord Melbourne. Whenever he was presented with a new idea he would say, By God, why can't they let it alone".

3.15 p.m.

Lord McIntosh of Haringey

My Lords, with opponents like that, who needs friends? I am fond of pontificating about local government and am grateful to the noble Lord, Lord Rippon, and his colleagues for giving us this opportunity. I am bound to say that I find it astonishing that a Government which have been in power for 12 years and have been responsible for the "hammer blows"—to use the words of the noble Lord, Lord Rippon—which local government have suffered in recent years should consider it appropriate or even defensible to use Conservative Back Bench time to debate a subject of this kind. One of the objectives may be to tempt my noble friends and myself to write the relevant parts of the Conservative election manifesto, which the Conservative Party are incapable of writing at the moment. I shall resist that temptation. If the Government and noble Lords opposite wish to discover what our views are they are welcome to read our documents on fair rates and equality commission. I wish them joy of that; it is much more clearly thought out and well written than any of the documents appearing from the other side.

I repeat that it is astonishing that a government party should consider it appropriate after 12 years in office to seek a fundamental review of the structure and finance in local government. I noticed that the noble Lord, Lord Rippon, almost used the word "functions" instead of "structure and finance". I found that interesting. I wonder whether he meant it. I shall be returning to the matter later.

We have had 12 years in which we have not only experienced rate capping and then the poll tax—apparently that phrase is now respectable throughout the House—but also, as we have been told, poll tax capping. There has been the whole debacle of compulsory competitive tendering and the abolition of city government and metropolitan counties. We have seen the ring-fencing of housing revenue accounts so that local people are not able to decide what their housing costs and rents should be. As we were reminded, we have the provision that when council houses are sold the money cannot be used by local authorities for capital purposes, including more housing. We have seen the various experiments with education. Some of them are excellent, like the local management of schools, and some far less excellent, like the grant-maintained schools which predictably are adopted only when schools are threatened with closure by local authorities who want to rationalise their educational provision.

The 12 years' experience of this Government could be said to have made a review necessary, but a review by a Conservative government almost certainly a failure. The noble Lord, Lord Rippon, quite rightly said that the tendency towards centralisation has gone very far and should now be reversed. I am tempted to say, cynically, in regard to my own side and my own views, that those in government are nearly always centralisers; they cannot bear to allow anything out of their hands. Those in opposition are nearly always decentralisers because they want a small share of the power if they can possibly get it. I am afraid that has been as true of Labour governments as Conservative governments throughout the ages. However, the principle is sound.

In looking at the structure and finance of local government we should always consider the extent to which the methods, procedures and institutions we adopt tend towards centralised power. If one looks at local government in this century, its history under all administrations almost entirely has meant the taking away of executive functions from the real authority of local government.

We were reminded recently by the borough housing officer of Rochdale that in 1906 the functions of the Rochdale Borough Council included police, the manufacture and distribution of gas, water supply, drainage, highways, libraries, art gallery, museum, parks, running the tramways and education. He said, quite rightly, that only one executive function, one business, now rests in the hands of Rochdale Borough Council; that is, the business of public sector and municipal housing. Even that is being largely taken away. It is the declared intention of this Government to take away such functions from local authorities.

In this century we have gone a long way towards encouraging centralisation and diminishing local accountability and democracy. When we examine the structure of local government it is astonishing to see how much we differ from most other developed countries in the world. The county of Kent is as large in population terms as the 17 smallest individual states of the United States of America. The average size of counties and even of districts in this country is larger than any comparable first or second tier local authorities in any country in Europe.

Denmark practises, as do most Scandinavian countries, a commune system. Local authorities with an average population—not a minimum population —of 17,000 people in effect run all local authority services. I take a more extreme example. The state of Liechtenstein has a population of approximately 30,000. It not only runs all its own services where it needs to, but contracts out where it finds it convenient to do so. For example, for higher education it contracts out to Germany and Austria; for customs union it contracts out to Switzerland, and so on. Even with a population of 30,000 people there is a separate town council for the town of Vaduz which has a population of 15,000. There are separate local authorities for various communities in the country areas of Liechtenstein. If that country can do it why cannot we? In other words, why cannot we adopt the principle that local government will be more effective the closer it is to the people it serves?

In this country we have a distortion of local government which has been brought about over a number of years mainly by Conservative governments. That was based on the idea that the minimum size of a local authority should be determined by administrative efficiency rather than by democracy or accountability. If anything proves that that is wrong it is the fact that voting turnouts in local elections in this country are lower than in almost any of our European counterparts and still diminishing as local authorities continue to get larger.

Whatever detailed series of prescriptions we adopt, surely we should be adopting the principle that we look at what local government has to do, then find out the best way to do it rather than to impose a pattern. When I think about the structure of local government I am always strongly attracted to the view expressed by the noble Lord, Lord Rippon, that there is no reason why there should be a uniform prescription for local government boundaries and responsibilities throughout the country. There is no good reason why one should have the same network of counties. Counties such as Cornwall and Devon are perfectly real. But Hereford and Worcester is not a perfectly real county. Humberside is not a perfectly real county and neither is Avon. In our desire for conformity and uniformity we have imposed absurd and expensive patterns of local government organisation and matters are getting worse.

I propose to the House that it should not seek any other uniform or unilateral prescription for local government boundaries. If that is to be the alternative I would rather leave matters well alone than to enter into wholesale and uniform reorganisation.

Another principle that we should consider is finance. We should look at the role of local government expenditure in relation to the whole of public spending. A White Paper published in 1988 rightly said that local government expenditure should not be lumped in with central government expenditure in the total public spend. I go further and argue that theological views about what public expenditure is should not in any case apply to local government. It was the noble Lord, Lord Jenkins of Hillhead, as a member of a Labour government, who first gave expression to the absurd view that somehow there is a reduction in democracy and efficiency if public spending reaches, I think he said, 40 per cent.

There is no such magic figure. Like private expenditure, public expenditure can be investment or current spending. The economic effects of it depend on whether it is investment which may be extravagant or otherwise or whether it is current spending. Whether the spending is private or public is almost irrelevant to the economic argument. But local authority expenditure does not add to public borrowing unless it is genuine investment and neither does it affect the money supply. I suggest that the kinds of controls which are involved in the poll tax capping procedures which we have for 1991–92 are economically as well as democratically unsound.

The problem identified by the Secretary of State and his predecessors is that the level of the poll tax is too high. People hate it. There are very good reasons why the poll tax is too high. It is too high because it is now expected to contribute 28 per cent. of local authority spending whereas in 1979, 1980 and 1981 rates contributed only 17 per cent. to local authority expenditure. At the same time, but not quite in inverse proportion because of business rates, government grants to local authorities 11 years ago accounted for 60 per cent. of local authority spending. They now account for only 42 per cent. That is why the poll tax is too high. It is not because local authorities are being extravagant but because the poll tax payers are being asked to pay more of the share of local authority spending.

It is no good anyone saying that what is called community charge relief is a welcome change. After all, that is only a transitional provision. It tries to minimise the damage done by the poll tax by relating it to those wicked old things, the rates. It is not exactly a reform which would be welcomed by those noble Lords who valiantly supported the poll tax Bill when it was before your Lordships' House three years ago.

I am going to keep a very careful account of the speeches made from the Government Benches this afternoon. I shall compare them with what noble Lords did and said and how they voted when that Bill was going through this House in 1988. I suspect that it will be left to the noble Lord, Lord Boyd-Carpenter, to defend the poll tax in the full violence of its blossoming. I do not think that there will be many other noble Lords on the Conservative Benches taking that position now.

If we want to look at local authority expenditure in a rational way we should not be taking a single prescriptive view for the whole of it. We should be doing what the Joseph Rowntree Trust is recommending that we do; namely, look at different elements of local authority expenditure and decide which of them are inevitably caused by national policy. We could leave much of that to local judgment. We should make local people pay for those provisions which are essential but about which there are genuine differences of opinion as to the level of provision. In some cases we should be making the users of particular services pay for them. It is not an alternative prescription which is required, but a commonsense view of what local authority finance should be about.

Beyond all this talk about the structure and finance of local government comes the question of what local government is for. If this were a real review it is the functions of local government that should be considered. I suggest to noble Lords that local government is for a plural view of society. It is in favour of the view that there is not only one source of wisdom, whether in Whitehall, Marsham Street or even the Palace of Westminster. The view that has been taken, particularly by this Government over the past 12 years, has been that local people are incapable of making up their minds about the issues that affect them.

There has been a smokescreen of false economic argument about that view, but that is fundamentally the view that has been taken. It has been taken because certain Members of certain Cabinets over the past 12 years have bitterly resented the concept of an alternative source of political authority. I cannot promise that under a Labour government those centralist urges will not reassert themselves. I am sure that some of my noble, honourable and right honourable friends will wish to return to central government control of local authorities. There will be many of us who will continue to bitterly oppose them.

3.30 p.m.

Lord Ross of Newport

My Lords, we are greatly indebted to the noble Lord, Lord Rippon of Hexham, for giving us this opportunity to debate the need to review the structure and finance of local government. He has, I know, long been a doughty supporter of local government. I have to say that I agreed with almost every word of his speech. I wish now that I could just sit down and say, "Hear, hear". However, I may say that his short-term palliatives, which I do not intend to cover, were along the right lines. I think that what he suggested should happen immediately was correct.

I am also grateful to the noble Lord, Lord McIntosh, who at least admitted to centralist tendencies were he to become a Minister in the Department of the Environment following a change of government. He has considerable knowledge, but he did not tell us too much of what Labour might do if they were returned at the next election and had this problem on their hands. We have not heard what they would do about the poll tax, although we have some idea from other sources.

On these Benches we have consistently opposed the ever-increasing centralising of power in the UK. We used to think that in that aim we had at least a modicum of Tory support. When Conservatives were in opposition, I appeared on a number of occasions at meetings with the ACC and others. I always heard words to the effect that we should leave it to local authorities to decide. As the noble Lord, Lord McIntosh, said, it is very different when one happens to be in office. I hope very much that if we were ever to have a role in office we would stick to our guns and make sure that we did not want to take over everything from local government.

It is a fact that over the past 12 years we have seen a virtual castration of local government decision-making, particularly in England and Wales. I think I am right in saying that in Scotland water is still a local authority function. Local communities should have the right to local self-government with a capacity for local choice and local voice. I agree with every word on the brief of the AMA. There is now a desperate need to revive the morale of local government officers, most of whom are exceptionally capable and with a great tradition of service. They are highly trained people. But their efforts have too often been derided in recent years. We must also attract back councillors of experience and knowledge who have much to offer their local communities but who have disappeared in droves since the mid-seventies, possibly following local government reorganisation. However, I do not think that is the real reason. On the whole, they are just frustrated by Whitehall diktat. They may be elected for four years but find they are unable to achieve anything so off they come. They have also been totally disillusioned by the excessive domination of party politics. As long ago as the early 1880s Mr. Gladstone said: If we can make arrangements under which Ireland, Scotland, Wales, portions of England, can deal with questions of local and special interest to themselves more efficiently than Parliament now can, that, I say, will be the attainment of great national good". Surely those words could never be more true than they are today, more than 100 years later.

The last time the country took a serious look at local government reform was between 1966 and 1969 when the then Labour Government set up the Redcliffe-Maud Committee. They were also responsible for initiating the Royal Commission on the Constitution, which reported in 1973 and is usually referred to as the Kilbrandon Commission. It therefore makes sense to look back and see what they recommended. Redcliffe-Maud is quite clear. England, excluding London, should be divided into 61 new local government areas, each covering town and county. In 58 of them a single purpose authority should be responsible for all services. In the special circumstances of the three metropolitan areas around Birmingham, Liverpool and Manchester, they suggested that responsibility should be divided in each case between a metropolitan authority, whose key function would be planning, transportation and major developments, and a number of metropolitan district authorities, whose key functions would be education, personal social services, health and housing. They also called for the establishment of eight provincial councils to handle the broader planning and economic issues. Our party long ago published a document called Power to the Provinces in which we called for the setting up of 12 regional bodies.

Redcliffe-Maud also reiterated its strong support for elected local councils—that is, parish and town councils, which are now often called community councils. This is something which we on these Benches want to see further extended. There has been a move in that direction. It is a good move and we want to see it taken still further. Kilbrandon called for the establishment of Scottish and Welsh assemblies, with legislative powers and elected by the single transferable vote PR system. For England Kilbrandon suggested regional councils co-ordinating various planning and transport matters which should be partly indirectly elected and partly appointed. We want to see such policies implemented, not necessarily in the particular form which I have read out but following that line, and soon. Developments in Scotland and Wales and regionalism in England should come before any change in the structure of lower tiers of local government.

Despite the fact that men and women of great experience sat for several years taking evidence from a vast number of bodies, their majority views were almost totally ignored by the then Government. What a tragedy, and what an expensive one too! We have consistently called them multi-purpose authorities whose boundaries match local needs and circumstances. It does now seem that there is much wider acceptance of this principle. Uniformity was thrust upon us in 1973. It is perceptibly not necessary. What fits best with the local community should be the rule.

I speak with considerable feeling about the matter because we fought for our independence in the Isle of Wight. It was suggested by Redcliffe-Maud that we should go into Hampshire. I think the Labour Party wanted to put us into some great metropolitan authority with Portsmouth and Southampton. The then county council, which was independent but basically Tory, put forward a paper which said that there should be one all-purpose authority. I totally agreed with that and have fought for it ever since. I have been to the Boundary Commission. I have been to every appropriate Secretary of State. We ran a poll which produced a majority in favour of the proposal; but it still has not happened. We still have the ridiculous situation of a county and two districts. The county is the biggest authority by far. The districts have budgets of about £4 million each or less than that. The system is totally daft and has divided the Isle of Wight. But I agree totally with the point about Hereford. Hereford, near where I now live, is a proud county. It produces a breed of good cattle. Why on earth was it put in with Worcester? I will never understand how Peter Walker got away with that, as Member of Parliament for Worcester.

On these Benches we welcome the invitation from the present Secretary of State for the Environment to discuss with him what we think should now be done, not only about finance but administrative structures. If we are to set about a further upheaval, it is—I totally agree with the noble Lord, Lord Rippon—of the utmost importance that what is ultimately proposed should have a wide cross-party measure of acceptance. We just cannot afford to proceed along dogmatic party lines as we have in the past.

The latest example is the poll tax. It has to be abolished. It is grossly unfair and desperately expensive to operate. I have given this example before. I live in Shropshire but my postal address is Powys. No one can accuse Powys or Shropshire of being overspending authorities. However, if one happens to be on the wrong side of the Teme one's poll tax is way over £300. In Wales, it is £190. It is grossly unfair.

One of the worst outrages is the way the standard charge of twice times the poll tax rate has been implemented by most local councils. I argued about this with the local authority. My son was in Australia. He came back four months into the current financial year to face a bill of more than £600. I had that reduced to £260 but the borough had the choice to go between, as I understood it when we were discussing the Bill, 50 per cent. of the amount or double the amount: "Oh no, I was told that's not possible. We decided at the beginning of the financial year that, if it's double, that has to be and we can't make any amendment to that." I worry about what is going to happen to our troops in the Gulf. I hope that they will not come up against that. It is grossly unfair.

I also think that most shopkeepers now deeply resent the uniform business rate. I know that I do; I am a shopkeeper. I would much rather deal directly with the local authority than wait years to get back my money for overpaid rates! I have appealed against mine in all circumstances and I still have not had a response from the valuation officer. I have to pay what I think is a grossly excessive business rate. We do not get that money back. I wonder whether I shall get some interest on it when I win; I hope that I do.

As a party we stick by the local income tax as the main source of finance for local government, backed up by a land tax based on site values, which we think should cover industry, commerce and development land. As concerns a LIT, we can claim the support of the Layfield Committee which reported in May 1976. Once again experienced people gave of their considerable time, consulted widely, and then stated: There is a strongly held view amongst us that the only way to sustain a vital local democracy is to enlarge the share of local taxation in total local revenue and thereby make councillors more directly accountable to local electorates for their expenditure and taxation decisions. On balance we consider that the administrative cost involved in introducing a LIT for this purpose would be justified". Layfield reported in 1976. It is now 1991. The Inland Revenue has moved on with computerisation. It may not be entirely computerised yet but it will happen in the next few years and LIT should therefore be considerably cheaper to implement.

One of the greatest advocates of LIT was a friend of the noble Lord, Lord Rippon, the late Graham Page, who was a Minister with responsibility for local government. He introduced in another place at least two Private Member's Bills on the subject. I ask noble Lords who still have doubts about LIT to read the reports of the debates on those Bills. We totally oppose the idea of taking responsibility for certain services away from local government. Education, fire and the police are those most often mentioned. The opting out of schools will prove a tragic error. Do Ministers really want literally thousands of head-teachers and chairmen of management committees constantly lobbying them, by letter and in person, for extra resources? There are around 28,000 schools and colleges of further education in Britain. If they all opt out they will all look to the centre for their money. They will pour down here at certain times of the year. In most parts of the country counties run our education services well. We ran ours well. Do not destroy overnight what until comparatively recently worked to our children's best advantage.

We all generally welcome the changes brought about by the 1988 Act in terms of the way we set up the management of schools. Let it settle down before making any ill-considered reforms. While there may be a case for regionalising some of our police force responsibilities, to put them under direct control of the Home Secretary would surely be a grave mistake. Experience with the Metropolitan Police should teach us that lesson.

Layfield recommended a second source of finance based on capital values of properties, grouped in bands and brought down to rateable levels by the use of a common divisor. I cannot see such a scheme working in current circumstances where property values are all over the place. We read in the papers that houses which had a price tag of £600,000 two years ago are now on offer at £250,000 and they are still not selling. A flat in Docklands, sold for £110,000 in 1987, has recently changed hands again for £47,000. The valuation officer would be changing the list every week if we went down that path. Where I do agree with the Labour party is on the need for a return to the old valuation lists for an interim period, as that is the only base available to local authorities on which to levy their rates if the poll tax is to go, as surely go it must. I have for a long time been convinced that another essential reform is to introduce the directly elected mayoral system into England. I could really have done things in the Isle of Wight if I had been the mayor with power. I want to give real pride and power back to our cities and perhaps to other all-purpose authorities; but that may be going a little too far. I agree with the noble Lord, Lord Rippon. One has to be a little careful about how one sets about it. Certainly I think London would benefit enormously; so too surely would Liverpool, Birmingham, Manchester, Bristol and many other major cities.

In this I have the support of the Secretary of State himself and of Mr. Tony Banks of the Labour Party, who recently introduced a Private Members' Bill on the subject. Even Dame Shirley Porter thinks that there should be a Minister for London. I just hope to God that she is not in for the job herself. It should perhaps be left to the elected councillors themselves to decide what form it might take. Not all mayors in the United States, for instance, have exactly the same powers. I found that out when I was there. The mayor of New York has considerable powers; the mayor of Dallas does not have very many at all. But what is essential is that all local government elections should be run on the single transferable vote system of PR. This, I appreciate, will not be easy to sell to the Conservative Party, though I have higher hopes of Labour. But surely all right-minded people who are concerned about the future of our democratic systems must be appalled at the abuses of patronage in appointments to public bodies that have occurred in recent years—the appointment of a Liberal or two might not come amiss sometimes—and some of the thuggish tactics perpetrated in our council chambers are an absolute disgrace.

In 1979 my electorate felt very sorry for me. They said that they could not vote for me because of this terrible thing, the Lib-Lab Pact, but that they would vote for my colleague in the local elections. Suddenly we took control of Medena borough council. I thought that I would lose my seat but all my people were elected. Fortunately I managed to survive in the end. The councillors who unexpectedly came to office came to me and said, "What should we do?" I said, "First, don't kick out the mayor-elect. Let him go on and have his year of office. Secondly, don't take the chairmanship of every single committee. Let the Tories and the Independents have one or two chairmanships". They actually took my advice, poor fools; but they suffered in the end for so doing. That is how it is played.

If we had had PR, then those things would not have happened. It is the party line that hardens attitudes. When I became leader of the county council in 1981, I tried to persuade colleagues to take a similar view; but then it was far too late. I say to the House that, for the health of our nation, proportional representation is long overdue: we can make a good start with the local authorities.

3.46 p.m.

The Lord Bishop of Manchester

My Lords, this is a timely debate, especially in view of what has been termed the "Heseltine review"—the review of the community charge or poll tax. We are all profoundly grateful to the noble Lord, Lord Rippon, for giving us an opportunity to debate this matter. I checked the reference to him in Dod's. In the midst of his very distinguished career, much of it related to local government, I could not help noticing that at one point he was the admiral of the Manx herring fleet. I can only hope that his fishing this afternoon will bring a good catch among those who are responsible for policy, whether on this side of the House or possibly in a future government.

The diocese of Manchester has within it, in whole or in part, nine metropolitan boroughs, including the ring of Lancashire towns: Bolton, Bury, Rochdale, Oldham, Ashton as well as Manchester and Salford. The Churches have always valued their relations with local government, especially in education for there are many church schools. Every year, the mayors—affectionately known as the chain gang—and the chief executives come to meet the leaders of the Churches in the Greater Manchester county area. Let no one say that the Greater Manchester county has been abolished. Although the county council has been abolished, the county still exists. We also have a Lord Lieutenant. They come usually to my house and sometimes to the house of my opposite number, the Roman Catholic Bishop of Salford. We try to affirm the value of local government for all the people living in the area, and the importance of good men and women giving their time and energies to the work of the local council. We try to emphasise that this a proper sphere for the working of God's spirit in service to our fellow men and women.

Whatever structure of local government one has or whatever the financial arrangements, what really matters is positive encouragement and support from central government and a good working relationship between central and local government. This has been sadly lacking in recent years. During the years that I have lived in the area there has been a steady campaign of denigration of local government by central government and also many, many actions of central government deliberately designed to bring pressure on local authorities.

It should not be supposed for one moment that I am saying that all the faults in such tensions are always on one side. They are not. Of course town halls can do silly things; they can on occasion be extravagant; political considerations can become dominant. There is bureaucracy and some inefficiency, as is the case in all major organisations. But having said that, I believe that the main responsibility for a sad deterioration in relationships over the years has rested squarely on the shoulders of central Government.

It should not be supposed for one moment that it is all like that. There are obviously some splendid examples of good, constructive co-operation in these areas for the service of the people living there. I spent an afternoon this week viewing a very exciting project in the Ordsall triangle in Salford, which encompasses "Coronation Street" and so on. That is where the Rover's Return is situated. In a new neighbourhood centre, financed partly by urban development funds, by the "Save a City" project and, indeed, by central government grants of various kinds, people are working together in the field of housing, community work, social services and planning. It is very encouraging to see such work taking place. That is how it ought to be.

There are signs of a new wind of change coming from central government as regards their attitude towards local government. I can only hope and pray that that wind will blow even more strongly. However, before it can do so, it must blow away some of the suspicions and bitterness of past years. It is vital that government and leaders of all political parties realise just how bad things have become. Morale is very low in local government at present, and it is already becoming increasingly hard to persuade good people to give of their time to local council work or indeed to apply for jobs in local government. Perhaps I may give your Lordships an illustration of what I mean. A former chief executive in our area, admittedly a few years ago, said to me, "I came into local government out of a spirit of service. I now find myself and my officers constantly denigrated by central government who call us a bureaucracy and give us no co-operation in what we try to do for the needy people in our area".

That pressure has been put on local authorities which at present have some of the greatest social problems in our country—problems that have been created by the aftermath of the Industrial Revolution which, as I am sure many of us know, created much of the wealth of modern Britain. Local government must be affirmed and there must be co-operation instead of constant damaging vendettas. Incidentally, some years ago I heard a courageous speech by the president of the Manchester Chamber of Commerce and Industry in the presence of the then Prime Minister, Mrs. Margaret Thatcher, who was the honoured guest on that occasion. The president, a man of no political party, pointed out that commerce and industry had managed to work well and co-operate a good deal better with Left-Wing dominated town halls than had ever been the case with central government. Let us hope that the wind of change is indeed blowing.

It is true that local government expenditure in real terms rose during the 1980s. I am sure that that point will be made later in the debate. But, as has already been said, the autonomy of local government has been steadily whittled away. In that respect I would point, as an example, to the urban development corporations. Good and exciting things are happening in the centres of some of our cities; yet there has been a tendency to by-pass local government, the co-operation of which is needed.

The biggest disgrace of recent years has been the poor investment in housing with the reduction in central government subsidy—the life-blood for local councils in this vital field—cut to a fraction of what it was in the 1970s. I am glad that the noble Lord, Lord Ross, was especially strong in his views on education. His remarks have perhaps saved me from talking at great length on the matter. I believe that the potentially gravest damage to the structure of education in this country is the policy of grant-maintained schools. Encouragement is increasingly being given to more and more schools to opt out. What is expected from this policy? How is it possible for local education authorities to plan effectively for school places when schools are being encouraged to opt out in that way? Schemes for reorganisation have already been shelved; but surplus places have not been removed and that is wasteful and expensive. Surely part of the object of the Government's declared policy is to bring a rationality of expenditure into our education services.

How can the LEAs plan when the Secretary of State announces that he wants many more schools to vote to opt out of local authority control? Moreover, they are being bribed—and I use that word advisedly—to do so. I can fully understand schools threatened with closure choosing this option. The first secondary school in the country to opt out was in my diocese, and it was threatened with closure. One can appreciate the reasons for taking that option. But when stronger schools which are under no threat of closure are given every inducement to opt out, what does that say to people who are trying to plan the education system in this country? In regard to capital allocations for schools, the average for opted-out schools is, as I understand it, £250,000 at present as opposed to the average of £17,000 for Manchester schools. Such schools are also receiving a top-up from LEA funds, at the expense of others. Is that a fair policy?

There should, of course, be no fundamentalism in the structures of local government. None of us need dig our toes in about any change in that respect. However, as the noble Lord, Lord Rippon, pointed out so effectively, we can plead that where changes are made they must be given time to settle down. I believe that that was one of the tragedies of the abolition of the metropolitan counties. The reform had not been given time to settle down. One of the objects of that reform—certainly in the Greater Manchester area —was that it brought together areas of deprivation along with more affluent areas, especially on the Cheshire plain. That was one way of helping to reallocate resources which is now no longer available. In any review in the future, I hope that that very important social aspect will be given prime consideration.

I shall not say a great deal about the issues concerning the financing of local government. I listened with great interest to what has been said and especially to the words of the noble Lord, Lord Rippon. He said that expenditure determined nationally should be paid for nationally. He drew a very important distinction between grants and administration. I believe that that should always be borne in mind. In my view, the areas of responsibility for which local government is now accountable should remain and should not be transferred to central government by way of a process of centralisation which has been taking place.

Perhaps I may quote from a very interesting book which I found in the Library of your Lordships' House. It is entitled Recent Trends in Central-Local Government Relations, from the Policy Studies Institute for the Joseph Rowntree Foundation and written by Peter John. After examining what has happened in relations between central and local government in recent years, he said: Increasing the role of the consumer"— for example, decentralising schools— may increase the role of the professional … decentralising powers to schools may increase the influence of teachers, particularly head teachers, rather than parents. On balance there has been an overall trend towards centralisation, particularly in some services such as education. It is not evident that the reforms will extend local choice, although local authorities will adapt to their new roles. The government's attempts to smooth over relationships have been short term only and have been superseded by new controversies, particularly over the community charge". If the noble Lord, Lord Boyd-Carpenter, who is the next speaker, seeks to defend the community charge or poll tax, I hope that he will remember that that charge has been condemned by every major Church body in this country because of its inequity.

3.58 p.m.

Lord Boyd-Carpenter

My Lords, the last remark of the right reverend Prelate is perhaps a trifle double-edged. I say that because, in financial and economic matters, condemnation by Church bodies may well seem to impartial opinion to be a very considerable endorsement of the policies. Although the right reverend Prelate and his colleagues speak with unquestioned authority on theological matters, I hope that he will accept that many of us do not feel that that authority extends to financial and economic policy. The fact that bodies which in this respect are wholly amateur have condemned a policy would not, I think, suggest to many people that there is necessarily anything very much the matter with it.

We are all indebted to my noble friend Lord Rippon for introducing the debate. As he did so, I had an agreeable recollection of him, aged 26 or 27, as his worship the Mayor of Surbiton accompanied by a charming mayoress aged 22 or 23. My noble friend has experience of local government going back much further than his apparent youthfulness of appearance would indicate to your Lordships. My noble friend's extremely interesting and stimulating speech was perhaps, to a considerable extent, due to that experience. Whether or not one agrees with what he said, one realises that he knows what he is talking about when he talks about local authority matters and that that knowledge is based on great experience.

A debate on the structure and finance of local government falls into two parts. One part is easy and concerns pointing out what is wrong with it. The other part is extremely difficult and concerns suggesting sensible changes. In that sense, we divide the debate into two parts.

There are many serious defects in the current structure. When it is suggested that all those defects are apparently due to the community charge, I am bound to say that I must disagree with those who make that suggestion. After all, the essence of the community charge, and the principle behind it, is that if one has an electorate voting on public expenditure it is a somewhat unstable situation if the majority of that electorate is not financially involved in contributing to that expenditure and happily knows that the whole of that additional expenditure for which it is voting will fall on a minority only. I cannot believe that that makes good sense or good economic sense. It is because the community charge was an attempt to redress that balance: to bring together, at least to a certain extent, financial responsibility with responsibility for the determination of the policies of local authorities, that I have always believed that that approach was the right one. Of course it has run into difficulties as has every previous attempt to reform local government. That is one of the subjects that your Lordships are discussing, and it may well be that there are variations to the original proposals which could make an improvement.

I have always believed that it was a mistake to introduce the community charge so late in a Parliament. If your Lordships looked at what happened in Scotland where it was introduced a year earlier and at the comparative ease with which it went into the Scottish system—

Noble Lords

Oh!

Lord Boyd-Carpenter

My Lords, it is no use noble Lords saying, "Oh". Until there was a fuss in England, the practical, canny Scots accepted it and were working it efficiently. It was because the English scheme, for some reason which I have never understood, was introduced so late in the Parliament that a good many of the problems arose. There is no reason to be panicked by that. Adjustments will undoubtedly have to be made to the community charge and to the whole structure of local government, but to accept, as one or two noble Lords appear to have done, that there is something inherently wrong in principle with the community charge is not a view that I share.

I should like to touch upon the whole subject of the structure of local government which, whatever system one has —whether it is the community charge or otherwise—must be paid for by ratepayer and taxpayer. Recent experience is full of warnings of the danger; of changing. Changes made over the years have almost always been wrong. Let us take the new counties. Reference was made by my noble friend Lord Rippon to the county of Avon which has never been popular. Your Lordships may have heard the delightful observation of that great man the late Duke of Beaufort who said that it was rather sad to have to end his days in a four-letter county.

Humberside has equally been a disaster. Most of your Lordships who follow politics will be aware of how Humberside happened; it happened because a bridge had to be paid for; and a bridge had to be paid for because there was a by-election in the days of the Labour Government which it was thought might be helpfully affected by the building of a bridge. At any rate the county is a disaster. I hope that it will be dismembered. There are other authorities which have gained no acceptance. Your Lordships will have to consider whether a great many of the recent changes are changes which should be continued.

I should like to refer to the problem which has not yet been mentioned—it is a serious one in our modern local government—and relates to the two-tier system. We had it in London—no one knows that better than the not le Lord, Lord McIntosh of Haringey—until the Greater London Council was abolished. It was abolished although it did a good job when my noble friend presided over it. When it fell into the hands of the Labour Party—although not into the hands of the noble Lord who won an election for it—it proved to be a disaster and an encumbrance. We now have a single-tier system in London which on the whole has proved highly beneficial. I hope that it is an example that will be followed.

There are heaps of similar complications. There is the extraordinary fact that the Surrey County Council —one of the richest local authorities—has its headquarters in the Royal Borough of Kingston-upon-Thames which is of course part of the Greater London area and is outside the county of Surrey. I do not know whether it was made to pay a business rate; I rather hope that it was. It is an astonishing system when a local authority can have its headquarters in the area of another authority.

On the two-tier system as a whole, I can best help your Lordships by recounting the situation where I have my home in Hampshire. My home in Hampshire is situated seven miles from Newbury, but because we are in Hampshire and Newbury is in Berkshire we cannot be allied with it. We are now placed under the Basingstoke and Deane Borough Council. What or where. Deane is, I have not yet discovered. There may be some of your Lordships who have knowledge of that recondite subject.

Basingstoke is 18 miles away from us and is not in the slightest degree interested in us except of course as a source of revenue. It is an absurd alliance. Basingstoke's ignorance of the facts of the area where I happen to live was brought home to me vividly a little time ago when it sent a senior official to warn me that I should take greater care of a water pump of considerable antiquity which needed to be treated as a scheduled building. However, the authority had failed to ascertain, before sending an official on an expensive visit, that the water pump was not on my land. It could perfectly easily have been found out by telephone. On the other hand, because of the authority's ignorance of the whole area it solemnly incurred this expense to no useful purpose.

In addition to Basingstoke, 18 miles in one direction, there looms the Hampshire County Council, 20 miles in the other. If one considers the demands either for rates in the past, or now the community charge, one sees that the greater part of the charge is imposed by Basingstoke on behalf of Hampshire. I cannot believe that that is a good system. I cannot believe that an authority which feels that the money it spends is rightly spent—as I am sure Hampshire believes, rightly or wrongly—should be free of the obligation to levy the charge for itself. But to be able simply to impose it on another local authority which has no responsibility over it at all and make that other local authority impose it on the private citizen seems to me a cumbrous and tiresome system.

Moreover, that means that covering the same area are two large bureaucracies; in my experience corresponding in a rather leisurely way with each other at public expense and duplicating to a considerable degree each other's functions. Therefore, having two separate authorities, both remote from the area with which they are supposed to be concerned, one dealing with the other at considerable length, seems to me an extravagant and inefficient system.

I give another example of what I have tried to explain about the mistake of recent changes. Before they came about there was a rural district council—the Kingsclere and Whitchurch Rural District Council. It was in the area, which it knew, and it operated on a modest but efficient and economic scale. It was a great pity that some years ago the Government of the day abolished it and put the area in the combined hands of Basingstoke and Winchester. I quote that example because it can be duplicated all over the country.

There is a large number of two-tier authorities. There may well be an argument for two tiers in certain cases and I should not dare to dogmatise and say that it could never be right. However, I suggest that in many cases it must be wrong. In the case of rural Hampshire, it certainly is wrong. I hope that when my noble friend replies she will indicate that the Government are examining the two-tier system. The Government will be encouraged by the improvement which they themselves have brought about in London. The freeing of the London boroughs from the overall interference and expense of the Greater London Council has been a great success. However, it is one which those of us who live in other areas would like to see repeated to our own benefit.

The structure of local government requires review. The noble Lord, Lord McIntosh of Haringey, referred with great vigour to public expenditure in this context and attacked the noble Lord, Lord Jenkins of Hillhead, on the subject. It is no part or duty of mine to defend the noble Lord, Lord Jenkins, with whom I often disagree, but it seemed to me that to attack him on the ground that he had wished for some restraint in public expenditure was rather odd; not least given that when the noble Lord, Lord Jenkins, was Chancellor of the Exchequer, public expenditure was high. To attack him on the ground that he apparently did not believe in high expenditure was wholly unjustified.

Whatever system of local government we have, there will be considerable expenditure. There will be the problem of maintaining the balance; and it is not as easy as the noble Lord opposite suggested to brush aside the consequences of high expenditure beyond a certain point. The exact point is, I agree, a matter of critical judgment, but high expenditure beyond a certain point diminishes enterprise, discourages business from entering an area and diminishes the whole incentive to work, earn and create wealth. Therefore, however good, however conscientious, however sincere and however full of nice ideas the right reverend Prelate the Bishop of Manchester thinks local government may be, it will be ineffective if it promotes rates of expenditure which bring economic and financial depression to the area.

That is no mere abstract fear, it is happening today in Liverpool. Once a great city of economic and financial success, a major port on the North Atlantic, Liverpool is now an area of high unemployment. Some of its districts have 20 per cent. unemployment, great poverty and great distress, largely because the city has been governed over the years by local authorities that have not only spent public money recklessly but have, in the process, discouraged business and enterprise from starting there. That is why so many people in the great city of Liverpool now suffer hardship which is all the more bitter because it is unnecessary.

We are therefore engaged in an extremely important subject. If we are to get local authority organisation in this country right, it will need a considerable effort over a long period of time. I share the feeling of my noble friend Lord Rippon that it would be silly to rush into changes. The matter needs full, detailed, and careful consideration and we must make sure that we get it right. In doing so, I am sure that we realise that we shall be performing a major service to our fellow countrymen, particularly to the citizens of the local authorities concerned. I shall be interested to hear from my noble friend the Minister what ideas the Government have on the subject. I very much hope that they will not include speedy action but will include widespread consultation, careful thought, and prolonged study.

4.17 p.m.

Lord Stoddart of Swindon

My Lords, if the noble Lord, Lord Boyd-Carpenter, believes that the poll tax in Scotland has settled down and works satisfactorily, he had better tell that to the Scots. He may receive a somewhat dusty answer. I too congratulate the noble Lord, Lord Rippon, on introducing the debate and on his speech. As I listened to him the old Salvation Army refrain kept going through my mind: "Come and join us, come and join us". I am sure that he will reflect on it.

Undoubtedly, the next time there is a reorganisation of local government, and as the noble Lord, Lord Boyd-Carpenter, said, there is a need to have a reorganisation that will stick, be long-lasting and not under severe strain after a mere 20 years. We should remember that the 1888 reorganisation lasted 84 years. The next reorganisation must last a lot longer than 20 years.

I believe that the present situation arises to a large extent because the then Secretary of State, Mr. Walker, did not accept the advice of the Royal Commission under Lord Redcliffe-Maud. In particular, I believe that it was an act of wilful vandalism to destroy the county boroughs which had contributed so much to the stability, liveliness and inventiveness of local government. It was also a mistake to reform the system of local government without at the same time reforming its finances to give it a firm and dynamic base of its own resources. That alone can give local government the democratic independence that it needs if it is properly to perform its functions and gain the support and respect of people.

I had the honour to serve on the sub-committee of the Association of Municipal Corporations that was concerned with the reorganisation of local government. That sub-committee prepared evidence for the Royal Commission. The proposals that were made by that sub-committee were apposite. In my view they still constitute the best blueprint for stable, effective and democratic local government, provided that a secure, independent and popularly acceptable system of finance can also be agreed.

The Association of Municipal Corporations was in favour of most-purpose authorities ranging in population size from 100,000 to 1 million. The association said that size should not define the powers of local government. I believe that is still true. Other noble Lords have mentioned that point. The association also proposed that there should be provincial councils responsible for strategic planning and wider services.

In my view local government needs to be of a size and form which meets the needs of the locality and the people who are to be administered. There is no optimum size for the administration of services. That applies even to education. In its submission to the Redcliffe-Maud Royal Commission, the Department of Education insisted that a population base of 500,000 people was necessary to provide a viable education service. That was a nonsense then and it remains a nonsense now. The Government no longer believe that to be the case. They have recently implemented proposals for the decentralised management of schools. Those proposals suggest that schools should manage themselves and be removed from the control of local authorities.

For 18 years I served as a member of the Reading Country Borough Council. I was the leader of that council for a significant period. My experience has been gained with an all-purpose authority. I found that experience rewarding and instructive. Reading was one of the smaller county boroughs with a population of 125,000 people. It was a nice, tightly-knit unit of people. Many people knew each other and the people of the area certainly knew who their councillors were. They knew where to go if they had any complaints about their services. The Reading County Borough Council ran a superb education service with a population base of 125,000. The council was a pioneer in many areas of education, including the teaching of deaf children. People who had deaf children used to move to Reading to take advantage of the pioneering work that the Reading education committee undertook in relation to the teaching of deaf children.

I am sorry that I, too, must refer to the noble Lord, Lord Jenkins of Hillhead. Reading County Borough Council ran its own efficient police force under the Watch Committee until the noble Lord—he was then the Home Secretary—amalgamated that police force with those of Oxford, Berkshire and Buckinghamshire into the Thames Valley Police Authority. There used to be virtually no crime in Reading. The reason was that policemen were on the beat rather than in Panda cars. The police came under the day-to-day supervision—I hope I may put it like that—of a chief constable who was responsible to the Watch Committee of the county borough. There is no substitute for the police feeling that they are part of the area they police. There is no substitute either for the people in an area knowing and trusting their policemen. I fear that we shall never go back to that position, but our system was a very good one and it certainly worked.

Reading County Borough Council administered housing, social services and a children's department and was therefore able to deal with family problems as a whole rather than in a piecemeal fashion. Although we were one of the smaller county boroughs, we were the second largest mortgage-lending council in Britain. We helped thousands of people to own their own homes.

The great beauty of an all-purpose authority was that people knew where to go for their services. They knew that the town hall was a short bus ride away. They knew where to go for redress because there was a single authority in charge. They also knew who to blame when things went wrong and who to kick out of office if that became necessary. Accordingly, people were more interested in the governance of their town. That was revealed in voting percentages at local elections. In Reading the percentage turnout was usually between 45 and 50 per cent. overall, whereas in Berkshire County Council the percentage turnout was between 18 and 24 per cent. Those figures speak for themselves. Reading County Borough Council was an example of government near the people, of the people and by the people with their consent and interest.

Let us contrast that with the position now. Decisions, instead of being taken as near as possible to the people affected, are taken remotely. I know to my cost that that is the case in Berkshire. Road schemes, for example, which affect people in Reading intimately and adversely are not decided by the people of Reading but by the people of Slough, Maidenhead and Newbury. Those people sit behind maps which are often out of date. How can they decide what kind of services Reading should be offered?

At present counties tend to be officer governed. The district councils, however, are more likely to be member governed. Certainly in Reading there was no question of who ran the council. Whichever party was in power, the members ran the council; and rightly so. It should be the members —the elected representatives —who run councils and not the officers.

Because of the system there are bad relations between district councils and county councils. That is certainly true in Reading at present. Certainly while I was the Member of Parliament for Swindon there was bitter resentment on the part of Swindon people and their councillors at what they saw as the unnecessary interference in and baleful influence on their affairs by the Wiltshire County Council. Swindon's resentment was compounded by the fact that the town provided 30 per cent. of the total local income of the county council. Government grants which Swindon believed should have been administered by Swindon were being disposed of by remote county councillors in the little country town of Trowbridge in Wiltshire where the county council headquarters are situated.

It is essential, if councillors are to be really accountable, that there should be annual elections. I hope that we all agree with that. It is a great discipline to have one-third or a quarter of a council standing down every year. Coupled with that increased accountability local authorities could, and should, be given a general competence power. Under those circumstances rate-capping could be eliminated.

I now turn to local government finance. Let me say immediately that I believe—and have believed for a long time—that rates were a perfectly respectable form of tax. There is nothing wrong with a property tax. A property tax is easy to collect and difficult to evade. The problems with the rates were that they were being required increasingly, as the noble Lord said, to pay for national services when grants, as a percentage of total expenditure, were reduced from about 60 per cent. in 1978 to 46 per cent. now. That caused the strains on the rating system.

There was also the failure to update the rateable value base, or increase it in line with inflation. That caused the relationship between different properties to get out of proportion, to the detriment of smaller properties and generally poorer ratepayers. There was no attempt—and has been no attempt—to find other forms of revenue to supplement rates. In my view a property tax remains a very respectable tax which should be reintroduced, but with a base that can be "dynamised" at frequent intervals. There is no need for frequent revaluations; the RPI can be used to update the base. However, a property tax needs to be supplemented by other forms of local authorities' own income. It is important that they have their own income which cannot be touched or undermined by central government.

I am not in favour of a local income tax—I think it would be administratively difficult—but there are other means of supplementing such income. For example, why should we not have a sales tax on non-essential goods? People say that that would be administratively difficult to collect, but they manage to do so in other countries. They have such a tax in the United States and Europe so why on earth should we not be able to administer one in this country? We ought to think about trying a similar tax. Why should not local authorities have a proportion of petrol revenues for the petrol sold in their areas? Those are measures that we ought to consider.

The reorganisation and financing of local government should not be a party-political matter. Again, I agree with the noble Lord, Lord Rippon. Local government and local democracy are far too important to be settled by a political dogfight. There is probably a need for a new Royal Commission whose report could be submitted to a Speaker's Conference—to a Speaker's Conference, not to the Government—to try to obtain all-party agreement on a system of local government and its financing that would be acceptable across the political spectrum, and therefore likely to be long-lasting once enacted.

4.33 p.m.

Lord Bellwin

My Lords, I welcome the chance to speak on a subject that has been close to my heart for the last quarter of a century. It is certainly something in which I was involved for all of that time, and longer. My only concern is that the subject is so vast that in the reasonable time that one should take, how can one say meaningful things right across the spectrum? However, I shall do my best to cover some of the matters. I too am grateful to my noble friend Lord Rippon for affording to us the opportunity.

Let me say right away that I wholeheartedly agreed with what the noble Lord, Lord Stoddart, said—and that is not something that I do too frequently—when he talked about unitary, all-purpose authorities, and when he reminded us of what pertained when he was in local government in the county boroughs. That absolutely duplicates my own experience, albeit in an authority several times the size, but the principal was the same, the effects were the same, and it worked very well. It even worked well when we had so many more functions than authorities have today including health, water, the police, and many others.

The closest that we have to that situation at the present time is of course the metropolitan districts which seem to work well enough so far as I can see. Of course some inevitably do better than others, but then there is nothing wrong with that. There is nothing that I should like to see happen in any reorganisation that would change them. Indeed, quite the contrary: I would add to them. It makes little sense to me to have authorities the size of Southampton, Bristol, Nottingham, and Leicester and about seven or eight other such authorities, some of them with hundreds of thousands of people, staying within the present shire county arena. Call them metropolitan or county borough authorities if you like, but it seems to me that they should certainly come out and have their own all-purpose function.

I agree with those who have already said that, as a general principle, the less tiers of authority the better. When we have more than one authority levying precepts and taxes of whatever kind upon the same local people, in whatever form, it certainly blurs accountability and responsibility. People just do not know to whom to go to complain, to question, to query. It is really less than we ought to be aiming for.

The metropolitan counties and the GLC were classic examples, as my noble friend Lord Boyd-Carpenter said, of duplication and overlapping. Although many of the people working in them—and I knew them well—were excellent and indeed very able officers, and there were many excellent elected members too, as a system it was just not necessary. That has surely been proven by the fact that since they have disappeared—and I speak better for the metropolitan areas than London, as you would expect me to do—they have not been missed. Many of the services—I could name one or two of them if pressed —are being carried out far better today than they were then, and that leaves aside the matter of cost.

In my view the only situation where more than one tier is justified—and here I would not agree with the noble Lord, Lord Stoddart—is where the size is too small. If the size in terms of population and resources is too small, then the fact is that they just cannot achieve what they ought, and want, to do. In another incarnation I used to sit and go through the budgets of many of the authorities which used to come to us from the shire districts and I was always slightly taken aback by how small were those budgets, and the problems that faced them because they were so small. For that reason I think that that is where the shire counties actually have a role, and I for one would retain the shire counties, taking out, as I have said, the large towns in the areas where it makes sense so to do. I believe that if we had a restructuring of this kind it might be well received by local government, and my goodness, would not that be a change?

I now turn to finance. The first matter that we always need to look at is the cost of financing the spending of local government on education. I understand why there are those who would like to see the cost of funding education removed to the centre. Comprising as it does some 70 per cent. of the spending of every authority which has it as a function, it is bound to impact dramatically upon the level of local taxation, whether it be community charge, rates or whatever. It is tempting, but I have to say to myself that, on balance, the downside in doing that is too great. We do not know what effect it would have upon central taxation and the costs do not go away. Somebody has to pay, in any case, and we do not know what that would mean.

Even worse, it would mean Whitehall having to be involved in the business of running scores of local education services with all the local decisions that it would then have to take. I have to say that the mind boggles at the prospect. Clearly, Whitehall is not in a position to do that, even if it were desirable.

Another alternative which my noble friend Lord Rippon touched upon was teachers' pay. To take that out and give it back to the centre would impact greatly upon the problem. However, although the financial effect would be significant, such a move would eliminate local discretion to a far greater extent than I wish to see.

A possible solution which I hope my noble friend on the Front Bench may consider seriously—it is not original but I have long thought that it might be of value—would be to take, say, half of teachers' pay back to central funding. That would make a large enough impact to be meaningful. I am told that in my own city of Leeds it would today take £100 off the community charge. That is a significant amount. So it would achieve a major objective while at the same time retaining to local government the discretion and the decision-taking which it ought to retain. I hope that my noble friend may give consideration to that.

Those who pour scorn upon the community charge forget all too easily that, although, as the noble Lord, Lord Stoddart, said, there was much that was effective in the rating system, certainly from the collection point of view, there were inequities and unfairnesses. Now we do not even think about that. But your Lordships know the classical inequities, such as the lady on her own paying the same rates as several earners living in the house next door, which could not possibly be fair. There was much that was not right. Nevertheless I am sure that that is now in the past and we shall not get it back.

The two basic problems of the community charge have been the ability to pay and the difficulty of collection. They are the main issues and I do not want in any way to belittle them. They are very important indeed: and, as events have proved, they are critical points. If we are looking at ways in which things might have been done, if we had stuck to the original intention of phasing-in the community charge over five years, it might have been far more acceptable than it has proved to be in the event. But that is now history.

Now the search is on for something else. Nothing that I have heard from any source has been better. Local income tax leaves much to be desired. I studied and thought long about it when it was put forward as Layfield's preferred option. But it goes too far the other way and I am very nervous indeed of the discretion which it leaves to many authorities who —and I have to say it, reluctantly—punish many of the people who come within their orbit. If noble Lords think that that is an extreme way of putting it, I shall talk to anyone afterwards and can refer to a number of authorities where you would all hate to live if they had the option of deciding what your local income tax should be, as well as everything else. So I do not like that alternative for that reason, and also it presents other problems.

The sales tax would not work in this country. In, I think, 1983 there was a Green Paper produced by the Government, when we put forward 15 alternatives to the rates. I remember debating it with your Lordships from the Dispatch Box. We went through the 15 alternatives and discarded every single one of them. Is it not interesting that one of them was the poll tax?

The sales tax is a system that works in the United States which is a great country in area. But can your Lordships imagine having a certain level of sales tax in Leeds, and then going nine miles down the road to Bradford which has a different sales tax? Furthermore, there are so many parts of the country where you cannot tell when you leave one town and enter another. Can your Lordships imagine going around Lancashire to Manchester, Burnley, Oldham, Rochdale, and so on, all with different sales taxes? I do not think it would work in practice, although I like very much the underlying theology behind it. We might well return to a system which encompasses a tax based upon property, in some form or other, and the ability-to-pay factor will now be high on the agenda of any change that comes about.

If I may just digress for a second, I am sorry in some ways that local government has lost the right to fix the business rate. But again I have to say, sadly, that there were authorities where the excesses were too great, and where local businesses were used as a milch cow, which simply would not do. At the end of the day, what always happens where you get excess is that there comes a level of revulsion beyond which people will not go and then somebody acts. That is the beauty of our whole system, especially when you compare it with others which we see around the world today.

To return to the domestic rate, I see no reason to denigrate an alternative which combines a property-based factor with individual per capita contributions. Ideally it should be built into one easy-to-understand formula, if that is possible. I cannot stand up here today and say, "Eureka, this is it!" There are people working on an alternative, but it is incumbent upon us to put forward any ideas. If there was an easy answer, we would have it by now. In the meantime, we continue to await the results and conclusions of the Government's deliberations, for which we are holding our breath.

May I comment briefly on one or two other observations that have been made? I am very much in favour of annual elections. Like the noble Lord, Lord Stoddart, for 14 years I worked under a system where we had them. It is a tremendous discipline. It is right, and I do not see why we should have longer than that in local government. Local people do not mind the system at all. I do not know of any elected member, in any of the metropolitan areas where they have it, who objects to it. Why should you be stuck with something for four years when circumstances change so much? It is a great discipline and I am strongly in favour of it.

The concept of elected paid mayors is a fascinating one. I spent some time looking into it in different towns in America, as well as in Germany and in France. But in the United States the culture is different. Here we are concerned with representation of the people at the lowest level. It is fine if councillors are so available to people that they all know them well, in wards with up to 15,000 people with three councillors. I do not think there should be more than that. All the people know who are their councillors; and if they do not, they make sure that they do not put them back next year, not in four years' time. That is what local government should be about. With an elected paid mayor and a small council one cannot have that system.

I visited Los Angeles and attended a council meeting there. That city has a population between 9 million and 11 million. There are 13 members on the city council—13 councillors for a population of millions. There is a paid mayor, and the system works well. It is a different system; and, frankly, the culture is different. I agree that we should look more fully into such a possibility—I think that there is merit in looking at it—but the downside that I have mentioned should also be taken into account.

When one gets older, all the policemen seem to look so young. When one looks at the council members, one tends to think that they are never as good as they were in one's own time. However, it is not unfair to say that there is much in the fact that many people who have a great contribution to make do not now stand for election to local government. Certainly there are fewer business people now than there have ever been. I know of no local authority—Labour or otherwise —who believe that that is a good thing. Such people have great expertise to bring to the job, and sadly they do not come. I could take much more time than is available today to speak about these matters and that point is worthy of genuine consideration when the Government examine many other issues of that sort.

Finally, I should like to say a quick word about PR. In my experience PR does not work. The nearest experience that I had of it was that we tried it for two successive years on the council in Leeds. In one year we were in minority control and the following year we were in minority opposition. I am sure all the Labour members would agree that those were the hardest two years of all our time on the council. We could not make decisions or get on with making things happen. It was just a headache. I understand the pluses that those who advocate PR put forward. I am not without sympathy. Things are not black and white. But in practice my experience is that it does not work and certainly not in local government.

Old habits die hard. I shall not do it, but I was horribly tempted when listening to the noble Lords who have spoken to make a list of all the points that they made and comment on them. A price that has to be paid is that I cannot do that any more and I cannot go ahead with it. I am sure that my noble friend on the Front Bench will do it far better than I can.

Nevertheless, I end by saying that I agree with other noble Lords who have said that the time has now come for a review. The noble Lord, Lord Stoddart, whom I have quoted at length in what I have said, said that 20 years was not long enough. But the past 20 years have seen change at a rapid pace, far beyond what has taken place in the previous 20 to 40 or even 50 years. The world has moved on. The time is now right to have some action—not that that should put off the Government from doing what has to be done to make things better now. While that is going on, at the same time a major review could well be undertaken to the advantage of everybody concerned.

4.53 p.m.

Lord Armstrong of Ilminster

My Lords, I have to apologise in advance for the fact that I shall have to leave the debate for a short time a little later in order to keep an engagement which I have not been able to defer. I am very glad that the noble Lord, Lord Rippon, has given the House an opportunity to discuss this important subject. I cannot bring to it the depth of knowledge and experience of local government that he and so many of your Lordships possess. But during my time at the Treasury, the Home Office and the Cabinet Office, I had a number of dealings with local government and was present at a good many meetings at which the problems of local government and its relationship with central government were discussed. Of course I was neither a little Liberal nor a little Conservative—nor, for that matter, a little Labourite. However, I can assure your Lordships that I am an intellectual chap and during those meetings I sometimes thought of things that would astonish noble Lords.

When I first became concerned with the relationship between central and local government, which is now some 40 years ago, there was no doubt that much was not as good as it might be. But things worked more or less. I think that one of the reasons for that was that although there were disputes and disagreements, they were carried on within a general acceptance of the underlying principles and framework of the relationship between central and local government. That meant that the two structures—central and local government—broadly speaking, would be able to work together with a reasonable degree of mutual trust and confidence. Latterly, during the past 15 years or so, we seem to have lost that mutual trust and confidence and the relationship has become much more adversarial and even confrontational. I do not believe that anybody, least of all the electors, taxpayers and community charge payers, gain from that.

It seems to me that one of the principal reasons for that situation is that we have not been able to reconcile the principle of allowing the greatest possible degree of autonomy for local government, to which almost all of us a re committed in general terms, with the need felt by successive governments of both political parties, particularly in recent years, to constrain the level of expenditure in local government for the purposes of macro-economic and financial management. At the same time we have seen the emergence of groups in local government, sometimes in control of councils, which have sought deliberately to flout those constraints and, as it seems from Whitehall, to defy the decisions of Parliament.

During that period there have been a number of attempts to reform aspects of local government—to reform the functions, structure, organisation, standards of conduct, the accountability or finance. As the noble Lord, Lord Boyd-Carpenter, pointed out, it has not been difficult to identify weaknesses and make objections to the old arrangements. We do not seem to have been very successful in achieving durable improvement and reform.

There are two main reasons for that situation. The first is that every attempt at reform becomes a matter of strong party political controversy, so that all too often a coherent and logical proposal for change is compromised by adjustments introduced at least partly if not primarily for party political advantage or the avoidance of disadvantage. The result is not only a botched-up change but also a determination to reverse the imbalance of political advantage and disadvantage that has been created, with the risk of successive tinkerings as party fortunes shift in the Palace of Westminster.

The second reason is that we never seem to be able to look at the range of issues and problems as a whole. We reform the functions and—hey presto! —the structure is not right. We reform the structure and the system of finance no longer fits. We do not sufficiently try to find out how the requirements of control and accountability are to be reflected in the organisation and structure or in the system of finance. Is it any wonder that the ship of state of local government is creaking and leaking at so many points?

What conclusions should we draw? I suggest that there are two quite simple conclusions—at least they are simple to state. First, while I strongly agree with the noble Lord, Lord Rippon of Hexham, upon the need for a review, I think that he does not go far enough. I believe that, as other noble Lords said, the time has come to review the whole state of local government and the relationship between central and local government in this country in all its aspects and in a single comprehensive survey, so that not only every aspect comes under scrutiny but also the various ways in which each aspect interacts with the others are considered.

Secondly, I should like to echo the view expressed by the noble Lord, Lord Ross, that such a review should not be conducted exclusively by politicians at Westminster or by civil servants in Whitehall, even by a process of consultation with interested parties. It is not possible totally to exclude politics from the process, nor would noble Lords expect me to think that it was sensible to deny such a review the experience and knowledge that civil servants can bring to it. But it is desirable to detach the review so far as possible from the day to day thrust and parry of party politics and from the ordinary business of administration, whether in Whitehall or in council offices.

I recognise that it is not possible to leave in its present state the system by which local authorities raise local revenue. I await with no less interest than other noble Lords the Government's proposals for modifying or replacing the community charge system. But cannot we let that be the last of the piecemeal changes until a comprehensive review has been completed?

I suggest that any such review should be guided by the principle of subsidiarity—retaining the greatest possible degree of local control and local accountability for local services, including education. I was interested in the suggestion of the noble Lord, Lord Bellwin, that a half of teachers' pay be transferred to the national Exchequer. It is not an unreasonable suggestion given that the rates of pay of teachers in the state system are nationally determined.

My noble friend Lord Knights may have some views to offer on this, but I should not wish to see the creation of a national police force. I understand that some police functions may be best organised on a national or regional basis. However, I am not convinced that it still makes sense to have as many as 43 separate police forces in England and Wales.

That apart, I am inclined to the view that the county council strikes about the right balance between being large enough to be able to provide a full range of services with a proper degree of competence and being near enough to the ground to be seen to be locally accountable and responsive to local needs. However, that prejudges the outcome of the comprehensive review that I propose.

How should such a review be undertaken? Royal commissions have been out of favour of late. Nonetheless I share the view of the noble Lord, Lord Stoddart, that it is pre-eminently a subject to be entrusted to a royal commission with members chosen not so much in a representative capacity as for their qualifications to consider the subject and contribute to the process of review with dispassionate and non-partisan clear-sightedness and wisdom. Such a royal commission, with a well-chosen membership including suitable people from the world of politics, should be able to produce proposals, as the noble Lord suggested, which could provide a reasonable balance of interests which would persuade the political parties to accept them and to make them work.

Such a review will take time—some years, no doubt—if it is to be comprehensive, thorough and authoritative. I believe that the six months allowed by the Government for the current review of structure and funding is far too short if the job is to be done properly. However, I am sure that it is worth taking the longer time because such a review would have a reasonable chance of establishing a coherent and durable system of local government in all its aspects, and of re-fashioning a framework of relationships between central and local government which would command broad acceptance on both sides. It must surely be better to proceed in that way than to continue year after year to tinker with different aspects of the system, producing an increasingly incoherent tangle of arrangements which suit no one.

5.4 p.m.

Lord Beloff

My Lords, as I recollect, local government was the subject of my maiden speech in your Lordships' House. I have not reread what I said in my speech 10 years ago. I suspect that in the intervening 10 years not only has a great deal occurred but my ignorance at that time is now ignorance on a much higher plain thanks largely to the discussions in your Lordships' House to which we have again been directed by my noble friend Lord Rippon.

My impression over the years, having watched the changes and having listened to the debates, is that we all suffer from a series of unexplored myths about British government, central and local, and the relationship of the citizen to his government. The noble Lord, Lord Armstrong—to whom we have listened with proper attention—referred to the main myth in central government. He referred to the Goverment's wish to subordinate other considerations to their control of macro-economic matters. I do not believe it possible for any government to control the economy. Whether guided by the late Lord Keynes or the living Milton Friedman, makes no difference. One has only to follow what has happened to the economy under a series of governments to see that economic policy does not of itself justify the way in which Government approach other problems. That was illustrated by a point raised: that it was hard to see on what economic theory the limitation of local government expenditure on housebuilding as a result of its sales is justified.

However, the illusions with regard to local government are much greater and more widespread. Listening to speeches, and in particular reading the briefs that one receives from the Association of Local Authorities, in particular from the Association of Metropolitan Authorities (which I thought was the most extraordinary document to come my way for some time) one has the impression that every citizen in Britain is dying to make his impact on the functioning, responsibilities and activities of his local government. One has the impression that not merely does he wish to vote yearly, but would be passionately in favour of voting weekly.

In the end the illusion is that people understand the source of the finance which provides the services. People clearly want services. Their views on how those services should be provided ought to be taken seriously. However, there is an illusion—and this point relates to the debate about the community charge into which I have no intention of entering —that one can get away from paying for them. The noble Lord, Lord Boyd-Carpenter, was quite right. People understand less with a multi-tier system than with a single-tier system. One knows in the single-tier system who is raising and who is spending the money. Therefore, if I were considering the subject simply as a matter of financial realism, my instinct would be in favour of single-tier authorities.

However, I strongly suspect also—it is an even greater problem—that most people are unaware of the relationship of local government and central government finance. They are not appreciative of the fact that the proportion of grant to money raised locally varies but that the services are paid by themselves as taxpayers as well as being rate payers, community charge payers or whatever it may be. There is an equally widespread misunderstanding of the way in which the National Health Service is financed.

There is a good deal of questioning over aspects of local government. I agree with the noble Lord, Lord Armstrong, that there is a very strong case for a long, cool look at the subject. However, one has to accept that it will be a long time, if ever, before some rekindled enthusiasm exists for participation, whether at the lowest level by voting, or, as the noble Lord, Lord Bellwin, reminded us, with the more important participation as elected members of council. Whether or not the same applies to the recruitment of permanent officials upon whom local and central government rely I am not in a position to say. There would be general agreement, as indeed there must, that the quality of those providing the services and the resources available are the two key issues. All other issues are subordinate, including the question of areas and boundaries, although that excites understandable sentiment among some people.

My present worry is that while we are waiting for this perfect solution to our problems, we may be under the impulse of current problems, taking steps which damage the services themselves. In particular, I am worried about suggestions that we should deal with the education budget and its administration in terms of how to relieve the pressure on local taxation. If one were starting afresh there might be a reason to ask: why should we not have a national system of education like some of our competitors, or a regional system as in Germany? But we have not; we have an existing system which is local.

Therefore, one must ask: are there any good grounds for changing that by transferring part of the finance, and inevitably part of the responsibility, to central government? Although I can see the arithmetical arguments, merely to transfer half teachers' pay will contribute to the muddle in the public's mind. It will not know how the teachers are paid, who pays them or who is responsible for their employment and conditions of service. Such aspects cannot be divided.

As some noble Lords will know I am not an enthusiast for local education authorities. Being careful not to display any party bias, I shall take Nottinghamshire and East Sussex as being examples of authorities to which I should not entrust the running of schools if I had any way of stopping them. As the results clearly show, there are other authorities which on the whole do a perfectly good job. Nevertheless, at present it is difficult to argue for a major change. There is something to be said for the variety that might be introduced by grant-maintained schools, if in relatively small numbers. For the same reason, I am in favour of city technology colleges. However, if, say, half the schools in a local authority looked to Whitehall for their finance, direction and general services, while the other half looked to the local authority, the confusion would be great indeed.

It is a mistake to believe that you can go all the way in applying either market principles or parental choice to the educational system. As was pointed out by the noble Lord, Lord Ross, there are 28,000 schools. There must be a system of ensuring that they receive the finance and the services that they require. Unless one is prepared for a revolution one must accept such ameliorations as can be introduced—for instance, the nation al curriculum and perhaps a strengthening of the central inspectorate—to raise educational standards. That must be our general objective. Perhaps at the moment that is all that can be usefully done.

There are particular reasons for saying that now. Parliament has enacted the Education Reform Act and other measures dealing with education. However, we have not yet fully worked through even the implications of the national curriculum; the papers are only now emerging from the DES. Therefore, school teachers—in particular head teachers who are confronted for the first time with budget management—have an enormous amount of information to assimilate and an enormous degree of reorganisation in their schools if they are not to be overwhelmed with paper. That appears to be the fate of all institutions in modern democracies. I say that because this morning in another place I heard an eminent British soldier describing the impact on the morale and recruitment possibilities of the British army of officers' desks which are so tightly packed with questionnaires, documents and circulars that the officers have little time to be with their troops or to exercise them. We all risk that. The schools have experienced it and, as noble Lords will know, so have the universities.

Even if we could envisage a much better system, schools should be given at least five years to assimilate the changes that have taken place. As that might roughly coincide with the report of the Royal Commission (as I hope we may call it) of the noble Lord, Lord Armstrong, the timing will work out quite nicely. Perhaps by then we shall have a better idea about where the responsibility for education is to be placed. Other noble Lords may talk with greater knowledge about the police and other services. One must make as transparent as possible—to use the mode word —the system of government that we have and not imagine that what is obvious to us is obvious to every citizen in the land.

5.18 p.m.

Baroness David

My Lords, I felt some anxiety when I saw that I was to follow the noble Lord, Lord Beloff, because I thought that I should disagree with a great deal of what he said. In fact I find myself in considerable agreement. First, I too have always been an enthusiast of single-tier authorities and I was delighted to hear him say that education should remain local. I am glad that he cast doubts on the suggestion made by the noble Lord, Lord Bellwin, about transferring half of teachers' pay, slightly supported by the noble Lord, Lord Armstrong. That would further confuse people's minds. I do not entirely agree with the noble Lord's statement that local people do not know much about the local government of their area. People are remarkably interested and know a little more about it than he believes.

I, too, must apologise because I must be away from the Chamber for some time later this evening. I hope that that will not be during the winding-up speeches. However, I apologise to the Minister, who is absent, and also to the noble Lord, Lord Rippon, who is absent. Perhaps the noble Viscount, Lord Astor, will pass on my apologies.

I wish to speak on only one aspect of this wide, difficult and controversial subject. It was introduced by the noble Lord, Lord Rippon, in a remarkable speech with a great deal of which I totally agree. The one subject on which I wish to touch is what may be the financial and educational effects if all or part of education expenditure were to be transferred from local to central government. We know that an Early Day Motion has been tabled in another place signed by over 80 Conservative Members demanding that transfer as a means of reducing the poll tax. We know also that the progress of the teachers' pay legislation has been stopped. The Report stage of that Bill which was expected a fortnight ago has, at the moment, no date. Naturally we look upon that as sinister as we were told that the Government wanted that Bill out of this House by Easter. There is now no possibility of that happening. We regard that as significant and when the Minister replies, I hope that she will comment on that.

I am sure that we can all agree that, if that expenditure is removed from local government, it must be found from elsewhere, whether by income tax, increases in VAT, higher taxes on business or by de-indexing personal allowances. First, I shall assume that teachers' salaries are removed. I am taking the 1991–92 figures. Salaries are estimated to be £8.75 billion. On that assumption the increase in the basic rate of income tax would have to be 4.4p in the pound and the proportionate reduction in the poll tax would be £133. That assumes no passing on of the business rate to local authorities. The reduced poll tax figure if some reductions were passed on would be £262. If all school expenditure—£11.54 billion—were removed, there would be a 5.8p increase in the basic rate and a reduction in poll tax of £176 or £346, depending on what was done with the business rate. If all education expenditure were removed, the increase in basic rate would be 8.7p and the reduction in the poll tax would be £264 or £520, again according to what is done with the business rate.

That attractive decrease would carry with it two problems for the Government. First, they must continue to levy rates from businesses as before and that has not proved to be very popular. Secondly, having done that, they cannot keep any of the money for government purposes and, therefore, they must raise more income tax or whatever.

One interesting fact to come out of those figures is that if all education expenditure were to be taken out and the maximum reduction in poll tax of £520 achieved, that would imply a negative poll tax, as the Government's forecast for the average poll tax is £381. Whatever source the Government took to raise the education expenditure—whether increased taxation or borrowing—the extra burden on central government would be unavoidable. There would obviously be serious political implications for any government who proposed tax increases on the scale which I have mentioned, especially as they would provide no improvement in services and would have to be introduced for purely political reasons. I suggest that the figures which I have given call into question the political practicality of the proposal in the Early Day Motion.

I should like to take three examples which show the possible implications for individuals in different types of job. In each case I take the figure which represents the average salary for that group of workers. The figures are taken from the New Earnings Survey conducted in April 1990 or LACSAB. A single nurse earning a gross salary of £12,000 would be £134 worse off if teachers' pay were transferred and £263 per annum worse off if all education spending were removed. A single secondary school teacher earning £17,000 could lose £354 or £698 depending on the scale of transferred spending. A single company director earning £50,000 would lose between £1,806 and £3,569 per annum, again depending on the attitude taken towards the business rate.

I shall not pretend that there will be no gainers. However, the scale of increases for those in very different categories shows what a difficult problem Mr. Heseltine and the Government have on their hands. I cannot believe that supporters of the EDM had worked out all the implications and consequences of their proposal.

In case my figures are challenged, I should like to quote a Written Answer given by Mr. Norman Lamont to Sir Ian Gilmour on 23rd January of this year. Sir Ian had asked if the Chancellor would estimate, by how much the standard rate of personal income tax would need to be increased if (a) education and (b) education, fire and police were financed by income tax, assuming no change in the grant paid by central Government to the local authorities". The Answer was: Assuming no change were made in the level of revenue support grant and non-domestic rates paid by central Government to local authorities, the basic rate of income tax would need to increase by (a) 8½p and (b) 10p if these services were financed by income tax. However, if education, fire and law and order services were funded in line with these proposals, the extra central Government funding would more than exceed anticipated community charge income for 1991–92".—[Official Report, Commons, 23/1/91; col. 218.] Therefore, the figure quoted is 8.5p and my figure was 8.7p. There is not much difference.

I turn to the educational effects. If education expenditure were to be removed from local authorities, who would do the work? One assumes that it would be done by the DES. Is it capable of doing that and has it the staff qualified in the areas in which they would need to be qualified? One has no confidence that it has. Over the years I have tried to find out how many teachers are in the DES at the level of principal and above. The Government have refused to answer and one draws one's own conclusions from that.

What about the great expertise, experience and knowledge built up over the years in shire and county halls? LEAs have come in for a lot of stick in recent years. In my view, that is very often unjustified stick. In my time—and it is a long time—both as a councillor and education spokesman here, I have known a great many very competent, well-informed and caring officers with a wealth of local knowledge. How could that be provided centrally? What will happen to the diversity which is found in different LEAs, the ideas that are thrown up and the good practice which comes from an imaginative and enterprising officer and is then spread around?

It is critical to the long-term health of a plural society for systems to be devised which accommodate rather than suppress or confine diverse institutions. Local innovation and proper civic pride are symptomatic of the very real support enjoyed by local authorities. Planning, quality control and the provision of specialist services are strategic functions best suited to the county level of government. Transfer to central government would be totally inappropriate since schools are a very important part of local communities.

What about the democratic aspect? A councillor is elected, has responsibilities and is accountable to his or her electorate. How could staff at the DES fulfil that function? We have watched the gradual erosion of local government. Health, water and transport services have all been taken away and the remaining services subjected to greater central control; for example, housing, planning and education. The past decade has seen an increase in the pace of enforced change which amounts to a sustained attack on local democracy and on local government. Local government's power to express its view and protest against what is happening to it was limited by gagging Acts in 1986 and 1988. Authorities operate already within a battery of controls and standards set in a variety of ways by statute, central guidance, codes of practice, departmental directions and so on. Surely the internal checks on legality, quality and efficiency to which local government is subject through the ombudsman, the local auditor and the Audit Commission are sufficient to scrutinise standards of service and procedure.

In no other country in Europe has there been similar moves towards centralisation on the scale which this Government have brought about and which they threaten to continue to bring about. In Europe the tendency is to move down the path of greater decentralisation.

If education were removed from local government, that would have very serious implications for the quality of the service. I am glad that the noble Lord, Lord Armstrong, did not favour that. I shall mention a few of the areas that I believe would suffer greatly. There are pupils with special needs, and parents would have difficulties obtaining advice and proper assessments. Adult education courses, such as advanced literacy, may disappear. English as a second language could be lost entirely. As regards further education, funding could shift towards work-related training and away from courses for students with special needs, and non-vocational and minority interests. In regard to voluntary groups, youth and community organisations may lose the funding and the support of LEAs. Finally, as regards church schools—mentioned by the right reverend Prelate—their partnerships with the LEAs would disappear.

It was suggested, and I believe it to be true, that if LEAs were abolished it would soon be found essential to re-invent the wheel and create new bodies to take on the functions that the old bodies performed. Neither the DES nor remote bureaucratic and unaccountable regional offices of central government departments could cope and provide that service. I predict that if education were to be taken out of local control, that would be the end of local government.

We should not forget how many local councillors of all parties go on to serve in the House of Commons and indeed in your Lordships' House. They learn the skills of practical democracy in local government. It would be appalling to destroy what is a very important basis of local democracy.

5.31 p.m.

Lord Wade of Chorlton

My Lords, I obtained experience of local government as a county councillor in Cheshire in the early 1970s at a time of many changes, and then in another capacity I became involved in other local government throughout the north-west of England; namely, in Merseyside, Manchester and Lancashire. Therefore I have seen the good and the bad; Cheshire is part of the good side of local government. It has a great county structure and tradition. It works extremely well with the districts within it and is therefore a good representative of what the people want to be involved in. On the other hand, as my noble friend stated, Liverpool and Merseyside is at the other extreme. During the period when I was involved in the 1970s, it became an increasing disaster caused by the vacuum created by certain leaders leaving. The people who came in had no respect for the electorate—the people who voted for them—for those who paid the rates or for the future of the city.

One must therefore consider the wide scope that local government covers. Although I am a great supporter of the democratic process of local government, believing that it should be a local government in the sense that it represents the local wishes of the people, we must appreciate that within that system there will be wide-ranging views, depending upon the leadership that ebbs and flows within the local environment.

Within the past 10 years the Government have introduced a number of changes which have improved local government. They insisted on a tendering process which made local government think again about how to run its affairs more efficiently. That has brought it closer to industry. It recognises the need to develop close relationships with the businesses within its community, not merely as a source of revenue but as suppliers. Change has made councillors and managers of councils reconsider how to conduct their business more effectively. My local council in Cheshire, where I now operate, is very pleased with the system of local management of schools. It has brought a greater understanding of management techniques and allowed its resources in the shape of individuals to be used more effectively as administrators rather than day-to-day managers of the schools.

The Government got rid of the rates. I cannot understand why some noble Lords believe that to be a bad thing. The rates were abhorred by everybody in the 1970s and early 1980s. Everyone believed that the system was unfair, unrepresentative and caused extreme problems. I would say that the structure of the rates systems of Manchester and Liverpool specifically, allowed them to be dominated by the extreme left, which destroyed what they were supposed to support.

I accept that the way in which the community charge has been allocated creates what appears to be an unfairness in the system. I do not believe that it is unfair. Everybody who uses a service should pay for it. As the noble Lord, Lord Beloff, pointed out, it is the taxes levied on the majority of us on the basis of wealth that pay for most local government spending, not the money raised locally.

I suggest that one way of looking at the matter— because the principle that everybody is seen to make a contribution to his or her local costs is important—is that, if we are to review the system, we should perhaps have one based more upon self-assessment. I see no reason why we cannot compromise between a local income tax, on the one hand—I appreciate the problems that exist—and, on the other, an individual charge based upon a system of self-assessment. That system has been very successful in the United States. People state the amount of their income; a system of checking exists and people know that ultimately checks will be made. Within that checking system people say what their income will be and that fixes the amount of money they pay as a contribution to their local taxes.

We have already spoken of the relationship between counties and districts. I believe that the county system should stay and we should not opt for a purely unitary system, as some noble Lords have suggested. I appreciate that one of our motivations for wanting this system may depend upon whether or not the council does what we want it to do. We look at it in a personal way rather than with a view to the greater good.

We need to look at matters strategically, environmentally and economically over a wider area than can be coped with within a district. Although it is right and proper for district councils to represent closely what the people want, and, on the wider issues, to be able to explain the needs of their local community, at the same time many decisions would not be made in everybody's best interests if they were left to the local council. If we took that to the nth degree and retreated to the very small groups, nobody would do anything. Everybody would want to see the new development, the business, the factory, the growth and the road not in their small area but in somebody else's.

At some stage certain decisions need to be taken over a wider area for the benefit of the country and the development of the whole region. The present structure is one that needs to he left alone. However, I accept that in certain urban areas there may be an argument for the kind of system that exists in London, Manchester and Liverpool.

Mention of regional government has not been made in this debate but was made elsewhere. I believe that this country needs regional government like a hole in the head. We already have the confusion and problems mentioned by many noble Lords as being created by the present system. I cannot see how the imposition of a further level of government within the existing system will help anyone. It will create more costs and confusion, and the opportunity at the end of the day to take more from the person who must pay. I believe that there is a need for regional matters to be considered at some stage. There is a role to be played by a regional committee, group or forum made up of representatives from the county who can take a wider view of certain environmental and strategic matters and possibly, in a way, of our place in the world.

We have already seen changes in attitude of local government officers, officials and members due to the new systems that now exist. They take a more business-like and managerial approach. That will happen more and more. Local government will evolve very rapidly over the next 20 years as the demands of local communities change dramatically. Perhaps I may give one brief example. Industry will become more globally financed. It is inevitable that after 1992 and the removal of trade barriers we shall see the importance of inward investment from large global companies and supranational firms. The key to the growth of future employment and business will be the attraction of that investment, not by pitting Cheshire against Staffordshire, but Cheshire against Wurttemberg in Germany or Normandy in France. We have to have structures that can deal with matters on that scale. We have to have people involved who can see things on that scale.

I should greatly like to see a much closer relationship between local authorities, particularly at county level, and business, in order to deal with business matters. There is a much greater need for business to realise the importance of releasing executives of the right age to be involved in local government. We all know of the advantages. Governments have recently invited business people to take part in government and vice versa. That needs to be done much more effectively at local level so that businesses can understand the political pressures on people to make things happen. Similarly, those involved in local government need to understand the pressures on business so that the employment and investment needed can be provided to make a particular area grow. I should like the Government to consider that suggestion.

It does not matter how we finance such provision because, at the end of the day, it is the ordinary citizen who has to foot the bill, whether the money is raised through central government, local government or income tax. We can only make that money available if we run our business operations efficiently. We have to be productive and make profits available to put into those provisions. There is a great responsibility on local government to operate in exactly the same way with its money. When things get tight in local government, the reaction is to say that a school must be closed or an activity must be stopped, whereas in business, if there are difficulties, costs have to be cut. All the normal activities must be continued, but they have to be conducted much more efficiently by getting rid of staff or cutting back this or that. Everything must be done more effectively. That is the spirit that I should like to see carried forward in local government.

Many noble Lords have spoken about reviews. By and large, when we have had reviews and great and sudden changes in structures, we have caused more problems than we have found solutions. Most of what is good about local government has evolved rather than being imposed. I suggest that that is the way ahead. We should not have sudden major structural changes. As my noble friend Lord Beloff said, we are dealing with the ordinary people of this country, who want involvement in local affairs but who need to be taught to understand in order to carry out their functions. They need to understand the changing world and to help to manage the changes in their society and in their own lives. That is an important role for local government. It involves and should be helped along by a positive approach from government which makes no drastic changes to that policy.

5.43 p.m.

The Earl of Gainsborough

My Lords, the House will be grateful to the noble Lord, Lord Rippon, for instituting this debate on a very topical matter at the present time. We know that local government finance is under review. We understand that the review being undertaken by the Secretary of State for the Environment and other Ministers will be made known shortly. I should also declare an interest in the matter as the noble Lord, Lord Rippon, has done. He is now the distinguished president of the Association of District Councils. When that body came into being after reorganisation, it was my privilege to be its first president. I am still interested and should therefore declare my interest for that reason.

We have heard a great deal about the community charge. Speaking from these Benches it is not for me to discuss its political implications. We have seen demonstrations up and down the country and all kinds of activities. In our magistrates' court we sit week after week adjudicating on matters which magistrates should never be called on to adjudicate; namely, whether people should or should not pay the community charge. We do not have information available on each case. Nevertheless we have the community charge. Until something else comes along which will be better, I agree with the noble Lord, Lord Boyd-Carpenter, that it is perfectly right that everyone in the community of adult age should contribute to the cost of services. How that is to be done will have to wait until the review is available. Until now the community charge has shown up a number of serious problems and anomalies which are particularly difficult for people who are less able to pay than others.

Today local government is very different from what it was when I first became a councillor in 1948. I was a member of a small RDC in Rutland. The population was a bout 9,000 which increased as the post-war period developed. We had a staff of only five people in the office. The organisation was very small and very close to the people. I am not suggesting that that can be done today. Rutland is now a district council, and a part of Leicestershire. That caused a good deal of fuss when it happened. We now have a population of 37,000 and about 20 times as many people in the office as we had then, possibly more. Local government is now big business with a substantial budget although Rutland RDC is one of the smaller local authorities.

It is generally recognised that there will be further reorganisation. That should be taken slowly. It probably will be anyway. Previous reorganisations took a long time to come into being. As a noble Lord on this side of the House mentioned earlier, it was about 60 years before there was any kind of reorganisation after the Act of 1888. The Association of District Councils has put forward suggestions about the possible reorganisation of local government in, its consultation paper Closer to the People. That paper met with a good deal of interest. It has put forward some suggestions, though I do not agree with some of them. However, I agree with the general concept that local government should be closer to the people. The only way for that to be achieved is to have unitary authority (I do not like the description much) where the people in the area can find out who is their councillor, what his duties are, where the office is, how action can be taken and how their own contribution, both financial and in the work that they may do for the community, is best done.

As noble Lords know, some of us have been in this House for quite a few years. I believe that a royal commission was constituted by Mr. Crosland when he was Secretary of State for the Environment. I am not sure whether it was called that then, but the royal commission was set up in that period. Lord Redcliffe-Maud was the chairman and Mr. Derek Senior was also a member of that commission. He produced a minority report of one. He proposed city regions and a number of large unitary authorities based on a selection of the largest cities throughout the country.

That proposal was not acted on because not many people liked it, though it had some measure of support in the Labour Party at that time. Nonetheless, it is not an idea that has ever completely disappeared. I believe that it may be partly under review again in the suggestion which the ADC is putting forward for multi-purpose authorities. It is not suggesting by any means that there should be city regions. It suggests that there could be all-purpose authorities to take the place of the shire counties. One-third or more of the population is now served by multi-purpose or unitary authorities following the abolition of the metropolitan counties and the GLC. The larger, more densely populated areas are now administered by one-purpose authorities. I come from East Midlands. In that area there were several county boroughs; Nottingham and Leicester were mentioned. They felt very aggrieved when they lost their borough status. Perhaps those areas could form viable districts with the rural periphery around them. They could well make very good all-purpose authorities. The more rural areas would probably have to be amalgamated into councils with sufficient resources to enable them to operate as multi-purpose units. This is where the difficulties begin.

We have heard about those parts of the country, including Hampshire—which I know quite well, and which is a very beautiful and large county—and other areas where there are differences of opinion on how these authorities might be set up to make the more rural areas more self-governing so that they are not under the influence of large industrial areas. If the change takes place it will have to be done by some form of commission. The noble Lord, Lord Armstrong, thought that another royal commission might be the best way. If we do that it will take many years before anything happens. Some Members of your Lordships' House may not be around to see it, perhaps me included. If it takes as long as the previous one, I shall not be. Nevertheless, the issue will have to be looked at nationally. It would be nice if the guidelines could be agreed by the main political parties. That is probably too much to hope for.

As politics go, the parties put forward schemes which give them the greatest advantage. Therefore it is to be expected that politics will come into the picture. Different areas will require different solutions. It may be that a scheme can be thought up to give some flexibility to the way the authorities are set up. There are many stories about the late Duke of Beaufort and his objections to being in Avon. But we must get rid of some of these prejudices about change. Parochialism is rife in local government. This must be changed. We must look at it from the national point of view. We must decide how we can provide a service to give the best possible benefit to the largest number of people in the area in question.

The services would have to be organised in a viable way. That is where the difficulty lies. I am not qualified to put forward suggestions as to how that could be done. It would have to be done by experts and by people who had access to data and so on. Basically, each all-purpose authority would, if the authority were on the smaller rather than the larger side (which is what most people would like) have representatives on the boards of regional bodies which administer, for instance, the police and the fire authority. Those authorities could correspond with the area health authorities as they exist at the present time. We could not go back to the days of places such as Rutland and some of the other small councils having their own police forces. We had our own police force once. There was a chief constable, an inspector, two sergeants and 18 constables. That went out of the way and we shall never see it again. We cannot put back the clock. We must look forward to what can be done as we go into the next century.

I am sure that most people would prefer to see education remain a local function if that is possible. Such considerations will come into any review about local government. Perhaps what I have said is a little nebulous. The problems need to be given more thought and consideration, but none is insuperable. It should be possible to find a way of organising local government so that it can take advantage of technology, modern management methods and other facilities which were not available to it when I first became a councillor many years ago.

If that can be done, local government can go forward into the next century with a better prospect of providing services at reasonable cost and with some assurance, it is to be hoped, that it will not then be subject to further reorganisation for quite a long time. What we need in local government is a settled period rather than constant changes and political upheavals when the national government changes from one party to another.

5.56 p.m.

Baroness Platt of Writtle

My Lords, after 25 years in local government as a district and county councillor, I warmly welcome this debate and I thank my noble friend Lord Rippon for initiating it. My husband served for nearly the same length of time as a parish councillor. I believe deeply in the importance of all three levels, which in my view form a bastion of democracy in our country.

There are few people in a village who will not know the name of one parish councillor whom they can contact about their particular problem in local government. The powers of parish councillors are strictly local: sports fields, burial grounds, village greens and allotments; areas which are of importance to the village but not outside. However, they have the incalculable advantage, shared by school governors, of having their ear close to the ground and having a good estimate of the strength of local opinion: literally parish pump politics. The other tiers of local government need to listen to them attentively. Parish councillors need their own small source of finance so that they can encourage worthwhile local voluntary effort which seeks practically to fulfil village needs, often at very low cost.

District councils have far more powers, cover a wider area and command greater levels of financial resources. District council planning powers have increased enormously over the past decade. I am in favour of carrying out local government duties at the lowest practical level, so that local opinion is genuinely taken into account—perhaps the principle of subsidiarity.

In planning one has to be careful from several points of view. Planning permission for a particular use considerably enhances the value of land. One must guard against favour towards friends or, at the worst, outright corruption. The price of liberty is eternal vigilance. From that point of view, the continued division of powers—leaving the local structure plan to the county council, at one remove from local pressure, and also the power to call in an application where that plan may be contravened—is an important democratic check. Otherwise, I am in favour of district council planning powers. Housing and public health are considerable district council responsibilities, best carried out at that level.

The provision of leisure facilities, often centred on a medium-sized local town with a radial transport system, involves other important district council powers. This can provide a focal point for local villages which would be too small to provide their own facilities. I have no experience of service in metropolitan authorities, and so from my point of view they are best left alone. The rest of our countryside, however, is based on well-established market towns, now considerably enlarged with new industrial estates providing local employment through small and medium-sized firms.

People either live on new estates surrounding the towns, or similarly in enlarged villages nearby. District councils based on those towns therefore make sense in democratic terms. People will travel in daily or weekly to work, to shop or to catch a train to the nearest big city. They will know where the district council offices are, and their parish councillors, if they live in the villages, will be insisting on their viewpoint being heard at district council level, if responsible people are involved.

At the level at which they operate—with populations of 100,000 or more—they will be able to pay and attract well qualified and responsible staff with whom councillors can work efficiently. Councillors can make policy decisions but only based on good quality committee papers prepared by professional officers of judgment and experience. High quality people are the most important resource for good local government. I agree entirely with my noble friend Lord Beloff on that point.

So far, so good. I have not heard that either of the tiers is under threat. However, sadly, I have heard ill-justified threats being made against the existence of county councils. County councils have been working well for more than 100 years. Many of your Lordships, like me, attended at Westminster Abbey about a year ago a most impressive thanksgiving service for their work over that long period. Once again, from long experience, most people know in which county they live, except possibly those in Humberside or Avon, and the location of County Hall. They would have no such identification with the so-called region.

County councils serve wide enough areas to be responsible for structure plans, road systems, police, fire brigades, waste disposal, the caring services, libraries and—their largest responsibility—schools and further education. Co-ordinating those responsibilities gives them a strong emphasis on the protection of the environment as a whole which continually rises, rightly, on the public agenda, the conservation of historic towns and villages and their buildings, village greens, woodland and farmland, pollution-free coastlines, rivers and streams. All will be affected by the powers at all levels of local government and will need co-ordination.

However, joint committees do not work well—they are nobody's final responsibility—whereas a strong county council can see to it that co-ordinating action is taken. They are large enough to stand up to central government on behalf of the local point of view where that is necessary and to co-operate with it on most occasions; and they are able to bring together perhaps several district councils on a coastal matter, several others on the planning of a local airport or out of town hypermarket or parkway type railway station.

The single market town district is not big enough to carry out that kind of function, and putting several together in a so-called unitary authority is not unitary at all. All the historic roads and lines of communication work against it. Many of us were involved in the last round of local government reorganisation and tried to the best of our ability to make it work well, which by and large it does. There may be need for review and some amendment of powers and boundaries to keep in step with modern developments, but in my view there is no need for root and branch change. I agree with my noble friend Lord Wade of Chorlton on that point. Upheaval of that kind results in the proliferation of the worst kind of empire building, it costs extra money and results in loss of morale and general diversion of councillors' and officers' minds from their prime duty of providing necessary services for their local people, efficiently, with due care for their needs, and providing value for money.

There have been many changes recently. What we need now, as many other noble Lords have said, is a period of consolidation to make them work well. Counties accept that far more responsibility is now being given to governors of schools and colleges, and are making the necessary reductions in staff numbers and expenditure to match that. However, there is now a national curriculum, the GCSE is now in action, and in the next few years there will probably be changes in the sixth form curricula to broaden the experience of 16 to 18-year olds. Counties are committed to good education, and are experienced in its provision. In a recently published list showing how areas compare in GCSE grades A to C achievement, only two counties featured among the bottom 30 authorities. Certainly, in Essex, we promoted parental choice of school, co-operation between schools, colleges and industry and good vocational education, long before they were laid down by government.

Local governors, with their understanding of parental wishes, are important; but they need professional expertise. A well-run county authority will have experienced senior officers and an inspectorate to provide the authoritative advice on how to raise standards of education on which they need to rely, and also the vital in-service training of teachers so that they can keep up with the fast accelerating progress in technology and changes in the curriculum. Volunteers, whether as councillors or governors, need above all to be accountable to the people that they serve. They need to be people of quality who have that natural instinct of public service. They are difficult to find, and they must feel that their calling is an honourable one. They need generous allowances for expenses, but they do not need payment. Mediocre payment will attract mediocre people. In this House noble Lords are prepared to serve voluntarily in the knowledge that their duty is being done, once their expenses are covered. The tradition for voluntary service is part of the genius of our country, but volunteers need to feel appreciated. A period in which the Government positively enhance the status of local government will recruit more councillors of varied experience, judgment and ability.

The CBI has expressed its wish to be more involved in local government. It needs willingly to release those in their fifties who perhaps have reached a plateau in promotion but who nevertheless have considerable commercial and industrial expertise to offer to local government. In this respect, I agree again with my noble friend Lord Wade. There should be more encouragement of women with experience in voluntary caring work to stand for local government. Counties are large enough to pay reasonable salaries to attract well qualified and experienced professional people. The main secret of local government lies in the amicable and efficient interaction between the professionals and the volunteer councillors and governors.

Perhaps I may highlight just one example among many in Essex. We councillors initiated an energy-saving campaign in conjunction with the Treasurer, the County Architect, the Chief Education Officer and others. It resulted in net savings of £26 million over a decade—no mean feat—which enabled that money to be spent on books, teachers and other provision in the local area. County councils have a longstanding reputation for economy and spending in line with government standard spending assessments. In local government all those concerned must always be acutely aware that they are spending other people's money, not their own. They must be constantly accountable to their electorate for the essential nature of that spending. I am therefore behind the principle of the community charge that everyone should be responsible for paying something towards the local government services that they receive.

For a number of years now well over 95 per cent. of households have afforded a television set. I should like to see the community charge set at about the level of a television licence. In that way people will take more interest in the way that their money is spent, and one hopes vote accordingly. Low local government polls are to no one's advantage, and healthy democracy depends on the active participation of the electorate.

The principal criticism of the rating system, as other noble Lords have mentioned, was of the elderly widow on her own in one house, paying the same as the family of perhaps five wage earners in the adjoining exactly similar house. A combination of rates plus an individually based community charge element would be an attractive proposition. The community charge element could finance the district council and the rates the counties, so that the ill-understood precept system could be abolished. Otherwise they could be combined to finance the whole of local government locally. A scheme based on these lines would enhance councillors' accountability to their electorate, which is of fundamental importance, while at the same time allowing for adjustment through ability to pay, because size and quality of property roughly depends on household income.

The Government have a difficult task in considering solutions to the problems raised by this debate. No system will be perfect; but whatever is chosen needs to be capable of working well into the 21st century without further upheaval. It is well to remember that many countries latterly realising the importance of local democracy envy our structure. We must not sacrifice long-term experience to short-term expediency.

Properly financed democratically elected local government is a vital part of our national life, and any changes proposed as a result of this review need to be well thought out, practical, easily understood and capable of attracting wide support so as to recruit high quality officers and members in the future.

6.10 p.m.

Viscount Falmouth

My Lords, I should like to thank my noble friend for introducing the debate, which has a very wide interest in the country. It is only right that such a debate should take place in this Chamber as there are probably more people with experience of local government in this place than anywhere else in the country. It is seldom that I speak in your Lordships' House, but I believe that it is perhaps my duty to do so today on behalf of our ancient counties and their county councils. I am in fact Lord Lieutenant of my own county and that is the reason for my speaking today.

From the proposed review of local government and the statement that "nothing is ruled out and nothing is ruled in", it would appear that local government has again been thrown into the melting pot as it was in 1974, when so much time, energy and money was spent, and with all the consequent disruption of services to the ratepayers, as they were called in those days.

I speak as a Cornishman living in Cornwall where we have a very good county council and a population of 460,000, which is not large compared to that of large cities. Cornwall is almost an island with its long coast and very long and perhaps stormy history. We are all intensely proud of being Cornish. We are very independent when we can be but, for all that, we have a record of loyalty to Crown and Parliament which is second to none. Now, as a result of this review, we fear that county councils may be abolished in favour of unitary or all-purpose district councils—I emphasis the word "district".

In order to show the importance of county councils, perhaps I may briefly illustrate to noble Lords some of the principles which I have gleaned from my own county's example. In Cornwall we have our problems. We have unemployment which is above the national average; our main industrial employer is announcing job losses; we are perhaps over-reliant on the tourist trade; there are uncertainties in the minds of fishermen; there is a decline in our largest industry, agriculture; and we have just lost our two mines which I believe closed yesterday evening. Those problems are best attacked by the whole county acting through the county council which can provide roads, schools and the allocation of land, and so on, rather than through the very limited and constrictive channels of a district council.

We have six of those district councils in Cornwall, each with an average of about 77,000 people. If they become unitary authorities and the county council is abolished we should presumably need to have, as the noble Lord suggested, various chief officers, six education officers, six librarians, six trading standards officers, six head firemen, six youth officers, and so on. That may be an exaggeration, but if the county council was to be abrogated that would lead to a great deal more expense being involved.

We undertook a cost exercise in the matter. It was found that such a move—that is, getting rid of the county council and putting the power into the hands of the district councils—would add at least £45 per head to the community charge. District councils in the country as a whole vary enormously in size, ranging from 360,000 to under 30,000 people. Presumably, if those unitary councils came into being they would be fixed to serve far larger numbers than that or, indeed, larger than our average population of 77,000, but the rise in overhead costs would be inevitable.

Let us consider for a moment the contrast in budget between a county council and a district council. Our county council budget for the coming year is £276 million as against the average for all six districts in our county which stands at about £10 million each. If districts were to take over county councils on any sort of basis it would be as if the corner shop were taking over Marks & Spencer. District councils, the main roles of which are housing, planning controls and environmental health, are much more concentrated bodies and thus not as near to the public as it might seem in theory. Nearly a quarter of their personnel work in their offices. Indeed, a case could be made for some of their functions being returned to county councils, especially in the realm of planning controls where the smaller councils may be too near those whom they serve.

Because a county council is large in comparison, it can invite the criticism that it is remote. I do not believe that that is the case. In fact, in my very rural county only 9 per cent. of the staff work in the county hall while the other 90 per cent. work in 554 contact points throughout Cornwall. They work in fire stations, in schools, in surveyors' offices, in weights and measures offices, in road depots, social services and so on. They are spread widely throughout the area.

Many of those services must be run from the centre. Perhaps I may put forward the example of our county youth service. It is run through the county council which does an excellent job. It fully supports the youth in the county who are themselves largely organised on a county basis. Then there is the magistrates' court committee and the training of magistrates. Are such services to be split up or run by joint boards? If so, to whom would they be accountable? Further, who will provide the secretariat? A central county council would have to be invented.

Cornwall is a highly mineralised county. County councils are large enough and experienced enough to take an overall view of the importance of minerals to the local economy and to the country as a whole. It is said that that is likely to overcome the NIMBY symptoms. Let us take Kent as an example. It is a county with which I am closely connected. It plays a most important role in providing such materials as building aggregate and other essential minerals. It is far Letter that the county council with its wider interest should take decisions rather than the smaller districts, even though the Department of the Environment lays down the guidelines and has the ultimate responsibility.

County councils have clout because they are not too small and bear great names to which we are all accustomed. For example, Cornwall has a close link with the European Commission. Last Monday I met the chief executive of my council who had just returned from Brussels where he had been lobbying the authorities. My county is a member of what is called the Atlantic Arc. It is a lobbying group set up to balance the weight of the industrial heart of the mainland of Europe. There are regions in Europe, but that is not the case in this country. Therefore, we have to look to the counties. How could a district carry that weight? There are nearly 332 of them in England and Wales. If unitary councils were introduced, the number would presumably be much reduced; but there would still be great difficulties inherent in this proliferation.

Kent was once called "a little kingdom" by one of its best known writers of this century. It has joined with Nord-Pas de Calais in forming the region Transmanche in order to submit to Brussels a multi- million pound programme for the coastal areas joined by the new tunnel. Could an unknown district do that or stand up to British Rail and Whitehall and get it right for Kent over the tunnel rail link?

My final and most important point is that a county council attracts a high calibre of councillor drawn from all political parties and from all walks of life, with a wide outlook and much experience; and it has an excellent staff. Their incentive is to serve that old and famous institution —the county, the shire—with pride in its success and devotion to its continuing welfare, with perhaps an element of competition with its neighbours.

A county council presents the face of a county and in England we have, over the centuries, in the words of a recent song: become accustomed to her face". Like Professor Higgins, we like and love it. Those are thoughts that I hope are shared by many noble Lords who come from the counties.

I pass from the general argument to the particular. I fear that my county might go like Pembrokeshire, which has been divided into two districts and lost in Dyfed. Pembrokeshire is a smaller county than ours. Those are justifiable fears. Do away with our county council and as night follows day our county will also be done away with. To abolish Cornwall as a county in its own right would deny the people who live there their identity, and that would never be acceptable to Cornishmen.

In any review, it would be wrong of the central authority (your Lordships' House and another place) to disregard those strong local feelings which I am sure are shared by all counties. Rather should we harness those old and inherent feelings of loyalty and service to provide sensible local government with a vision for the future.

6.22 p.m.

Viscount Hanworth

My Lords, we have difficulty in Britain making alterations to constitutional matters. First, there is no provision in our unwritten constitution for doing so. We should probably have to rely upon a referendum and massive all-party support to make major changes which would be unlikely to be reversed.

We know the fate of the attempt gently to reform the House of Lords some 15 or more years ago: it was sabotaged by Michael Foot and Enoch Powell, although there had been substantial agreement. Nevertheless, gradual changes must be made in other areas to meet changing external conditions. It is interesting to reflect that when the Conservatives came to power 10 years ago they were all in favour of delegating more responsibility to local government; but that is what they have not done. Why?

The difficulty was that some local authorities turned out to be run by a bunch of extremists. Their consequent financial mismanagement and other extraordinary malpractices created an intolerable situation—completely out of touch with and repugnant to the electorate as a whole. Why did that happen in a system which worked tolerably well in the past? Mr. Herbert Morrison prided himself on introducing party politics into local government. It may have brightened up council chamber discussions initially, but something else rapidly happened. Many councillors ceased to take democratic account of the people they were supposed to represent. The party view, whether or not it was appropriate to local circumstances, became the one thing that mattered and had to be followed.

Many of those who would otherwise be willing to serve as councillors have been deterred because it would interfere with their professional or other commitments. Thus it has come about in some areas that a hard core of those standing on a party ticket may be people inordinately dedicated to the views of the far Right or far Left, or they may be power seekers. Today, in many areas candidates are elected solely on a party ticket. Few electors know anything about them, have any contact with them afterwards or even remember their names once they are elected. I draw two conclusions.

First, we should try to reverse the extreme importance of party politics at the election stage and in the council chamber. We should try to reintroduce the principle of a candidate's selection being dependent upon his ability to represent his local community in a variety of ways. The ideal local councillor—there are some of many political colours in the area in which I live—is someone who is well-known and trusted by everyone in the locality. Candidates' names should not be listed under party headings; there should be indicated after their names and in brackets only their party preference. That of course would raise the vital question of how, and by whom, candidates are vetted, if at all.

The voting turnout in Britain is poor. It averages about 40 per cent. Many people, except again the highly motivated, or those who know the candidate, are not sufficiently interested to vote. We should consider following the Australian example and impose a fine, or some deterrent, upon those not voting. We should try harder to provide full details of each candidate through the local newspaper and by other means.

I now come to what I and my party consider the best way to improve the situation. Your Lordships will have guessed the answer—proportional representation. I am at least willing to listen to arguments as to why we should not adopt that system for national elections. I have yet to hear good arguments against its use for local government. We talk about democracy and government by the people's duly elected representatives. I have heard that said more than once today. In practice that does not give a fair representation of the electorate. I shall not bore your Lordships with more than one example. At Lincoln in 1988, Conservative voters totalled 39 per cent. and Labour voters 60 per cent. of the poll. One seat was gained by the Conservatives and 10 by Labour. There have been many similar results.

Proportional representation is more crucial in local elections than in national elections because the present system enables extremists to take over local government relatively easily, the selection of candidates being undertaken only by a dedicated local political party. We are all aware of startling events and extraordinary behaviour in certain of our well-known northern cities. They are practices which many of us find repugnant. Rate-capping and the unfortunate poll tax were an attempt to assert control by central government. But that was not the way to cure the problem or to promote greater delegation to local authorities, all of which have their individual needs and problems.

I advocate proportional representation in local government. It will help to elect those who genuinely follow the electors' interests. It will help to prevent extremists and those unrepresentative of the electorate's views from taking over. It may be sour to ask how we can go on talking about the duly elected representatives purporting to represent the views of the electorate in our democracy. I hope that this model is not exportable to countries trying to set up a democratic system. I see a profound paradox when the elected representatives neither represent the views of the electorate nor, even when appropriate, follow them.

6.30 p.m.

Baroness Carnegy of Lour

My Lords, I agree with the noble Viscount that we need to try to find ways of making the provision of services in local government less political. Some of what I have to say may perhaps appeal to him. I am not sure whether I go along with his suggestion of proportional representation although my mind is by no means closed to it.

In writing to me, as it has written to many noble Lords, the Association of Metropolitan Authorities points out that this debate provides the first major parliamentary opportunity to put forward some of the positive arguments for a healthy system of local government. The noble Lord, Lord McIntosh, said that he thought it odd that this opportunity should be offered in Conservative Back-Bench time today. I believe that the AMA is right: the debate is a major opportunity which your Lordships are taking with relish. I am sure that we are all grateful to the noble Lord, Lord Rippon, for the trouble he took and the originality of the ideas which he included in his opening remarks.

It seems to me particularly sad that out of the 26 speakers today only four have come from the Labour Benches. Noble Lords on our side of the House are often accused by the Opposition of not playing a big enough part in debates. Today perhaps the boot is on the other foot and it is a little sad that so few have spoken. Perhaps I may return to that in a moment because it is symbolic of some of our problems.

During the passage through Parliament of the legislation introducing the community charge, I for one took the view expressed by the noble Lord, Lord Armstrong, that local government has been working less and less well over the years. It is coming into increasing disrepute with the public and I felt that unless something were done it would simply wither away.

It seemed to me that the best chance of ensuring local government's survival and a restoration of public confidence was a change in its system of finance. Of all the possibilities—and all had disadvantages—the one most to be preferred was a system which involved every citizen contributing an amount reasonable for him or her which gave everyone a stake in ensuring the competence of his or her own council and the ability to compare its competence with that of other councils.

It was clear at that time that people who had hitherto paid nothing would not like to start paying. It was clear that to collect money from everybody would cost more and be more difficult than simply collecting from the 40 per cent. of the population who were householders paying rates. It was obvious that any entirely new system would need adjusting and refining as time went on.

There was and still is in my view nothing wrong with the basic idea of the community charge. Had local councils set reasonable levels of charge; had they operated the rebate system effectively; had they arranged proper user-friendly and efficient means of collection; had they encouraged people to pay and co-operated with central government in refining the system as it went along, by now that system would be beginning to work. Local government's future would be secure.

However, what has happened? The right reverent Prelate the Bishop of Manchester, seemed to suggest that what had gone wrong had been the fault almost entirely of this Conservative Government. In my view, many local government and central government politicians have treated the charge to far too great an extent as a party political opportunity. Numbers of MPs and councillors have advised people not to pay. A sizeable number themselves have not paid. Councils —wittingly or unwittingly—have arrived at extraordinary systems of collection. For example, my own council issues people who qualify for a rebate with a complete new book of vouchers for payment every time their financial circumstances change. A lady pensioner living on her own near me now has 46 books piled up and is worried stiff over what to do about them.

The system of four-yearly election is being badly abused. In Scotland, for example, in spite of additional Scottish Office funds calculated to keep increases in the charges below inflation this year, Edinburgh, where the community charge is in any case the highest in Scotland, has estimated that the charge will be increased by 33.3 per cent. Scotland's average increase is 29.3 per cent. We are told that in Glasgow an extra £97 will be added to the charge, of which £62 is due to non-payment by citizens. If there were a yearly election in Scotland, I doubt that this would have happened. That is where we are.

What should happen now? Should we continue to refine the system we have and improve the ways in which we collect the charges, making them more user-friendly? Perhaps we should transfer the funding of some: services to central government, as some noble Lords have suggested. Should we allow time for the public to decide for themselves the merit or otherwise of the new system and of their council's performance in operating it? In passing, I should say that my noble friend Lord Boyd-Carpenter was absolutely right. I know that the noble Lord, Lord Carmichael, will shake his head, but in my view it was right to suggest that people in Scotland are beginning to accept the community charge. Certainly in my part of the country they were doing so until England came into the system and the whole row began all over again and trouble started in Scotland.

Should we continue to refine the system of the community charge? Or should we say, "Right, let's accept that we don't want to continue up that road", and start again with a new system of finance? What about the structure? As local councils become more and more enablers and ensurers of quality than direct providers of services, and as schools realise the great advantage of local financial management, it may well be that the structures should change. Much has been said about that by other noble Lords and I shall not comment further.

I do not know, nor do I intend to suggest detailed answers to these questions at this stage. However, anyone who honestly believes that there is one easy way which fits all the criteria perfectly has forgotten those who, like my noble friend, Lord Bellwin, have struggled with the problem for 25 years. So far they have found that an easy solution does not exist. I do not believe that a Royal Commission would find new answers that successive governments and committees have already failed to find.

However, I wish to make one suggestion, half of which has already been suggested. I regard it as extremely important and I very much hope that noble Lords winding up from the Opposition Front Benches and my noble friend from the Government Front Bench will comment on it. The Association of County Councils seems to accept the need for cross-party agreement on changes that we make in local government. That association wrote to me expressing the view that local government should be nurtured and encouraged by both Parliament and Government. It further stated that too much central control weakens local government and there is therefore a need: to enshrine the constitutional role and value of local government in a set of agreed principles". I am not sure whether I would go as far as that. However, I believe that cross-party agreement is necessary if a system is to be evolved, in the short term or in the longer term—whether it is a refinement of the present system or a new system—which can be backed by the government of the day, irrespective of their political hue. Cross-party agreement is also necessary if we are to have a system which will produce councils that work within the overall economic strategy set by the government of the day—that is unavoidable because of the high proportion of public expenditure which is spent through local government—and if we are to have a system in which local government services are not damaged by the constant political warfare with which we are now all too familiar. The role of local government and, above all, its system of finance, must have cross-party acceptance and commitment.

If it turns out that such agreement and acceptance are not forthcoming, I suggest there is only one answer in the public interest. The best way forward for the users of local government services is for local government to be funded 100 per cent. by the taxpayer; for each council to receive a block grant funded from income and corporation tax from central government and for local councillors to be answerable to their electorate not for the amount of their total spending but for the way they allocate that spending between services. They should, above all, be answerable for the quality of the services they cause to be delivered.

I agree with the local government associations that it would be better for local councils to raise part of the money they spend. However, we must remember that local government exists primarily to deliver services. I believe the simple block grant would be preferable if the political parties cannot agree to accept a system, and if there is continuing dispute about the system and misuse of it, and that leads to vital services being damaged—that has occurred in recent years—and to totally unreasonable charges being levied on individual citizens. I have not been able to discover what rise in income and corporation tax that would represent because of the fact that corporation tax is included in the figure.

I hope that a response to that suggestion will come from both Front Benches. My noble friend Lord Beloff referred to the series of myths which prevail in local government about the glories of the system and our great aspirations. I believe that those aspirations will not be realised unless we obtain cross-party agreement. I hope that noble Lords will take my suggestion seriously.

6.44 p.m.

Lord Alport

My Lords, like others who have spoken, I am grateful to my noble friend Lord Rippon for initiating the debate. I do not say that as a formal courtesy but because I found myself in almost total agreement with him. I was delighted to hear him put forward his views with far greater authority and eloquence than I am able to do.

The temptation to reform and restructure local government is one which most governments in recent years have seemed unable to resist. The reasons are, I suppose, first that the process enables the party in power to indulge in a bit of useful gerrymandering disguised as constructive reform. Secondly, local government, like education, is a subject about which practically every Member of both Houses of Parliament has strong views based upon some personal knowledge. That has been the case in this debate.

Thirdly, the problems arising in local government are usually of a scale—this is not the case with foreign policy or macro-economics—that most people can understand and consider capable of solution. Finally, the cry "Reform local government" enables central government to offload some of the responsibility for its own mistakes on to the shoulders of the men and women who serve the community in county, district and parish.

There have been grand commissions, such as the one chaired by the late Lord Redcliffe-Maud. There have been great new Acts of Parliament. We have abolished the GLC, making London the only capital city in Europe, and perhaps in the world, which has no central administration. We have reformed local finance by substituting the community charge for the rating system with the social, financial and administrative consequences with which your Lordships are all familiar. Perhaps I should say at this point that the concept of accountability is an absolute myth. Perhaps I shall return to that point later. The outcome of all that effort is that, either in this Parliament or in the next, there will be another attempt by Parliament at Westminster to reform and restructure the local government of this country.

I have never had more than a walking on part in local government. My role consisted mainly of processing up and down the High Street in Colchester behind the Mayor and the town mace on municipal occasions. Local government in this country, whether in county, city, borough or parish, has not been the creation of Acts of Parliament, or Royal Commissions although there have been many of them. It has grown and been adapted over 1,000 years and more to deal with the intimate problems of families and people who live in the great and small communities of Britain. It never has and never will match up to all the criteria which professors of government, management consultants or the mandarins in Whitehall departments believe at any particular time to be right.

Local government will always have anomalies and occasional instances of corruption. However, there are remarkably few cases of corruption considering the opportunities and temptations that exist. There will always be councils which outrage the political susceptibilities of the party in power and spend money on eccentric purposes. As local government by its very nature reflects the varied aspirations of different political interests and the needs of communities ranging from great industrial cities to tiny villages, it cannot be constrained into a neat, tidy administrative pattern. I totally disagree with the point the noble Lord, Lord Armstrong, made when he proposed that we should have another grand commission. That is exactly what I would have expected from someone who has had long experience and a distinguished record in Whitehall.

What is needed is not the restructuring of our present system but a piecemeal attempt to put right some of the mistakes which earlier attempts at reform have made. The first and most obvious step is to get rid of the poll tax and to substitute for it a tax perhaps based on property that has some relevance to individual wealth. In my personal view the rating system produced just as much accountability on the part of councils as the poll tax could ever achieve. In the minds of the electorate that kind of issue is not the paramount one. During the past few years local government has become increasingly based upon the division between parties. It is party issues, both locally and in the country generally, that really decide how people vote at local elections.

The next thing to do is to provide some form of central administration for London. That would not necessarily involve revival of the GLC. It might consist of representatives elected on a collegiate basis by the London boroughs. Today London is a mess. A central co-ordinating authority is needed to cover among other things transport, certain aspects of special education, cultural amenities and planning.

What the next reforming spasm that we go through should not do—and here I follow very much my noble friends Lady Platt of Writtle and Lord Falmouth and many others—is to reconstruct the present system of two-tier local government by abolishing the county councils. Some boundaries may have to change, and it may be worth reverting to older terminology in order to make my noble friend feel more happy about where he was born. But any root and branch upheaval will not only be costly, as it was last time. It will also leave, as happened in London, an administrative vacuum in respect of certain activities which the district councils cannot properly fill, if only due to the pressures imposed on elected district councillors.

What is most important is that any reform should not result in increased powers for central government. I hope that my noble friend the Minister, when she replies, will assure your Lordships that the Government do not seek in any way to extend, by any reform that they intend to undertake, the powers of any department of state at the expense of the local authorities.

If the thoughts I have tried to present to the House have any value, they are addressed not only to the present Government but to whatever government comes to power after the next election. Speaking as an elector in what was until recently known by its Anglo-Saxon name of the Winstree Hundred, now part of the even older borough of Colchester, I hope that this and future governments will remember that local government is not only more deep-rooted in the political soil of Britain but is far more closely entwined in the everyday life of ordinary people than anything in Parliament or in Whitehall. It should not be dug up every few years by some Royal Commission or by some enthusiastic Secretary of State. What is needed is that it should be occasionally pruned and fertilised with adequate finance.

6.52 p.m.

Lord Digby

My Lords, in the 27 years since I joined your Lordships' House your Lordships have debated local government with monotonous regularity, but I must wonder whether the legislation that we have passed has in fact improved local government. The major reorganisation of 1973 fell between two governments. Originally based on the Maud Report, under a Labour government we would have had large unitary authorities which would, of course, have been effective. But under a Conservative government it was pointed out, perhaps quite rightly, that democracy would be too far from the people, and that there should be a second tier of district councils.

This resulted in all the costs of change and none of the financial advantages. Also, coming at a moment of high inflation, it increased the cost of running local services. But just because we got it wrong then there is no reason to reorganise again. I do not believe that local government is perfect at present, nor cost effective, but I am quite sure that anything that we put in its place, so far as structure is concerned, will increase rather than decrease the cost. The 1973 reorganisation concentrated on structure rather than on finance, and I suggest that this reorganisation should concentrate on finance and leave the structure unchanged. The present structure works, even if it is not perfect, so I must beg the Government to leave councils to concentrate on improving their services rather than face the problems and counter-productive effects of change.

Views on local government are inevitably influenced by one's own knowledge and experience. I was a member of Dorset County Council for many years and its vice-chairman for four. I am taking part in this debate not to represent any particular interest but because I have a strong personal interest in our system of local government, and in particular the provision of services within Dorset. Dorset, apart from being uniquely beautiful and a wonderful place to live, is typical of most English counties as it contains both heavily populated and rural communities. As a unit of government it has really been remarkably successful.

It is successful because, first, it is an organisation that draws upon the tradition and history of a shire county, and is one with which most people in Dorset can readily identify. I do not believe that units of government can be decided solely on theoretical criteria, and it is terribly important that local government organisations should be a natural focus for communities. Secondly, Dorset County Council is run on sound business lines, provides efficient and cost-effective services and, almost uniquely for a county council, is debt free.

I have some experience in running businesses and I believe that Dorset's success is attributable to the fact that it is well led by members and is sufficiently large to recruit highly competent managers. The ability to provide cost-effective services, education, transport, and so on, which not only meet the needs of rural and urban areas but also achieve economy of scale, calls for high management flexibility and competence. Thirdly, Dorset County Council is also successful because it has built productive partnerships with a variety of bodies within the private sector—voluntary organisations as well as the smaller districts and parishes within its area.

Turning specifically to the current debate on education and particularly to assertions that education could easily be transferred to district councils or even to the central Civil Service, I have to say that it is, of course, right to delegate more responsibility to schools and governors. Dorset wholeheartedly accepts the principles of local management of schools and is successfully implementing them. It would, however, be unthinkable if, say, decisions about the funding and provision of primary schools in Dorset were to be made by Civil Servants in Whitehall. People within Dorset know that the county council, with members drawn from differing communities representing a wide-cross section of interests, is the best unit of government to make these types of decision.

It will be a sad loss if we lose sight of the virtues of county government, which are to be found not only in Dorset but elsewhere. We should certainly not be contemplating the replacement of highly efficient and effective county government with any organisations that are smaller in size, smaller in outlook, and not equipped to respond strategically to the varying needs of communities. So my message is simple. Any tinkering with structure will be counter-productive. Let us just look at the financial side and not the structure of local government.

6.58 p.m.

Lord Knights

My Lords, I believe it is quite clear that any decisions to change the present structure and funding of local government will be based largely on political considerations. The increasing demands that local authorities make on our total national resources, and the extent to which their functions affect the quality of life of the individuals who make up the communities they represent, render this inevitable. At the same time, however, we are entitled to expect that, before any reforms are instituted, full consideration should be given to what effects the changes are likely to have on the efficiency of the services involved and on their practical delivery on the ground.

I doubt very much whether that has always been the case when local government change has occurred in the past, and I am left wondering whether some of the reforms that are being rehearsed at the present time have yet been properly examined from this point of view, certainly as regards the service with which I am most familiar. I hope your Lordships will permit me to concentrate on that service, though that may be a rather narrow approach to this debate.

History tells us that from Anglo-Saxon times policing in England and Wales has been the responsibility of local communities and it was no accident, when the new policing arrangements pioneered by Peel in London in 1829 were extended to the provinces, that rather than setting up a national police force it was to the newly created municipal boroughs, and later the new county councils, that the responsibility for maintaining law and order was passed.

Home Office involvement—in other words, government involvement—came in 1856 when it became necessary to supplement local rate income with government funding. For the first time, therefore, grant in aid for police purposes was introduced and with it the tripartite system embracing police authorities, Home Secretary and chief constables came into existence.

I believe that this locally based system with shared responsibilities, which enables complete impartiality to be taken by police in operational matters, has been one of the fundamental strengths of our policing arrangements over the years and that any moves to replace it with a national system should be strongly opposed.

Effective and democratic policing is dependent on this partnership and public support for the police—so essential in our system—depends upon a strong local influence being exercised. The Royal Commission of 1962, chaired by the right honourable Sir Henry Willink, with one dissenting member, recommended its continuance subject to a strengthened Home Office involvement and the amalgamation of some of the smaller forces.

Today others take a different view. For example, the Home Affairs Committee of another place, in its seventh report in July last year, regarded our present arrangements as being, essentially designed in a Victorian Britain and last seriously reviewed a generation ago when society and the world were very different. The committee urged the Government to, come forward with White Paper proposals for a police structure for Britain which will suit the needs of the 21st century. It needs to be borne in mind that this recommendation was made against a background of an examination of the arrangements for international co-operation in matters of crime. I share the view of the noble Lord, Lord Armstrong of Ilminster, that there may well be a need for some form of national unit to handle terrorism, major frauds, national security and perhaps drugs. But these matters form only a very small part of the whole crime picture which in total is estimated to take up only about one-third of total police activity with the remainder being directed to traffic, public order and other social service type incidents, all of which call for a local rather than a national response.

Publicity has been given recently to proposals for local government reform; be it by way of abolishing county councils in favour of all-purpose district councils—a view which I believe both major parties share—the introduction of regional government, or the transfer to central government of the total funding of the police perhaps with education and fire services as we understand is being canvassed in the Government's review of the community charge. All that brings into question the form of our present police arrangements and the relationship between the three partners currently involved.

I fear the possibility that, as with the reforms of 1974, we shall see the practicalities of policing ignored when local government reforms are being considered, leaving that service to be "fitted in" in some way to any new structure as may be administratively convenient.

In 1974 that approach led, on the one hand, to the formation of some very large, somewhat isolated, forces very difficult to integrate with the other local personal services—such as housing, education and leisure, which are so necessary for successful crime reduction measures—and, on the other hand, to the recreation of at least one police force which was smaller than it was some six years earlier when it was felt necessary in the interests of efficiency compulsorily to amalgamate it with its neighbour.

The opportunity was there in 1986 to rectify the position, but it was never taken; again, I believe, on the ground of administrative convenience. Policing deserves better than that and I am sure your Lordships will agree that the only criteria for change should be greater efficiency and proper accountability.

I hope that the noble Baroness the Minister will tell us today, first, whether or not serious consideration is being given to changing the present basis of government funding which, if implemented, could only lead to more central control on the premise that he who pays the piper calls the tune. Secondly, I hope that she can confirm that there will be no reform of the present tripartite system until all the issues have been comprehensively, impartially and publicly examined by a body with the status and authority of perhaps a Royal Commission. As the noble Lord, Lord Armstrong of Ilminster, said, these matters are too important to be decided solely by civil servants or party political machines.

I conclude by quoting a passage which I came across come time ago. I regret that I cannot now trace the reference. It reads: Local government"— and perhaps I could substitute for that "local policing"— always has one big advantage. It is closer to reality and to ordinary people. Whitehall can become a thickly populated and engrossing world of its own, bounded by the suburban train and the newspaper at each end of the day. Local authorities are much more exposed to the public whom their decisions affect. This does not necessarily make their decisions better, but it does add a dimension from the real world to the conditions of their work.

7.7 p.m.

Lord Norrie

My Lords, I wish simply to stress the importance of the environmental functions of county councils, especially in the field of planning. It would be extremely unfortunate if, in attempting to improve other aspects of local authority performance, we caused an adverse effect on activities that are currently being carried out extremely successfully at county level.

It seems to me that we often forget the importance of the strategic level of planning when looking after the environment of our towns, cities and countryside. On a day-to-day basis, development control decisions are made by district councils and this is the planning with which most of us come into contact. But district councils work within a framework set by county councils who prepare county structure plans setting out the strategic policies for a whole county.

County structure plans ask and answer the crucially important questions: How much development is needed? How many houses should be built and where should they go? Where is the best agricultural land and where is the most beautiful countryside? Structure plans take into account all these considerations while leaving day-to-day decisions to district councils. But if the strategic goals were not firmly set, there would be endless controversy over the location and amount of development. It is this important strategic view that would suffer if, as suggested by some, the role of the counties was dispensed with or, at the very least, weakened. I hope that that will not happen.

Weakening of the role of county councils would be particularly ironic, since the Government themselves have only recently re-emphasised the importance of the county tier of planning. Although they had proposed to abolish county structure plans, replacing them with weak county statements, that decision was reversed in the environment White Paper in September last year, when the Government announced that they would retain statutory county structure plans.

In doing so, the Government recognised that there was a need for firm strategic planning which would establish a framework designed to guide the detailed decisions of district councils, on the one hand, and feed upwards into the preparation of the new regional tier of planning guidance, on the other.

That decision was confirmed in the Planning and Compensation Bill which gives a central role to county structure plans in the development plan system. I heartily endorse it. It has been said that the county level of planning is less important now that the Government are moving forward on the provision of regional planning guidance. I disagree. Regional planning is only likely to work because we have a strong county planning system and counties that are prepared to work together to develop consistent policies for their region.

Serplan, the most sophisticated regional forum, works because counties in the South East believe that it is useful to co-operate and can agree on a common basis for doing so. Imagine trying to achieve the same result with literally dozens of district councils! It may be a long time before the tentative efforts that we are making towards regional planning come to fruition. But we must also recognise that in some parts of the country there is very little sense of regional coherence. I do not believe that regional planning can or should replace county planning, although no doubt it will be a very useful way of dealing with issues that are currently too large or complex to be handled by one county —for example, a new airport or a motorway.

Counties inspire a great sense of place among the public. The public know where they are and feel greatly attached to them. Counties are also an important and useful level at which to plan; they are neither too remote from what is happening on the ground, nor too close to the ground, with all the problems of parochialism which may result. I make the plea that we do not embark on another round of local government reform without being very clear that the changes can be justified. The upheavals of 1974 are still present in many minds and the past few years have been profoundly unsettling for county planning. Certainly so far as the county planning system goes, I do not believe that there is a case for changing the structure of local government. But whatever other changes may be introduced, county planning at least should be allowed to remain intact.

7.12 p.m.

The Earl of Carnarvon

My Lords, the Motion of the noble Lord, Lord Rippon, is most opportune. It calls attention to the need to review the structure of local government. We should examine most carefully the essential nature of local government before we reach conclusions.

Local authority associations see all too clearly the dangers of instant solutions and immediate proposals for a new structural system of local government. They would wish to participate in any process of inquiry which may be required to examine that very complex problem. But before diving in at the deep end, does there need to be a wholesale reform or can local government adapt to future needs by devolution? That was a word used by the noble Lord, Lord Rippon. I agree with the noble Lord, Lord Digby, and those who say that education should be removed from local government because it will reduce the pressure on the community charge. No coherent nationwide system is proposed from those quarters as to how the service is to be managed. The disappearance of the local education authority could be marked by the creation of an alternative bureaucracy, accountable only to the Secretary of State for Education. It is very difficult to see how that could be flexible and responsive to local needs.

I had intended to speak about the police service. However, the noble Lord, Lord Knights, explained so well the function of the police service that I can just add that the chief constable and his officers are directly answerable to the public that they serve. A national police service would remove that valuable public safeguard because it is very difficult to see how the Home Secretary could be an adequate substitute for that local role. I am pleased that the noble Lord, Lord Stoddart, agrees with that idea.

Those are just some examples, but I hope that the point is vividly made that local government has an important role in our life and is best equipped to take decisions on behalf of local people. It is a strange fact that, as Europe devolves power from the centre, the Government of the United Kingdom become more centralised. These issues are of extraordinary importance and go beyond the shallow interests of self-preservation or aggrandisement of county councils, or indeed district councils.

We are speaking about local government itself and the right of local people to take their own decisions and run their own affairs with accountability to the electorate and the public that they serve. The issue is one of great complexity. Changes should only be made after proposals have been thoroughly tested by a most searching inquiry. I am apprehensive that we have not reached the position where the need for inquiry has been properly understood.

I should like to talk for a few moments about county government and regional aspects, in which I can claim some special knowledge that I believe has general application. The County of Hampshire is the county that I know best—and indeed its county council. I was the chairman of its planning committee, chairman of its countryside committee and for some time chairman of both the policy and resources committee and the county council at the same time. Hampshire has a strong identity with its people by its history and tradition and there is no difficulty in asserting its personality. Like most counties, Hampshire is not an artificial creation. The local ties are obvious. Winchester does not need to find for itself a role as the seat of county government; that has been astonishingly obvious since the time of William the Conqueror.

The county council provides its statutory services, which are no different from those of other county councils. But it is able to do more than that. It can operate as a leader for enhancing the environment of the county—for example, by far-sighted land purchase policies, which have been operating for many years, buying land for public enjoyment and conservation. Substantial sums of money have been devoted to urban regeneration in the great cities of the county, to improve unsatisfactory areas for which other funds are not available, and it has led the country in successful town development schemes such as at Basingstoke and Andover. At this point I must pay tribute to the noble Baroness, Lady Denington, and the help that we received from London when she was in charge of that responsibility.

County councils are expert at working with one another to provide a regional dimension to local government. I shall give two examples. The first is a long-standing one, having taken place for about 30 years. The second is much more recent; indeed it has taken place only during the past 30 days. Town and country planning around London is achieved by the counties with their structure plans, as the noble Lord, Lord Norrie, explained, and by the districts with their local plans. But the central unifying force is provided by the counties themselves in a voluntary combination.

Strategic planning for areas as large as counties makes sense only if the regional dimension can be included. That is particularly imperative in London and the South-East. The counties, together with London, established what is now known as Serplan, which prepares regional statements of planning policies for agreement by the Secretary of State for the Environment. That work has been highly regarded for many years under the chairmanship of the noble Lords, Lord Nugent, and Lord Sandford. I hope, because I am the present chairman of Serplan, that it will continue to be so regarded.

I am convinced that the present county council structure is very well suited for that vital role. It would be extremely difficult to find an alternative as substitute. Indeed, I go so far as to say that without county councils it would be an impossible task. I believe that my officers in Serplan support my views.

My second example of county council initiative is in the area of the Environmental Protection Act 1990, as a result of which the Department of the Environment urged the establishment of voluntary waste regulation committees to define regional policies for the management of waste and avoidance of pollution. Within a few weeks of the Act becoming law, the South East counties explored, defined and established their own voluntary committee which has now started work. The Department of the Environment asked for proposals to be completed by 1st April. I am pleased to say that the regulation committee is already in operation. This example of rapid joint working needs to be borne in mind by those who seek to establish regional tiers of government. Do we know what regional government means? What national government will give their powers away to a regional government?

I am sceptical. I believe that the answer is none. Does regional government mean taking powers away from the local authorities? I fear that the answer is more likely to be yes because of the centralising tendencies of all governments. My view is that regional government is unnecessary and that those who promote it must think more deeply about the consequences of their proposals before they merit serious consideration.

The Association of District Councils seeks the abolition of county councils. I was pleased to hear the noble Lord, Lord Rippon, refer to "some" county councils. From my experience, to speak of more than 300 districts taking over the responsibilities of the county councils is, with all due respect, absurd. Smaller districts cannot possibly take on county responsibilities. What will happen? They will find themselves swallowed up in this greater council or that greater metropolitan area. To speak of a return—as one noble Lord mentioned—of old county boroughs is rather strange. Some simply would not have the resources to provide the services required. In 1974 when e county boroughs were abolished substantial areas of their responsibility were transferred to the new health and water authorities.

Perhaps I may refer to finance. There are some simple points that I should like to make. It is obvious that the community charge does not stand the test of public acceptability. Some radical change will have to be made. However, to comment in advance of specific proposals from the Government is difficult. At the same time it may be worth stating some criteria of importance which any new form of taxation should fulfil.

Any local authority must be directly accountable to the people from whom it levies its tax. As the noble Lord, Lord Boyd-Carpenter, said, there is no doubt that there is still confusion among the general public as to where payment must go—to the county council or to the district council. The demand for payment therefore should be unequivocal. The present system of payment to an anonymous collection fund is difficult for anyone to understand. There is widespread concern about the cost of collection of the community charge and—and this is important—the unfair burden placed on those who pay by those who choose not to pay. The losses on collection are too high and any new system must overcome that problem. The requirement for any new local tax must include the criteria of accountability by the taxing authority, ease of collection and basic fairness.

What should be put in place of a community charge? Let us take as our starting point the fact that a simple return to rates is not a feasible proposition because of the reasons that led to its abolition in the first place. The community charge cannot be retained in its present form because of unacceptability. In 1973 when I was a member of Hampshire County Council's Finance Committee we considered a Department of the Environment consultation paper on local government finance. It concluded that it was not appropriate to introduce any new system of local taxes. In those days some of us compared our single rating system with combined systems of local taxation operating elsewhere in the world and thought that combined systems might have some advantage.

The choice falls between a system of local sales tax, a local income tax or a modified property tax. I do not advocate a local sales tax because I believe that it would he haphazard in operation and would not pass the accountability test. To pay a sales tax on a loaf of bread as a contribution towards local services does not pass any test of credibility. Local income tax is practicable; but because it confuses local and central taxation collection processes, it is unsatisfactory from the accountability viewpoint. The role of central and local government would undeniably become blurred.

The proposition that any tax burden should be borne by the majority of people and that adequate regard is paid to their ability to pay is important. I am therefore attracted to a middle course which has been advocated by other noble Lords. We have the administrative means to combine the old rating system, suitably modified and simplified, with the community charge system. A household would contribute directly to its own local authority a fixed sum determined by reference to the value of the house and an additional payment for each adult wage earner in the house. Only one bill would need to be sent for each household, thus reducing the cost of collection.

The uniform business rate should be abolished. There is no sense of accountability in it. A contribution to a pool for nationwide distribution destroys any real link between the business community and its local authority, as the noble Lord, Lord Wade, said. Any new taxation system should ensure that business rates are paid direct to the local authority with some safeguards to protect against profligate authority.

I am not attracted to the idea that the local taxation system should have some value or volume predetermined by central government. The level of services provided locally must take account of local circumstances. While capping to prevent excessive expenditure is one thing, central direction of all levels of local expenditure is quite another.

The questions of form, finance and functions of local government are not discrete one from the other, but need to be satisfied at the same time. Form and function dictate finance; and finance and its collection bears upon both form and function. If there were simple answers, they would have been found before. However, because the answers are not obvious, it will be well worth our time proceeding with a searching inquiry.

I realise that in proffering these points for your Lordships' consideration, my anxiety to point out the case for a searching inquiry, and my enthusiasm for asserting the strengths of the county system of government, I may be understood to be putting a case for no change in our present two-tier system. I hasten to say that that is not my view. We need to examine all the possibilities without having—this is important—an unnecessarily short timescale for an exercise of such complexity. I was attracted to the idea of a royal commission. That was mentioned by the noble Lord, Lord Armstrong of Ilminster, but rather shot down by the noble Lord, Lord Alport. I hope that we shall have a Green Paper from the Secretary of State. All options need to be fairly stated so that we can see, for example, whether there needs to be a uniform answer for England or Wales, or whether there is a role for county councils to be unitary authorities. I do not propose answers today because I do not believe that there are or should be instant solutions.

7.30. p.m.

Baroness Gardner of Parkes

My Lords, I am delighted that my noble friend Lord Rippon has raised this subject. Many Members of the House have an interest in and a knowledge of it. I am pleased that we are discussing the review of local government. Review is good, but reform is not necessarily needed nor desirable at this time. Most of my experience is in London at local and regional government levels. I do not consider that I can speak on matters outside that area.

No matter how important we consider the discussion—and I attached great weight to it—there is no doubt that the average resident views local government in terms of whether his bins are emptied, the streets are cleaned, the street lighting is good and safe and the footpaths are sound. I have found that, no matter how important an issue is raised with local residents, they always return to those basic essentials and what will be done for them. They may be interested in a planning matter if it affects them immediately or if a new system being introduced into their area is relevant to them. However, most people think of their local authority in terms of how it affects their everyday lives. Bodies such as your Lordships' House are therefore required to examine the wider concepts and the ways in which the situation can be improved.

Yesterday when I was having a casual discussion with my noble friend Lady Carnegy I was tempted by the idea of all funding coming from central government. It appeared to be an easy option; no one need worry because the money would be available according to need. However, overnight I have given considerable thought to the idea. I now believe that it is particularly unsatisfactory to have all the duties imposed on local authorities by statute. If funding were imposed in the same way all the representatives of local authorities would be reduced to being agents of the Government. It would take away all the good and desirable aspects of locally-elected authorities.

Local government must be able to raise money and therefore we return to the same old problem of how to collect it. A property tax is simple to collect but not so simple to assess. We had an excellent system of rating valuation courts with great expertise. That continues to exist and now determines community charge issues. The rating valuation lists have been retained in connection with water rates and so forth, but they need to be updated. Some areas that were rated low on a notional 1973 rent are now fashionable and expensive.

I have read in the press a suggestion that property tax should be based on square footage. That system would not be entirely fair either. Someone living in a great barn of a place, totally unmodernised, without a lift and costing a great deal to heat might be disadvantaged when compared with someone living in a smaller, practical, well-insulated home. Therefore, a system based on square footage is not a total answer.

It has been suggested that rating valuation courts should be capable of assessing capital values. It is an interesting point but the difficulty is that capital values rise and fall. I have seen examples of people selling semi-detached houses for a large amount of money while their neighbours in the other half of the property have missed the boom and received perhaps one third less when selling later. Therefore it would be difficult to have capital values on a sound and up-to-date basis.

Perhaps a combination of a capital banding and an assessment of the property value would be appropriate. I always thought it wrong that after installing central heating one had to pay more in rates. At one time all kinds of ridiculous conditions existed. For instance, if one installed storage heaters the rates did not increase, but if one installed gas-fired central heating, which is more economic, they did increase. There have been so many such nonsenses and we must avoid them in any future system.

A suggestion that has been eloquently put forward is a combined tax for property and people. However, I am worried that there may be the same problem as now exists with the community charge. I remind your Lordships that when we debated the community charge in this House I was a member of the London Electricity Board. I pointed out that in London the annual turnover of people was 30 per cent. and therefore it was almost impossible to collect money in settlement of bills. The electricity board was trying to find only one person per property to bill but it still had millions of pounds worth of bad debts. However, the community charge system was proposing to find every living soul and it is difficult to find people if they do not want to be found. I believe that under the present system many people appear to have vanished off the face of the earth because they prefer to be anonymous. It is cheaper to be invisible, particularly in a high charge area, because you do not have to pay the community charge.

I make the following suggestion knowing the horror with which it will be received in the House. If one really wishes to be able to identify everyone in the country and to obtain payment one must introduce identity cards. I said that at a dental conference 25 years ago when I had arrived here from Australia only 10 years previously. I did not know then how sensitive was the subject of identity cards. All the other professional persons present threw up their hands in horror and said, "We did away with those at the end of the war and we shall never have them again". As an Australian I did not understand the attitude then and I understand it even less now.

What are all noble Lords wearing today, although we have been told not to wear them in the Chamber? We are wearing badges with photographs of our faces on them. The world is full of all forms of identification. Last week I read that it would be a good idea if when dealing with banks and building societies people had to present cards showing photographs of their faces. There has been great support for that argument. Therefore, if one intends to introduce a tax which must be paid by everyone in the country the only fair way is to ensure that no one will cheat the system. I believe that identity cards are the only answer.

I throw that in as a suggestion because I believe that we must have such a system or one which does not relate to identifying the number of people living in a property. One will end up with the situation that I have seen so often: the really honest person is disadvantaged because he or she is providing the names of everyone living in the house. As a dentist I have seen many people signing up for all kinds of free national health treatment then later saying, "That is rubbish. I want something more expensive". That contrasts with people who are actually qualified to have the treatment free of charge. The world is full of honest people who are disadvantaged by unscrupulous people who get away with their actions.

I fully support charge capping and rate capping. It is important that town halls are efficient and cost effective. They should be no different from any ordinary business or individual in terms of having to live within their means. That was a protective system when there were unlimited increases in the rates, and more recently in the community charge, which were terrifying for people to face. Therefore, it should be possible to have rate-capping.

However, some financial reforms which are already in operation are working very well. Competitive tendering has worked well as has residents' choice. Under the Housing Act, people can opt to buy a portion of their house. In Westminster one can buy 20 per cent of one's house. That is good because people who could not afford to buy the whole property are able to reduce the amount of their rent while at the same time acquiring an interest in and a part of the property.

However, there is need for more funding for housing. I have never understood the logic whereby if a council sells a property, it cannot re-invest in housing all the money which it received. That seems to me to be very illogical. I have heard reasons given but have never understood any of them.

I find the bed and breakfast provisions extraordinary and fortunately the Minister for Housing has recently changed those. Originally he made the statement that councils could not continue to rent flats for homeless people and that bed and breakfast accommodation would have to be used. Of course, that was much more expensive. However, he has now seen how illogical that was and has reversed it. I understand that it is now possible once more to rent flats for the homeless.

In controlling or directing how funds should be spent by local government, it is very important that central government should not interfere with the methods which local authorities have worked out for saving money and for getting value for money.

I wish to make a few minor but essential points. First, the Widdicombe Report, which recommended attendance allowances and extra payments for councillors, is rather unrealistic. The remuneration which local councillors receive—and they may perhaps be responsible for millions of pounds—is less than £20 per day and that is taxable. I believe that that is expecting people to give up their time for nothing. Therefore, if we are looking at a review of local government, we should look at a way of giving councillors greater reimbursement for their time.

We need a visible figurehead for our capital. When my husband was Lord Mayor of Westminster I went on an official visit to Beijing. The mayor of Beijing could not understand that he was speaking to the person who represented only a thirty-third of London. We explained that Westminster was very important and the seat of Government. He asked what the population was and we replied that it was 0.25 million, although it is less now. He was the mayor of Beijing which had a population of millions. Beijing had a special relationship with Paris and Bonn. There is no twinning but there is what is called a "special relationship" with other cities. He was extremely puzzled and the interpreter asked us several times who we were and who we represented in London. The Lord Mayor of London would be no better than the Lord Mayor of Westminster because I believe that he represents less people and has less electors. Therefore, in international terms we should have somebody to represent London. Interestingly enough, the mayor of Beijing was a cabinet minister in the government. I do not know whether that was a prerequisite or coincidental.

There is a special relationship between local councillors and their electors. A small number of voters can vote a councillor in or out. In that way, the elector has more direct control over his own local representative than at any other level of government. I also believe that to be a local councillor is most satisfying because it is possible to achieve things on an immediate and local basis which is extremely valuable. When I was a member of the Greater London Council I found it remote and that people did not really understand what it was. There was a huge electorate and a remoteness from that electorate.

However, there is a need for some kind of strategy plan for London. I understand that the traffic Bill in another place is suggesting a director for traffic. That would be good because it is essential to bridge boundaries in terms of roads going through the capital because there is a tendency to push the problem over a boundary into the next borough and that does not work. At the end of last year, London was at a standstill. It is only the current recession which is making us feel that the traffic congestion has eased. As soon as matters improve, once again it will be impossible.

Sound public transport is essential. Of course, there have been the most unfortunate disruptions recently which have made travelling very difficult.

Reorganisation and reforms in local government are disruptive and expensive. Therefore, they should not be rushed into or carried out too often. I believe that any changes should be implemented gradually, and I strongly support the point which has been made about evolution and not revolution.

The other point which I must support concerns the uniform business rate. That has hit some authorities very hard. Instead of having the money in hand and being able to earn interest on it, it is returned in small instalments. The rates have greatly increased in central London and they have had a disastrous effect on business. I support the Motion moved by my noble friend Lord Rippon.

7.45 p.m.

Lord Harris of Greenwich

My Lords, I join with all noble Lords in paying tribute to the noble Lord, Lord Rippon of Hexham, for introducing this debate. I do that with a light heart because I was in almost total agreement with everything he said in the course of his speech.

I propose to discuss primarily one issue this evening; that is, the consequences of any major reform of local government as regards the police service. That was a point raised by the noble Lord, Lord Knights, who had considerable experience as chief constable of the West Midlands. That issue was touched on also by the noble Lord, Lord Armstrong of Ilminster.

Before addressing that point, however, I should like to refer to one aspect of local government reform which is a matter of some importance. It has been debated in this House on a number of occasions, most recently during the course of a Bill sponsored by the noble Lord, Lord Blake, aimed at introducing proportional representation in local government. That Bill was passed by this House but blocked by the House of Commons, which was hardly surprising because of the well-known opposition by the then Prime Minister to the concept in question.

The reason why that Bill had substantial support in this House was obvious. The unrepresentative character of many local authorities is one of the principal reasons why there has been such a massive erosion of the powers of local government to central government in the past 10 years. The antics of a small number of local authorities provided the excuse for a major intervention by central government.

I shall give one example, and the noble Lord, Lord Boyd-Carpenter, gave another. There are plenty of examples to be given but I choose that of Lambeth. At the last election the Labour Party in Lambeth secured the votes of less than 44 per cent. of those voting but it obtained 62.5 per cent. of the seats. Therefore, a minority became an overwhelming majority.

At present, rent arrears in Lambeth are £25 million. There is a huge backlog of repairs, its streets are filthy and its services are decaying. The council leadership, faced with that position, has what can only be described as an unusual set of priorities. That was most recently demonstrated by its decision to call a special meeting of the council to discuss the war in the Gulf. I quote from the Daily Telegraph of 2nd February to give the House a flavour of the character of political debate in the London borough of Lambeth: A lone speaker from the Free Kuwait Campaign was subjected to racist taunts from people in the public balcony. His speech was followed by Mr. Dick North, of the Lambeth branch of the National Union of Teachers who, asked by a Tory councillor if he wanted the defeat of British and American forces, said that in any war between 'imperialist powers and oppressed people', he supported the oppressed. Demonstrators responded with cheers and shouts of 'Victory to Iraq' … Onlookers in the public benches were mostly divided between those waving Union Flags and those who wanted to tear them down. Attempts by council stewards to separate the antagonists failed and scuffles broke out on one balcony. The meeting had to be adjourned four times because of disruptions. Members of the Lambeth Committee to Stop War in the Gulf broke into cries of 'Yes' when accused of wishing to see the allies defeated in the war. Earlier they chased and tried to punch a member of the public who heckled an anti-war speaker … Labour delayed the vote for more than an hour because some of their members had made clear they opposed the motion. The delaying tactics continued until 1 a.m., when the Labour leadership judged that enough opponents had gone home for the motion to be carried. It was passed by 26 votes to 24". That was Lambeth Council. Those members were elected by less than 44 per cent. of the electorate and, by our ludicrous electoral system, were given a massive majority on that council. Imagine the attitude of people living in the London Borough of Lambeth when they read reports of that nature in their newspaper, knowing the quality of public services which exist in the borough.

There are many other examples. One could deal with the problems of Liverpool, with its massive disqualifications, expulsions and so forth. One could give examples of a different character of authority such as West Wiltshire. It is a Conservative authority and has been involved in one of the most unpleasant scandals seen in local government for many years. The result there was grotesquely unbalanced because of the first-past-the-post electoral system. We shall never improve the quality of our system of local government until we introduce a fair electoral system. I believe that one day we shall have such a system.

Having made those introductory remarks I wish to turn to the question identified by the noble Lord, Lord Knights, as one of the most important in the debate this evening. Twenty-five years ago my noble friend Lord Jenkins of Hillhead—this matter was referred to by the noble Lord, Lord Stoddart of Swindon, who was not an enthusiast for the changes made—decided to reduce the number of police forces in England and Wales from 117 to 47. He excluded a number of other forces which were involved in local government reorganisation in the North East. He was acting on the basis of powers conferred on him by the Police Act 1964 following the report of the Willink Royal Commission.

The Home Secretary announced the decision in Parliament and, on re-reading Hansard, one was struck by the fact, notwithstanding what was said by the noble Lord, Lord Stoddart of Swindon, that there was virtually no opposition. A few doubts were expressed but nothing of a fundamental character. The Home Secretary was required, as a result of the 1964 Act, to submit his proposals to public inquiries if there was opposition. A number of such inquiries took place. The problem was that if the inspector came down against him, he would have to secure explicit parliamentary approval for his proposals. In fact the inquiries supported the Home Secretary and he did not have to ask for those parliamentary powers.

That was in 1966 and 1967. At that time it did not occur to those of us in the Home Office that within seven years we would be involved in another massive series of police reorganisations. That happened as a result of the passage of the local government reforms in 1974. As a result of the legislation new police forces were created which were accountable to those new authorities. Other changes were made. The noble Lord, Lord Knights, referred to one of them. A police force was recreated in 1974; it was one of the smallest police forces in the country. All that was done on the back of local government reorganisation without the issue of whether or not it was a good idea in itself ever being addressed.

That led to other unfortunate consequences. In Lancashire and Durham, police forces were substantially reduced in size. The consequence was that after 1974 until the present day one of the major problems experienced by the chief constables of those forces has been arranging for the letting of as much as possible of the large amount of office space they had had as their headquarters, which had been created for forces at least twice their current size.

Since that time we have seen the abolition of the metropolitan authorities. Despite that—or perhaps because of it—there are now calls for further major changes in the structure of local government. As we heard today, there are suggestions that the counties should be abolished; some of those favouring abolition, though not all, are in favour of the creation of new regional authorities. Others favour the creation of city mayors on the American pattern. Mr. Heseltine is said to be keen on that idea. I believe that there is something to be said for it. But it is not my desire this evening to discuss the merits of those specific proposals. I am a sceptic about many of them. One must admit that the constant changes in the structure of local government have cost immense sums of public money. They have put greater power into the hands of central government and created a substantial amount of public disillusion.

The noble Lord, Lord Rippon, referred to the salary structure of chief executives when reforms were introduced. I remember addressing a meeting of magistrates early in my period of office at the Home Office in 1974. I sat next to a very agreeable man who was a chief executive. It later became clear that he was earning 15 per cent. more than the then Permanent Secretary to the Treasury. It occurred to me that that was an unusual set of priorities. I am sure that he was a chief executive of outstanding quality. However, it did not occur to me that he was worth 15 per cent. more than the noble Lord, Lord Croham, who was then Permanent Secretary to the Treasury.

I could continue giving examples of that sort, each of which creates further public disillusion about what is happening. Let me push my own doubts to one side. I believe that some changes will be made. They will carry major implications in regard to the police service. If we face the situation where counties are abolished it is likely that there will be those in government and in Parliament who will ask why the county police forces should be maintained in their present form. Of course they could be overseen by the district authorities acting on the basis of joint boards of the kind we see with, for instance, the Sussex police force, which is drawn from the West Sussex and East Sussex County Councils. There are many other examples, including the old metropolitan counties. However, it is far more likely that there will be calls for a more profound restructuring of the police service. We are already hearing that from the Home Affairs Committee of the House of Commons. We must seriously examine that pressure.

I shall give briefly some of the options advanced. First, there are those who argue that we should maintain the current system accompanied by the amalgamation of some of the smaller forces. The case for that is fairly strong. The present system ensures that in many areas of the country the police are close to the local community. If one changes that there is a real risk that public confidence in the police will be undermined. It is asked, "Why break up the system when it is working well?"

Secondly, there is the argument in favour of regional police forces. Were this country to have a tier of regional government the case for a regional police force might be rather persuasive. There would then be an elected regional government to which, in one form or another, the chief officer of the force concerned could be accountable. It is said that that would be more cost effective than the present arrangements, incorporating bigger specialist departments with improved career planning and so on. That presupposes that we have regional government. In Germany, with its Länder system where there is a Ministry of the Interior in each of the German states, and a Federal Minister of the Interior in Bonn, it works rather well —that is, until something goes wrong. Then there is the likelihood—and we have seen some examples of this in West Germany—of a major political brawl between the Länder and the Federal Government.

As I have said, there are plenty of other arguments to demonstrate that the police can be reorganised in such a way if there is a tier of regional government. The case for doing so if there is no regional government is far from persuasive. There is then the third option, to which the noble Lords, Lord Armstrong of Ilminster and Lord Knights referred and to which they said they were very much opposed. That is the idea of a national police force, which was a scheme put forward in the Goodhart minority report to the Willink Royal Commission. There are arguments for that and the Goodhart minority report was a very well argued position paper.

There are, however, serious potential disadvantages. Would we all be really happy at having a single Minister responsible for all senior police appointments? On some occasions would there not be a risk that it would be said that a certain senior officer's career was prospering because of his very happy relations with a particular group of politicians? Would there be a risk that the police would be seen as agents of central government and that a divide might open up between the police and the public? The choices are not easy. The country must recognise that, if we get involved in significant changes to the structure of local government, this issue is going to be high on the political agenda. I hope that, if we are to have any approach of this kind, it will not be made in a government department and then voted through by a complaisant majority in the House of Commons. We have seen far too much of that in the past.

Let us examine for a moment the contrast between the poll tax legislation that we have been discussing today and the Police and Criminal Evidence Act. The former was drafted wholly in a government department. The poll tax legislation involved a group of civil servants working directly to Ministers. The latter was the product of a serious, careful and professional inquiry by a Royal Commission on which there were judges, academics, former senior police officers and so on. The Police and Criminal Evidence Act worked, but the poll tax legislation is, as we all recognise, in a most frightful mess.

In a situation of this kind we have to avoid decisions being made wholly within government departments. In my view it would be entirely undesirable to make major changes in police force structure and organisation without some form of independent inquiry. Thirty years after Willink it is time for a Royal Commission on the police. It would be most unfortunate if substantial changes were forced on the police service on the back of changes in the structure of local government. If this issue is mishandled, it could do serious damage as regards relations between the police and the public.

8.3 p.m.

Lord Dean of Beswick

My Lords, like previous speakers, I express my appreciation to the noble Lord, Lord Rippon, for introducing such an important subject for debate. Perhaps I have an advantage over most noble Lords. On more than one occasion I have had to visit him as a local authority representative. Sometimes I had to visit him with a begging bowl when he was Secretary of State in Mr Heath's government. I did not always get what I wanted, but there was never any adversarial politics between us such as has unfortunately developed between us since. There was always some understanding of one another's position.

The noble Lord made some suggestion about the cost of the disturbance to local government under reorganisation. I had the privilege of being elected the new leader of the Manchester metropolitan district, as it became, when the Greater Manchester metropolitan council was formed in the reorganisation of the 1970s. We lost every chief officer that we had to the Greater Manchester county which had, in real terms, less responsibility than the old city of Manchester. In fact there was a search for jobs and work to give to the counties because a role had not been established for them.

The salaries were decided on a head count. I believe it was a former member of your Lordships' House who is no longer with us who chaired the committee that dealt with the matter. I believe the chairman was Lord Greenwood of Rossendale, a former Labour MP. We were horrified to find that people such as our third-tier officers, earning between £8,000 and £10,000 a year, were walking a quarter of a mile down the street into the new county offices where they picked up almost double that salary. No one has mentioned the cost of the last exercise in reorganisation in relation to redundancy money, which involved the dispersal or dismemberment of county councils.

The chief executive of the Greater Manchester Council was just over 50 years of age when he retired. He drew f194,000 in redundancy money. That is an indication of the scale involved each time we begin to monkey about with local government because the professional classes never underrate their own case. No mistake should be made about that. The cost of reorganisation was millions of pounds. It is not a laughing matter. What also saddened me was the Government's action in winding up some of the new towns. The sum I have spoken about of £194,000 is chicken feed compared with what has been paid to some of the officers from the new towns. The money has been taken from public funds to buy the officers out of position.

I am pretty leery about any massive changes taking place. The noble Baroness, Lady Gardner of Parkes, spoke about her experience in local government in London. My experience involved Manchester. I also know a great deal about Leeds: the experience is not dissimilar. It would be dangerous for any government or anyone with political views to think that a local government pattern can be produced to fit the whole of the United Kingdom: the demographic differences are so marked. Dorset and Somerset cannot be equated with local government bodies in London, in Manchester, a conurbation of nearly three million people, and in Leeds, the centre for about two million people. The areas are totally different.

There has to be some system for adjusting the areas. The noble Lord, Lord Alport, got it right when he said that local government was not imposed on areas but grew there because the people wanted a say in what was happening. To a great extent they decided the formation of bodies which suited their particular areas. That worked because local government has a history in this country of being far better as an innovator in some respects than national government of any political persuasion.

I hope I shall not offend anyone if I refer to some comments made to me by a former friend on the other side who is no longer with us. He was very prominent in local government at one time and an adviser on the subject at Conservative Central Office. Only three or four years ago he said to me: "You have to understand, Joe, that we have a Prime Minister who hates local government. She has no time for it. She sees it is an obstacle to central government policies being enacted quickly." There lies the seed of the antagonism that has existed between the two sectors. It is very sad indeed to see the way in which matters have changed over the past 10 years. I do not recall in my time in local government over 17 years, whether under a Labour or Conservative government, legislation so outrageously designed just to suit their own supporters. An outstanding example of that is education. I picked up a piece from my local newspaper which said that average expenditure per pupil in local authority schools is £83 per capita in the public sector. But in the opted out schools it is £326 and in the borough of Tameside, where I happen to live, the local authority schools receive £51 per capita. The opted out schools receive £326 per head. I do not accept that that is fair and equitable legislation with no political aim. I do not think that Members on the other side will accept it. I do not believe it would have happened when the noble Lord who initiated this debate was a Member of the Cabinet and responsible for dealing with such matters. It is outrageous.

I also talked about innovation. The great city of Manchester did not become Labour controlled until after the war. We had the second largest water undertakings in the country. Only the metropolitan undertaking was bigger. They were developed on a communal basis because Manchester also accommodated 17 other authorities on the way down from the Lake District. They drew from Manchester's water. They were not only looking after Manchester. But what happened? The metropolitan counties were set up. One previous speaker on the other side of the House said that responsibility for water and health had beer taken away from local authorities. I am not sure that even the health services that were taken away from local authorities have been improved. They were handed to people not responsible to those who could vote them out if they did not like what they were doing. I am not too sure that the midwifery services, the domiciliary services in Manchester and even the chiropody services for elderly people have been improved. Those elderly people were far better off then than they have ever been since because they had someone near them to whom they could complain. That was done by a Conservative Government. I am not a centralist in my own party. There are centralists in every party but they have to be watched. In any future arrangements I should like to see some power —I do not like using the word "power"; I want to see a lot of the responsibilities and services that local authorities used to have being given back to them.

It is correct to say that most people who have spoken in the debate have an interest. I cannot quote them all individually, but there seems to be a very strongly held view that the county councils as they stand—I am talking about the traditional ones, not the metropolitan ones that were disposed of—should be left alone to get on with their particular job. My noble friend Lord Stoddart of Swindon, who was supported by the noble Lord, Lord Armstrong, suggested the setting up of a Royal Commission to look into the general situation to see whether changes are necessary. That might be a good idea but I would be worried by the time factor.

The other general theme I picked up was that there does not seem to be any overwhelming desire by Members of your Lordships' House to see central government being totally responsible for funding education. From my own experience I would be against that. There is no question at all that, whatever the political colour of the government, if they paid 100 per cent. towards the piper, they would want 100 per cent. of the tune. I am totally against that. Though we all aspire to getting the best education for our children it can be achieved differently in different parts.

The noble Baroness, Lady Carnegy of Lour, was rather unfair when she referred to the dearth of speakers on this side. I do not like to play tit-for-tat; but I have to say that for a successive number of Labour debates not one noble Lord from the Government Back-Benches has spoken. She should also remember that more than 400 Members of your Lordships' House take the Government Whip. When I arrived in this House in 1983 I joined the company of just over 130 Labour Peers. We are now down to just over 100. That is no fault of the Labour Party. That is the fault of the Prime Minister who has just left office. She persistently refused to make up our complement. We do the best we can on reducing numbers. Do not be too eager to criticise on that particular issue.

Baroness Carnegy of Lour

My Lords. I hope I made it clear. I was not simply criticising the lack of speakers. I accepted that there have been times when noble Lords on the Opposition Benches have criticised this side of the House for not joining a debate in sufficient numbers. That is right. But in the context of this debate my argument was that we needed broad agreement about the review of changes in local government. It seemed to me that if we were not getting many ideas from the other side, we were unlikely to get that agreement. I was hoping that was not deliberate. That was why I made the point.

Lord Dean of Beswick

My Lords, the noble Baroness may have a point; but let us be quite clear about it. I took the view that she meant that we were not as interested as we ought to have been. I also say that we take part in the maximum number of debates. I speak as often as any on the Front Benches. I speak from the Front Bench today because of the tragedy that has hit the person who should have replied to this debate. But mainly I like to speak from the Back-Benches. It is not always what I want to do but we are few on the ground in terms of people who can get here. More than 30 Labour Peers and Peeresses have died since I joined this place, and they have only been partially replaced.

I take on board the powerful speech made by the noble Lord, Lord Harris. I do not particularly want to go too far into the question of proportional representation. I am not dodging the question of Lambeth. I should like to come back to that. The noble Lord referred to the future role of police forces. I speak as someone who is totally in support of police forces. A national police force would be disastrous. Some of the present police forces are too big. I do not have expert knowledge on the subject. I become a little disturbed when I continually read about prosecutions of people who were possibly known to be guilty but who got off on technicalities because senior officers presented a bad case or stepped outside the normal rules of presenting a case. I am not talking about one police force in particular when I say that. It is happening all too regularly to be ignored.

The noble Lord, Lord Harris, mentioned Lambeth. I have to say that my party and I have no time at all for the nonsense that has been going on there. Councillors are not elected to talk about foreign policy and events in the Gulf.

There is another way that I want to approach the question of Lambeth. We are all big enough to be a little forgiving sometimes. A few years ago the councillors then controlling Lambeth—it was Labour controlled—did some rather stupid things financially. I am not talking about dishonesty. But they did not levy rents, and they did not levy rates, in accordance with the law. The public auditor moved in. That resulted in a number of them being surcharged heavily and disbarred from holding office. The debts in relation to the first set of charges were paid some months ago, the councillors having been disbarred from the council. However, the public auditor has now found another set of figures covering the same period and has set the proceedings in motion once again to surcharge the councillors and disbar them from office. I have always believed that, once you had paid the penalty, that was enough. I hope that the present Prime Minister, who was a member of Lambeth Council, will look into the matter.

I should like to refer for a few moments to the poll tax. I am the first to say that when the issue was enjoined in this Chamber there was not unanimity for the poll tax on the Government side. In fact a considerable number of noble Lords on the Government Benches were against it. I remember that on one night an amendment put forward by a noble Lord on the Government side was beaten only when a fleet of buses brought 300 or so noble Lords here to vote. The Government now seem to have had a change of heart. They were warned at the time about what would happen. The Prime Minister of the day was adamant that this was the way to do it. She did not realise that she was shooting herself, not in the foot, but in the heart. The issue literally destroyed her.

Who are the other guilty men? I have before me a well researched article from the Sunday Times by Robert Harris. He is not a paid up member of the Labour Party. He gives a blow by blow account of what happened, from the time John Selwyn Gummer was chairman of the Tory Party and used £226 million of public money to promote the idea of the poll tax by leaflets and publicity. Do noble Lords know that every time someone dies it costs £9 to take the name off the poll tax register? How the charges mount up is beyond belief. It is calculated that this appalling blunder has cost an extra £3,390 million, and it is all because of party politics. This is a different standard. The councillors in Lambeth stepped outside the law and were punished, but when Ministers blow this money they are untouchable.

The biggest robbery on record was perpetrated by this Government. I referred earlier to Manchester's water, but in doing so I could have referred to Birmingham's water, to Liverpool's water and to Sheffield's water. Those cities were running their water systems without government interference and were doing it well. However, the Government decided that they could not give responsibility for water to the counties and so they set up new quangos. They handed over responsibility for water to the new water authorities. The man appointed chairman of the Manchester authority was the biggest opponent of Manchester Council, lived in the Lake District and happened to be an active supporter of the Conservative Party. But, of course, that was an accident. He was the most able man in the North-West in regard to water! What took place then? No one could question what the quangos were doing and then of course the Government decided to privatise the water authorities. In 1974 Manchester's water system alone was valued at more than £300 million. What was the global figure? What would the value have been if, when the authority was sold off to the private sector, appreciation of the assets had been taken into account? It was a giveaway.

I recall that the noble Lord who initiated this debate said at the time that the money should have gone back to the local authorities. Where did it go? It went into the Government's coffers to help Mr. Lawson and Mr. Major put us in the mess we now face. What have they done with all the money raised from privatisations? And what have they done with the billions of pounds of oil revenues? They have frittered it away. Yet we have a load of nonsense like the poll tax, the problems of which were predicted by members of both political parties.

We have had a good debate on an interesting subject. This is not a laughing matter. It is not funny that the Government can legislate on people's money and then deny them access to it. If a previous Labour government had dared to take into public ownership one small business without adequate compensation for those from whom it was taken, there would have been ructions. We must return to a society where there is more respect for other views and where standards are not decided by political bias. This Government have set a standard of partisanship in government which may not work to the best interests of people if there is a change of government. They have set the scene. They have filled all the quangos with their own supporters. They have set a standard which one of these days they may well come to rue.

I thank the noble Lord, Lord Rippon, for introducing this timely debate. I do not know the answer to the poll tax. But no one else does yet. My party will scrap it and start from scratch. It will join any group to discuss the alternative. That is the only way forward because no one has a sounder idea.

8.27 p.m.

Baroness Blatch

My Lords, I was in Birmingham earlier today, speaking to a conference of the Association of Metropolitan Authorities. I received a less than polite welcome during that conference. Therefore, the debate to which we have just been listening has not only been fascinating and enjoyable for me; it has also come as something of a relief.

I join other noble Lords in thanking my noble friend Lord Rippon of Hexham for initiating this excellent debate on the structure and finance of local government and indeed for his interesting and impressive opening speech. It is particularly opportune in the light of the Government's current review.

Our review is concerned with local government functions—a word that is missing from the title of my noble friend's debate—structure and finance; and in its scope it is the most wide-ranging that has ever taken place. Previous reviews have concentrated on either structure or finance, but not the two together. Clearly the questions of what local authorities should do, how they should be organised and how they should be financed are inter-related in a number of different ways. We now have the opportunity to look at all these issues together.

It is important not to see the current review simply as a review of the community charge. Of course we are looking at the community charge. As many noble Lords have said, there are a number of aspects which we know are of concern both to local authorities and to community charge payers. We have already announced a number of changes for next year which are designed to provide help to a great many charge payers; and our review will be looking at both the principles and the detailed operation of the community charge. But that is not the sole purpose of the review.

All of us who take an interest in local government —and there are many in your Lordships' House who have a great and detailed knowledge of the subject —will recognise that the relationship between central and local government is of the utmost importance. It cannot be otherwise. Local authorities currently raise about one-third of their revenue from the community charge. The remaining two-thirds comes from the business rate and from government grants. The national taxpayer makes a major contribution to local authority revenue, so government cannot help being closely involved in local affairs. They have a responsibility both to Parliament and the taxpayer to ensure that the arrangements by which local government raises and spends its revenue are right in principle and efficient in their operation.

However, the relationship between central and local government should reflect much more than that. It should not simply be a question of government, in their role as paymaster, holding local authorities to account. There should be a genuine partnership, based on the recognition that some functions are best carried out locally and some centrally, but that at the end of the day local and central government have the same aim; namely, to serve the public who have elected them and whose representatives they are.

This recognition that local and central government have different roles is very important. There are areas, such as education, where policy must be determined by Parliament. It is quite wrong for local authorities, which are charged with the delivery of those services once Parliament has determined legislation, to seek to resist national reforms with which they disagree so that they are implemented in a way which differs from that envisaged by Parliament. Our review will certainly have to address the very important question of where it is appropriate for central government to determine policy and priorities and where it is appropriate for local authorities to have discretion.

Can it really be right that we have reached the position where it is no longer thought particularly remarkable if a local authority takes legal action against Her Majesty's Government and that one part of the public administration should, in effect, be suing another? What could be more wasteful of public resources? I see that the noble Lord, Lord Harris, wishes to intervene. I am happy for him to do so.

Lord Harris of Greenwich

My Lords, I agree with the noble Baroness in that I believe that there should be a more satisfactory partnership between local and central government, but given the fact that the courts have very often held in favour of local authorities, the point she is now making is a very weak one.

Baroness Blatch

My Lords, I think that the noble Lord missed the point I was trying to make. I believe that we ought to have a partnership which eliminates the need for taking such action. We are talking about a way forward. I am simply saying that the frequency with which such action takes place is no longer remarkable. That is the issue which needs to be addressed. As I said, what could be more wasteful of public resources? That kind of friction may produce a great deal of heat, but it certainly does not provide a very edifying spectacle. Our neighbours overseas must be astonished that it could happen. Central and local government should be pulling together, not fighting one another.

Our review of local government is based on a strong desire on the part of the Government to re-establish a more stable relationship between central and local government. We are anxious to ensure that local government itself is closely involved in the process. We asked the national local authority associations to provide their agenda of the issues they want to see addressed by the review. They duly submitted their thoughts, which we are happy to include in the coverage of the review. We have invited them to put forward their views on the agenda items as soon as possible.

Our interest in ensuring the widest possible participation in the review has resulted in our invitation to all parties to contribute to it. That is a genuine offer, which I am pleased to say has been accepted by the Liberal Democratic Party, the Scottish National Party and Plaid Cymru. It is a matter of genuine regret to the Government that the official Opposition have felt unable to respond positively, but have found it necessary to stipulate a precondition. The precondition is a narrow one: it is that we should commit ourselves from the outset to the abolition of the community charge. But, as I have said, the review is much wider than that. It is a great pity that the Opposition are denying themselves the opportunity to participate in a debate which is of immense importance to all our citizens and which will shape the kind of local government we have for the foreseeable future by seeking to limit the terms of the review. It is also equally indicative that my comments have been the source of some amusement to noble Lords on the Benches opposite.

The Government are not being intransigent in refusing to rule out the community charge from the word "go". The House will, I hope, accept that we simply cannot announce a review in which all options are open and then instantly rule out one of those options. The community charge may not be universally popular but there are a number of features which have found widespread support; notably—and this point was mentioned by my noble friend Lady Carnegy of Lour—the principle that everyone should make some sort of contribution to the cost of local services. We are not so bold as to claim that we know the answers before we start. There would be little point in undertaking a review if that were the case. We shall not rule out anything until we are convinced that it is right to do so.

I hope, even at this late stage, that the Opposition might reconsider their position. Local representatives of the Labour Party have not been as reluctant to participate as the parliamentary party. Labour leaders of councils have taken part in discussions with my ministerial colleagues and myself and we have had many constructive letters from the leaders and chief executives of Labour-controlled authorities. They have sensibly decided not to let slip a great opportunity to contribute to the debate. I am sure that they find it difficult to understand why they are getting so little support from their national counterparts.

As I said, any review of local government must take as its starting point the functions which we expect local government to carry out. These have been refined over the years, but for the most part local government today carries out as broad a range of functions as it has always done. The announcement of the current review has brought forward a great many suggestions for change. It is argued, for example, that the community charge could be reduced if certain local authority functions were either fully funded by central government, or even administered centrally. Again, that point was raised by several noble Lords, but especially by my noble friend Lady Carnegy of Lour.

I have said that nothing is ruled in and nothing is ruled out. We shall certainly be looking at the range of local authority services to see whether it is right that they should continue to be local functions; and, if so, whether they are administered at the right level. But I have to say that any case for change must be made on service grounds and not simply in order to reduce the community charge. That would be allowing the financial tail to wag the service dog. We must be certain that change would be in the best interests of any service for which it might be suggested.

I should like to make one further point about local authority functions. It is not enough simply to take decisions about the responsibility for administering services. Any government who did that would be shirking the very important responsibility of ensuring that services are provided to an acceptable standard. That is a responsibility which this Government have not shirked; and we do not intend to shirk it in the future.

Alongside functions we will need to consider structure. Many noble Lords will be aware that the reorganisation of local boundaries which took place in England and Wales in 1974 is still a matter of controversy in many areas. Old geographical loyalties die hard and many of those responsible for the changes must have been surprised at how much latent interest in local government matters suddenly came to the surface. Much may, of course, have stemmed from the change in postal addresses which accompanied the change in administrative arrangements—something which did not happen in the 1965 reorganisation in the London area. People were allowed to retain Middlesex, Kent and Surrey addresses, even though they then lived in Greater London. That was done differently nine years later. The depth of feeling one still discovers on this subject, after nearly 20 years, is a warning to future reformers.

At this stage it is too early to give any indication of the likely outcome of the review on structure. We are aware of the many suggestions which have been put forward in this area and we are looking carefully at all of them. Unitary authorities are a common suggestion, but within that umbrella term there are a number of patterns. One could envisage abolishing all county councils or district councils. Again, one could envisage entirely new administrative areas. Some districts—such as those which were formerly county boroughs—could be turned into unitary authorities, while leaving a two-tier pattern in the rest of the country.

Change could be brought about all at once or, as has been suggested by some noble Lords, it could be introduced by the evolutionary approach. We shall of course be looking at the need for very local representation. We shall also consider the remarks made in that context by my noble friend Lady Platt of Writtle about parish councils. I can also assure the House that the issues and implications of restructuring local government, such as the important points made about policing arrangements raised by the noble Lords, Lord Knights and Lord Harris of Greenwich, will be thoroughly examined. All those possibilities, and others, are being looked at as part of the review. Separate discussions are also taking place in Scotland and Wales where local government has its own character and traditions.

We also believe that the time is right to take a fresh look at how local authorities are organised and managed internally. There are many different approaches to that subject and plenty of good ideas in the air. Some councils are already experimenting informally with new ideas about organising themselves.

We are asking questions about the decision-making process inside local authorities and the role of councillors. The present system of decision by whole council or committee dates back to the 19th century. We need to consider whether there may not be better and more efficient ways of doing things. Should we be moving to a more executive style of decision-making and management, perhaps with directly elected leaders who could be given extra authority in order to get things done more quickly?

If we did, what would be the role of other councillors? Does the number of councillors need to be revised? All those are big questions and a lively debate about them is already under way in local government.

My noble friend Lady Platt of Writtle talked about councillors' remuneration and the need to attract people of the right calibre. We shall be looking carefully at that point which is within the scope of the review The noble Viscount, Lord Hanworth, mentioned proportional representation. Even electoral arrangements are within the scope of the review. If people have been contributing to the debate I am sure that that point has been put vigorously.

Finally, we come to finance. I hope that I have shown that our review will be looking at that question in a much wider context, but I accept that many people find it the most important part of the review.

There are a great many issues of principle to be examined, many of which your Lordships have raised this afternoon. I have already said that the government currently provide about half of local government revenue. Is that the right level? Should the Government provide a much higher percentage? Or would that be going too far in the direction of central control? Or should a local authority be able to raise much more of its own revenue, perhaps from a variety of sources?

Beyond those questions of principle there are further questions about the right revenue-raising mechanisms. Is the community charge the best way of collecting local revenue? Should we return to a property tax? Is it right that most adults in an area should contribute something to the cost of local services? If so, can arrangements be devised which do not place too great an administrative burden on local authorities? Those are all questions which have exercised your Lordships this afternoon, and which will continue to exercise the Government during the course of the review.

One common suggestion is that local taxation should bear a greater relationship to the ability to pay. Many interesting suggestions as to how that might be achieve I have been put forward. But they open up a range of further questions. How is it to be achieved? Even the Inland Revenue does not have up-to-date information on the incomes of all 41 million adults in Great Britain, since most people either pay no tax, or have their tax collected through PAYE, and never receive a tax return. Apart from the administrative difficulties (and they are many), there are also questions of principle. The confidentiality of tax records is, quite rightly, a matter of great concern to many people. That point has been raised in the debate.

Those are serious questions. They do not, however, rule out a link between ability to pay and local taxation. There are other ways of tackling the issue; and we are looking at them. The question of spouses with no income is often raised in that context. Again, the matter is not straightforward. How does one distinguish between the non-working wife of a duke and the non-working wife of a dustman? But again, the matter of reliefs and exemptions in any system of local taxation is clearly something we shall be looking at.

Lord McIntosh of Haringey

My Lords, I am fascinated by the Minister's phraseology. she will recall that it was Mr. Ridley as Secretary of State who used the example of the duke and dustman. His argument was that there should be no distinction in taxation between them. Is that still the Government's view?

Baroness Blatch

My Lords, I find the noble Lord's intervention depressing. The Government have said that they are prepared to take a clean sheet of paper and to look at all issues such as finance, structure and functions. They have not ruled out the community charge. To snipe about what was said a year ago is not constructive. It does not push the debate on one iota.

The right reverend Prelate the Bishop of Manchester was less than generous in his remarks about the relationship between local and central government as it related to the North-East and North-West. He cited one example in Manchester which I visited and found to be impressive. He presented it as an isolated example, but there are more than 500 companies working with inner city task forces and with local authority and central government funding. There were 161 projects set up last year. There are many examples of successful partnership arrangements across the North-East, the Midlands and the North-West. They are good examples of how differences can be buried and how local government, central government and the private sector can work constructively together.

My noble friend Lady Carnegy of Lour asked for a response from all Front Benches to proposals for what she described as the imposition of a 100 per cent. grant from central government to local government. She said that it would be an option in the absence of a consensus about the future of local authorities. That may also answer the point made by my noble friend Lady Gardner of Parkes. It is an interesting idea. My noble friend suggested that we should try so far as possible to reach an all-party agreement about a way forward in local government. Again, I say that it is depressing that our colleagues opposite are not part of the debate. If we can work together and achieve the broadest degree of consensus, there is the possibility that we shall find the right solution which will carry us forward for more than 20 years, as my noble friend Lord Rippon said.

My noble friend Lord Alport was robust when he said that whatever happens we must not extend the powers of any central government department at the expense of local authorities. The purpose of the review is to find the best way of organising and funding local services. He can rest assured that we shall not be increasing the importance of a central government department at the expense of local government. My noble friend Lord Norrie was worried about county environmental functions and responsibilities. The review is looking at functions and deciding the most appropriate level for the delivery of those functions. Clearly environmental responsibilities will feature as part of that consideration.

My noble friend Lady Gardner of Parkes also mentioned allowances. She said that where local decision-making results in value for money, it should be left at a local level and not interfered with. Again, I assure my noble friend that that point comes within the scope of the review, because at the end of the day we want local government that makes sense, which is the point my noble friend makes.

Perhaps I may say again how grateful I am to my noble friend Lord Rippon for initiating the debate and to noble Lords who have contributed to it. I can give your Lordships an assurance that the entire debate will be submitted to the review as an important statement of the House and a contribution to the body of opinion on this issue.

Noble Lords who have raised specific points in relation to the community charge this afternoon may therefore be assured that all of them will be carefully examined as part of the review. I invite any noble Lord who would like to elaborate on anything said in today's debate, or indeed to offer new ideas, to make a submission in writing either to me or to my right honourable friend the Secretary of State. We welcome all constructive suggestions, and all contributions from your Lordships will be fully considered as part of the review.

To try to stabilise and develop a fruitful relationship between central and local government is no easy matter, but I hope that I have left your Lordships in no doubt that the Government will do their best to bring about such a relationship, with all the benefits which that will bring to local people.

The quality of the contributions to the subject of local government today has more than justified the calling of the debate by my noble friend Lord Rippon of Hexham. We thank him for that.

The Lord Bishop of Manchester

My Lords, before the noble Baroness sits down, perhaps I may ask whether the review also includes consideration of the damage being done to local education authorities and their functions by the opting-out provisions. More and more schools may take up that option.

Baroness Blatch

My Lords, I do not accept the point made by the right reverend Prelate that damage is being done. Certainly the future of local education authorities, of education and how local authorities organise it, are all within the scope of the review. I refute the point made by the right reverend Prelate.

8.50 p.m.

Lord Rippon of Hexham

My Lords, I thank my noble friend the Minister warmly for the way in which she replied to the debate. As is usual in any debate on local government there is always a sufficient divergence of views for the Minister to be able to pick and choose. This has happened very effectively in the past. For my part I welcome everything she said about the concept of partnership. We have not heard enough about it in recent years.

Speaking as a new loyalist, I entirely share her view that we should wipe the slate clean and start again. I suppose we may say of this debate what an experienced diplomat said after one conference: "Nothing has been settled, but the concept has been strengthened". One concept has run through all the speeches and I am sure that my noble friend has taken it on board. We wish to see more decentralisation from Whitehall, whatever system may be devised.

I have made many notes on the speeches and would like to say something about them but I am sure I shall be forgiven if at this stage of the proceedings I simply say that they all deserve careful study. It seemed to me that the speeches fell broadly into three categories: first, there are those who did not want any change at all. They were like the late Mr. Justice Astbury who frequently said, "Reform, reform! Aren't things bad enough already?" Secondly, there are those who want a blanket comprehensive review with reference to the Royal Commission. I share the doubts that have been expressed about that. We had the Layfield Report and the Redcliffe-Maud Report. Royal Commissions are a device by which governments tend to kick the ball into the long grass from which it normally returns muddier than before.

On balance, I am glad that many of your Lordships shared my view that we should proceed in an evolutionary way. I certainly do not believe that we should freeze everything because a great deal can be done, without any fundamental change, that would create an improvement. I did not quite follow my noble friend's reference to my having mentioned 20 years. I do not know whether that applied to what I said about the review that was supposed to take place under Sections 47 and 48 of the Local Government Act 1972.

Baroness Blatch

My Lords, if my noble friend will allow me to intervene, I thought he referred to any changes having to last at least 20 years. I expressed the hope that this one would last at least 20 years and perhaps more.

Lord Rippon of Hexham

My Lords, I said at least several parliaments and more than one generation. In the 1972 Act it was envisaged that a review should take place not earlier than 10 years and not later than 15 years after the coming into force of the Act. Things are done these days by orders, and even by circulars, and the Government have just extended that to 18 years; there was no need to change the primary legislation. However, I have said enough about that from time to time.

All that the Government have done is, in 1985, to restrict the terms of reference of the Boundary Commission in regard to local government. If we examine the situation area by area using that procedure, we can deal more effectively than we have recently with the problem of Humberside. I did not deal with the police, I know nothing about crime in Reading.

Lord Graham of Edmonton

There is none!

Lord Rippon

My Lords, I know that in my own rural area of Northumberland we were offended when the police wished to take our local policeman away because he had not made an arrest for 20 years. The truth was that he could spot any villain from the local pub. He knew them all, there was no crime. We may do better with a few more police on the beat and to that extent we might also show a good deal of consensus on that. Having said that, I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.