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Mr. Hughes : That is a bit rich when Ealing's rate support grant this year is £72.9 million and Harrow's is only £43.1 million. The hon. Gentleman knows that there are strict criteria to be met for a council to be rate capped. Harrow does not meet either of those criteria, although it nearly met one.
Mr. Gummer : My hon. Friend should point out that the situation has been altered considerably by the fact that Ealing was rate capped, which meant that excessive rates were pulled down. This year Ealing is getting an £8 million increase in grant. Therefore, it could have a rate increase on a spending assumption of 3 per cent. rather than 35 per cent. Anyone who lives in the London borough of Ealing, as I and my hon. Friend do, could give it a long list of things that it could stop spending on, as well as one or two things that it could start spending on, in order to provide better services at lower cost.
Mr. Hughes : My hon. Friend's last point is precisely the one that I want to make. We should pursue the comparison between the London borough of Harrow and its neighbours, Brent and Ealing. Living in the London borough of Ealing and seeing the change of administration and the contract for the collection of rubbish taken away from the private contractors and given back to the council work force, I did not think that the system had been changed, rather that it had been abolished ; certainly the council does not come round very often to collect the rubbish.
If one looks at the movement of the population or talks to estate agents, one realises that people are clamouring to get out of Ealing and Brent and into Harrow. Any estate agent in my constituency will tell you that that is the
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reality, and even if people are not moving they are making sure that their children go to school in Harrow. We are grateful for the money that we receive as a result of children leaving the appalling education systems of Brent and Ealing to move over the border and enjoy one of the best in the United Kingdom. The figures show that Harrow's education system has been top for three years.The Government's provisions represent a generous settlement and mark the end of a bad system, but it is up to councils to make spending decisions and to ensure protection for their ratepayers by making them prudently and sensibly. One makes the comparison between Bradford council, for example, which makes prudent decisions and lives within its means so that Bradford and its people may prosper and Sheffield and Brent councils, which have to make huge cuts in their services. Labour Members never comment on them, but those huge and unplanned cuts in services greatly disadvantage the people living under those authorities. If the Labour party were serious, it would welcome the Government's measure as being a generous settlement. 8.50 pm
Mr. Pat Wall (Bradford, North) : It is as well to remind ourselves of the figures quoted earlier by my hon. Friend the Member for Newham, North-West (Mr. Banks), now that we face a cut in rate support grant in real terms--which is based on the rate of inflation--and which, as a result of the Government's disastrous economic policy, is far lower than I realised. My hon. Friend points out that the Government's grant-related expenditure provision has fallen from 46.2 per cent. to 43.3 per cent., and is now £5 billion less in real terms than in 1978-79. Over the whole of that period, rate support grant has fallen by £28.4 billion. Next year, we shall also face increased expenditure of about 16 per cent. arising from the introduction of the poll tax, at least in London.
In two debates on rate support grant I have made a plea against the cuts imposed on Bradford. Tonight, it is a pleasant duty to be in the Chamber to hear remarks about the extra money that Bradford has been given, whereas Wakefield and Leeds has not. I am sure that that is purely fortuitous, and happily coincides with the return of a Conservative council to the metropolitan borough of Bradford. For two years, I argued the case against the £28 million cut in Bradford's grant resulting from application of the so-called multiplier, even though the council at no time exceeded its grant-related expenditure. I have protested also against cuts of about 70 per cent. in real terms in capital allocation grant over the past four years. I assure the Minister that I am sure those cuts were not political-- but then I still believe in the Cottingley fairies, as do most local people. Those cuts are part of a general attack on local authorities, established during the course of implementing about 20 new Acts. They are also part of a privatisation programme that threatens the jobs of more than 700,000 people, and of a general policy of shifting resources from the poor to the rich. As if the cold, hard figures were not bad enough, the harsh realities for many local authorities and their citizens are castastrophic, yet earlier the Minister said the Government like to give help to those who most need it. In a previous debate, I crossed swords with the Minister on the question of council house rents. Subsequently, he
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said he had treated me rather harshly. However, I was not particularly terrified by the Minister's comments or arguments on that occasion. Perhaps it was because I was speaking from the Bench apparently permanently occupied by my hon. Friends the Members for Bolsover (Mr. Skinner) and for Bradford, South (Mr. Cryer)--one of whom is the most fearsome of my right hon. and hon. Friends, while the other is among the biggest of them. However, it is worth considering the council rents situation in a city such as Bradford. Nationally, there has been a two thirds cut in local authority housing construction since 1979. Despite sales to private tenants, Bradford still has 35,000 council properties. Its repairs backlog alone is budgeted at 10 times the Government's total housing allocation. Bradford has 7,628 people on its housing waiting list, and 1,047 priority need homeless. Only a handful of pensioners' flats are being built.In the period between 1983-84 and 1987-88, and before the new social security provisions came into operation, there was a doubling of Bradford's homeless due to mortgage defaults. The loss of housing benefits of £80,000 per week, £67,000 of which is council housing revenue, amounts to £4.1 million per year. That is a savage attack on the ability of Bradford's poor to purchase goods, having a knock-on effect on the local economy. The maximum level of housing benefit is set at £38.93p per week. Under the new local government housing finance Bill, Bradford will have to meet extra expenditure out of housing finance. At present, 70 per cent. of council rents are met from housing benefit.
In an earlier brush with the Minister I raised the point that rent arrears in Bradford have for the first time risen above £2 million. Nationally, there has been a 50 per cent. increase in council property rents. It is absurd for the Government to argue that 50 per cent. of people have deliberately decided not to pay council rents. The figures I give arise because of the change in housing benefit and the resulting increase in poverty.
Bradford has suffered one increase of £3 per week in council rents, with another to follow. We have had a freeze on housing benefits. There have been cuts in the standard of living, with, for example, 9, 500 school meals being abolished every day because of increases of 30 and 50 per cent. in school meal prices. We have already seen the dismissal of the poorly paid women working in our school meals service, with redundancies reaching an estimated 1,000.
I conclude with two real cases. Conservative Members do not like hearing about cases of hardship but I assure them that they are enjoyed even less by those actually suffering deprivation. One of my constituents is aged 63, has had operations on both hips, and can only get around on sticks. He has one lung, and he has an epileptic son of 23 who is out of work. For two years they have stayed in a house without gas or electricity, cooking on a small camp stove, huddled around a paraffin heater that gives off more fumes than heat. They have had no running water since the winter of last year. When the woman was taken into hospital she lost £2 in benefit because she was treated as a new customer and reassessed.
On Christmas Eve I visited a family whose doctor had referred them to me as suffering from malnutrition. They were not wicked or feckless people ; this was a single mother with two teenage children. The 18-year-old son had lost his job and his unemployment benefit had been
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reduced. The 17-year-old daughter was on a youth training scheme, and some bureaucrat had decided that she should be paid monthly rather than weekly. She had to find £20--£5 a week-- in fares before she was paid. The lass could afford so little food that she fainted twice at work.Those are not special cases, but the reality of life in Bradford. Those are the problems of inner-city deprivation, which emerge from the cold figures representing cuts in Government support for local authorities during the period of Conservative rule. The problems will worsen as a result of the poll tax and the new Housing Act. The Government are storing up for themselves an enormous revolt by people who will no longer be able to suffer, for themselves or their children, the misery that they and their policies are inflicting. 9 pm
Mr. David Wilshire (Spelthorne) : Every time an hon. Member gets to his feet there is a rustling of papers as other hon. Members search for whatever ammunition can be found among the statistics relating to the speaker's local council. Let me put them out of their misery and give them the statistics for my borough and county councils. In the past seven years my borough council, Spelthorne, has reduced its rate by more than 67 per cent.--so there is no need to look that one up. My county council, Surrey, is out of grant, so there is nothing to be gained from asking me what happens in a county when RSG is reduced. Despite rate reductions and loss of grant, services in both councils have improved year by year. There is not necessarily any connection between reductions in rates and grant and cuts in services, and I have examples to prove that.
Whatever hon. Members may make of local cases, the debate in general--as always with local government debates--generates more heat than light. We hear claim and counterclaim. The same aims are espoused on both sides of the House. Both sides say that they want better democracy and better services. We then indulge in a kickabout because we are apparently heading in opposite directions. Let us take one of those claims. Both sides have said tonight that they want better democracy. I have no hesitation in saying that the way to preserve democracy is to seek better value for money, to protect ratepayers and to lay down minimum standards for councils to follow. We are being accused tonight--as in every local government debate, especially debates about money--of being anti-democratic, but where is the democracy in the sort of waste that Labour councils typically go in for? Where is the local democracy in empty council houses and uncollected rates and rents?
Mr. Soley : Let me follow that line. Where is the democracy in the 6 per cent. of Government-owned houses that are empty--three times more than the local authority average? Where is the democracy in the other kinds of waste brought about by the present Government? Is it being suggested that we should abolish national as well as local democracy?
Mr. Wilshire : That makes my point entirely. Both sides will claim that they are in favour of democracy and then make opposite points. The other thing about this debate on democracy and finance that I find difficult to stomach is that those who try
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to lecture us on our lack of democracy are themselves guilty of double standards. We are told that local government should be free to do what it likes--except, of course, if it wants to go on running grammar schools. We are told that local government should be free to raise its own funds--except, of course, from council house tenants or ratepayers when it is convenient or politically expedient not to bother to collect their money.Double standards will get us nowhere in this debate. The way to make progress is to stick with the facts in the reports before us, to look at the 1989-90 settlement and to accept the reality of the planned expenditure for the final year of the present system being allowed to rise by 8.6 per cent. Opposition Members may wish to make cheap points about inflation, but an increase in expenditure of 8.6 per cent. will be above whatever they claim. It was asked earlier whether an increase in inflation would mean further change and an increase in rate support grant. If inflation goes down, as we believe that it will, will Labour councils hand back some of their rate support grant? Will nobody volunteer a refund?
Mr. Bernie Grant : Does the hon. Gentleman accept that local authority inflation is higher than inflation generally because local authority inflation includes a number of items that the Government do not use to calculate the national inflation figures? If that is the case, the 8.6 per cent. increase that the hon. Gentleman mentioned is barely sufficient to cope with local authority inflation as opposed to national inflation.
Mr. Wilshire : I accept that some local councils are guilty of increasing their expenditure because they cannot be bothered to keep it down, and I accept that some pay increases are unnaturally high because local government does not do its best to keep pay settlements down.
The report represents good news. It means that if councils are sensible there need not be a rate increase of more than 2 per cent. It means that services can be protected unless councils have party political reasons for trying to undermine them. It means that there need be no risk of variations. One of the reports that we are considering tonight is the fourth report for 1986-87. All those years after the money was spent, council treasurers are still trying to work out what the income might be. That is crazy.
The other piece of good news about tonight's debate is that this settlement is the last, so we shall not have any more gobbledegook of the kind in these reports. Given all that good news, why do Opposition Members make so much fuss? The answer is simple. Labour Members make a fuss because they do not want the public to know the truth. They want to disguise the fact that the rates need go up by only 2 per cent. We get all this hot air because the Labour party wants to mislead the public about the need for rate- capping and the truth about why it was introduced. When Labour Members talk about local government they are still hooked on some desperately out-of- date beliefs. They still believe that income is limitless and that the ratepayers can be soaked. They still believe that throwing money at a problem is the only answer and that value for money always means making cuts. When will they learn that value for money means that
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if local authorities save money where they are wasting it they can use that money to provide more and better services in other sectors? 9.8 pmMr. Ken Livingstone (Brent, East) : I did not originally intend to speak in the debate, but there have been so many completely unjustified and unbalanced attacks on Brent council that I wish to put the record straight. I am prepared to be as critical of Brent council as any Conservative Member when it is not working in the interests of local people. It is not my duty as a Member of Parliament to explain the shortcomings of the council to the people ; it is my job to represent the views of the people to the council. Neither am I here to defend the track record of the last Labour Government. I condemned them at the time, as a local councillor. I condemned them when they made cuts in the rate support grant in the aftermath of the IMF talks and I condemned them when they took extra controls to interfere in the running of local government. That mistake has been amplified 100 times by the Government.
There has been a drift to centralisation which is totally unacceptable and profoundly damaging to competent administration in local government. I shall give one example from the past. When the Labour party took control of the GLC in 1981 and inherited a Tory budget, we took office under a commitment from the Tory Government to provide £140 million of rate support grant out of a total budget of £450 million. Within days of Labour taking office, we were told that that was to be cut arbitrarily by £5 million. Once we announced that we were going ahead with the commitment to reduce fares, we were told by Government that the entire £140 million would be withdrawn. How can one budget in a realistic way when money is clawed back in that way? That was only the beginning of the Government's track record. It has got far worse.
I am not surprised that, throughout the country, lifelong Conservative, Labour and Alliance councillors--people who committed themselves to providing a service to their local communities--have given up active local government service because they feel that they are being reduced to ciphers of central Government.
I ask my colleague, the hon. Member for Harrow, West (Mr. Hughes), as well as condemning mistakes that the present Brent administration may have made, also to condemn the appalling acts of profligacy by the outgoing Conservative administration that ran Brent for three years with the support of three Liberals. Because it was coming up for re-election and did not want to face the consequences of the way in which it had mismanaged the borough, it left a budget with expenditure of £226 million and income of £165 million--a gap of £61 million. I am amazed that the district auditor did not surcharge it for that irresponsibility.
I am not surprised that problems were caused. I have criticised decisions that Brent may have taken that in practice have not dealt with those issues as wisely as they might have been handled. But what occurred on that occasion was an outrageous and scandalous abuse of public trust, and if blame is to be heaped on Brent council, let it be equally and fairly spread.
The real blame rests with Government, who have massively cut rate support grant. We in Brent are now
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getting 40 per cent. less in grant from Government than the area received under the Labour Government. Under Labour, moneys were allocated to local authorities on the basis of need on defined criteria, which were applied equally to every local authority. As soon as the Conservatives took office, new criteria were introduced which allowed the Government to fix the system in a partisan way each year so that some councils saw all of their rate support grant clawed back.What an outrage it is that for the best part of this decade ILEA has not had a penny of rate support grant to go towards providing education in inner London, yet Tory councils throughout the south-east are often getting 40 to 50 per cent. of their education costs covered. The allocation of grant to local authorities should be conducted on a completely even-handed basis, not on the basis of whether they are Labour or Conservative.
How would Conservative Members like it if a Labour Government were operating in that way? How would they like it if they suddenly had their entire rate support grant clawed back by central Government while Labour- controlled councils saw their income from Government doubled? They would be outraged.
What would be said of the board of directors of a private company that fiddled its accounts in the way in which the Government fiddle the rate support grant system? We would call it a crook and say that it was guilty of fraud. But because the Government can make the rules and laws and then change them year by year, they get away with it. On how many occasions have Ministers had to propose emergency retrospective legislation to make legal decisions that they had taken but which had been overturned by the courts? Billions of pounds have had to be dealt with in that way. It is a disaster. How can local authorities at officer or member level plan a programme of expenditure fairly and even-handedly when the rules are changed year by year?
I fear that local government in Britain is virtually dead. We shall soon be at the point when nobody will wish to serve in local government because they will feel that they have no real responsibility and power. We shall have witnessed the death of a vital strand of British democracy by a series of stealthy, devious underhand mechanisms conducted by the Conservative party.
9.14 pm
Mr. Simon Coombs (Swindon) : It is a pleasure to be the last Back- Bench Member to speak in what I hope will be the last debate on the rate support grant.
In the few minutes remaining, I shall bring the House up to date with the adventures of the borough of Thamesdown. The councillors who form the majority in the borough have been described as "loonies". That description is not entirely fair, despite the fact that they indulge in support for organisations of every kind ; despite the fact that they link with far-off countries in central America which will be of little benefit to the ratepayers of Swindon ; and despite the fact that they warned in 1984 that rate capping would prevent them carrying out their responsibilities--since when they have been able to carry them out to a greater extent at greater expense to the ratepayers. There is money in Thamesdown for everything--for leisure centres, community centres, modern sculptures which give offence to almost everyone in the borough and a plethora of daffodils which are a delight to
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the eye every spring. There is never any shortage of money in Thamesdown. The watchwords are "naughty but nice". To compare Thamesdown's grant-related expenditure with what the Government suggest as appropriate is to compare Mount Everest with Ben Nevis. Rate capping inevitably happened in 1984. As the rate income of the borough rises because of the growth and prosperity brought by the private sector, the rate level is reduced by Government, and it is hard for anyone to argue with that. Inevitably, however, that means that ingenuity is needed from the local Labour councillors. They instructed the borough treasurer--a man of the greatest probity and resourcefulness--to look for new ideas. The first suggestion was creative accountancy, which kept the ship of state afloat for three or four years. One cannot accuse Labour councillors in Thamesdown of lacking flexibility. They said that it was not possible to sell council houses. When they were ordered to do so by Government, they had no right-to-buy forms available and told interested customers to go to Bristol. Then they relented and sold about 4,000 council houses in a few years. Inevitably, the sale of assets followed.Councillors will not sell the shopping centre because it is a monument to municipal Socialism, but they are at last prepared to consider selling land. The first land that they think of selling this year is part of the largest and most attractive park in the centre of town, but it will help them to dispose of a building nearby. My constituents say that if they sell part of the Lawns they will sell anything. I say that they can sell almost everything else, but not public parks.
The next move is what is known as factoring--a new name on the local government scene which means mortgaging the future and disposing of assets to match current expenditure by letting it off to the finance men of the City. The Audit Commission says that that method of local government business is wrong and illegal, but that has not stopped the council in Thamesdown. On 22 February, we shall know whether it is legal or not. If it is, the people of Thamesdown will lose out on the ever-increasing value of the land that is to be sold in one heap to pay for this year's current expenditure. If it is illegal, the council will almost certainly be unable to formulate a legal budget for next year. If that happens, my constituents will almost certainly suffer the most savage cuts in services, which need not have happened if the council's financial affairs had been planned and executed in a proper way over the past five years.
The information provided to the House for this debate shows that of the seven rate-capped councils five were prepared to accept re-determination-- four were successful in obtaining an increase in the funds available and only one was told that it must spend at last year's level--and two councils refused to talk to the Minister. The people of Thamesdown and my constituents lose out, because of all the Labour councils up and down the country Thamesdown is one of only two that will not talk to my right hon. Friend the Minister.
I long for the time when this crazy system is abolished for ever. It leads local councils into the muddle and stupidity that I have had to witness over the past five and a half years from Labour councillors in my borough. The sooner they and the system go, the better.
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9.20 pmMr. William O'Brien (Normanton) : A number of issues arise out of the rate support grant reports. The Minister criticised the rate support grant system and swanned around criticising local government. We should make it abundantly clear that the Minister referred only to the new proposals and the poll tax but we are discussing grants. Under the new procedures the grants system will apply with 75 per cent. or 80 per cent. of local government income being controlled by the Minister. The grant system will still apply but not in its present form. There is substantial concern about the way in which the new grants system will apply when the present system is abolished. If anyone thinks that the Minister will introduce a formula under the new grants system which will satisfy all theneeds of local government--particularly the authorities represented by certain Tory Members who have been expressing concern at the way they were treated under the present system--they are living in cloud-cuckoo-land. Since 1979 there has been a reduction in rate support grant from 61 per cent. budgeted by the Labour Government to 43 per cent. under this Goverment. One can imagine that happening when the Government get hold of the global amount of rate support grant to be handed out to local authorities.
Last July the Secretary of State announced that the expenditure provision for the current year, 1989-90, would be £29,140 million. That figure was based on a then projected inflationary factor of 4.7 per cent., so the scenario sketched by the Secretary of State in his famous juggling act with the figures in his usual maladroit way allowed him to state in the House that the increase in the inflation factor for 1989-90 over 1988-89 was to be 4.7 per cent. The Secretary of State tried to demonstrate his compassion for local government by saying that 4.7 per cent. was a generous consideration.
When we examine some of the other features that are included in these reports on the rate support grant to local government we find that, excluding the provision for poll tax costs of £110 million in the current year, the increase in the 1989-90 budget compared with last year's budget is only 4.3 per cent. and not 4.7 per cent. as the Secretary of State claimed. Once again, the Secretary of State has got it all wrong and there is a mismatch in his representations of the rate support grant settlement. Since the announcement of the provisions of the rate support grant last July, the inflation rate has accelerated dramatically and is running now at no less than 6.4 per cent. It is forecast to peak--or pimp, I believe, was the word--during 1989 to 7 per cent. and may reach 8 per cent. The result of the Secretary of State's abysmal record in provision for inflation in that the rate support grant settlement means that the allowed increase in the RSG is wholly inadequate and should be reviewed. The shortfall between what is forecast to meet the increase in inflation and what is provided to maintain the essential services in local government will be about £1 billion. That reduction in the RSG could mean one of two things, which have been described on several occasions by my hon. Friends. There may be cuts in services or rate increases above the level that the Government suggests.
Mr. Wilshire : The hon. Gentleman has been enthusiastically trying to talk inflation up as high as he can, but he has talked it up only to 8 per cent. He wholly
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ignores the fact that the amount made available through grant next year will be 9 per cent. up and he has not yet reached that figure. What is his problem?Mr. O'Brien : It is clear that the hon. Gentleman is unaware of what his own party's Ministers are doing. If he reads the report, he will see that the amount allocated for inflation was 4.7 per cent. It is the Chancellor of the Exchequer who has said that he expects inflation to blip at 7 per cent. or 8 per cent. in 1989. I am, therefore, only using the figures of Ministers in the same party as the hon. Gentleman. Now that people have realised the extent of the costs concerned with the poll tax--
Mr. Robert G. Hughes : Will the hon. Gentleman give way?
Mr. O'Brien : Not until later. I shall deal with the point that the hon. Gentleman raised in a little while.
The figure of £110 million for poll tax preparation was produced last July when the authorities responsible for the poll tax were beginning to consider the costs. Now that they have realised how much the costs will be, the Minister should agree to give a commitment to increase the resources provided by the Government if the actual costs are higher than those determined by his Department's formula. It would be cruel and dishonest to the people who rely on local government services not to increase resources in line with the formula.
Mr. Harry Cohen (Leyton) : My hon. Friend referred to the cost of the poll tax. Is he aware that in my borough of Waltham Forest the Government have allocated £683,434 for the implementation of the poll tax, yet the independent consultants Peat Marwick say that it will cost £6.31 million in one borough alone. That leaves a gap of £5.7 million to be met by local people.
Mr. O'Brien : That illustrates my point. I hope that the Government will make up the difference between what has been budgeted for and what is actually needed.
A significant factor is the aggregate Exchequer grant, and it is helpful to examine the record on that since the Government came to office in 1979. For 1979-80, the last year of the Labour Government, 61 per cent. of local government services were provided from AEG. For the coming year, the Government's AEG contribution has fallen to 43.3 per cent. of relevant expenditure.
If we deduct from the total AEG for 1989-90 the £835 million that has been withdrawn in the change in funding of the polytechnics, we find that there is still a cut in AEG for 1989-90 from £8.95 million to £8.12 million. Expenditure and grant provision by the Government are being reduced by £835 million to reflect the transfer of the polytechnics, which will have no benefit for local ratepayers. There is a massive cut in block grant of more than--
Mr. Robert G. Hughes : Will the hon. Gentleman give way?
Significantly, the Government maintain a margin between the total expenditure of the local authorities and grant-related expenditure. That penalises the authorities which have to meet greater need. Every time the Minister for Local Government comes to the Dispatch Box he says
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that in future the system will be based on need. The rate support grant system is already based on need, yet local authorities' needs are being ignored by the Minister.We have also to consider the devastation caused to local government by the Secretary of State when for the purposes of the Rate Support Grants Act 1988 he decided that all grant entitlements--
Mr. Robert G. Hughes : Will the hon. Gentleman give way?
Mr. O'Brien : The hon. Gentleman should not be so hasty. His turn will come.
In July last year the Secretary of State decided that all grant entitlement for previous years would be frozen on the basis of the expenditure data that was with his Department on 6 July 1988. The Secretary of State should reconsider his decision because of the unfairness of that holdback, which was referred to by more than one of his hon. Friends. I would ask the Minister to reconsider the question of holdback.
Mr. Robert G. Hughes : Let me ask the hon. Gentleman two questions. Will he confirm--whatever he likes to dredge out in the way of details-- that the overall effect is that the RSG settlement is raised by 8.6 per cent. next year? Secondly, will he tell the House what the rate support grant was in the year when inflation peaked at 27 per cent. under the Labour Government?
Mr. O'Brien : I can tell the hon. Gentleman that when he said that people were leaving the borough of Ealing--[ Hon. Members :-- "Answer the question."] The hon. Gentleman said that people were leaving the borough of Ealing and going to Harrow, West for better education. His constituency is well down the list when it comes to nursery provision. He is afraid of the real issues on education--[ Hon. Members :-- "Answer the question."] When it comes to education, the hon. Gentleman does not know what is happening in his own constituency. [Interruption.]
Mr. Speaker : Order. Let us get back to an orderly debate.
Mr. O'Brien : Provision is made in the bulk grant formula for fire and civil defence, which has not been mentioned in this debate. When the bulk grant system was introduced in 1981, the Department of the Environment intended it to provide sufficient grant to the fire and civil defence authorities to allow them to provide a standard of service at a standard of rate levied on their ratepayers. Since 1986, however, the fire and civil defence authorities have had their level of services determined by the Home Office, which has developed a complex and puzzling system for distributing the grants, which in turn has significantly affected the precepts levied by the fire and civil defence authorities.
The Minister for Local Government is fully aware of this anomalous situation, because on Wednesday 6 December 1988 the Minister held a meeting with people from west and south Yorkshire fire and civil defence authorities, along with Members of Parliament representing those areas. It was explained to the Minister in detail, and made abundantly clear, what those irregular precepts levied in different areas would mean. The variations in precepts levied to provide services for fire and civil defence authorities in the metropolitan areas range from £10 per
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head of population in one area to £14 in west Yorkshire. That is the unfairness of the system about which the Minister has been told. Those variations in fire protection are due in the main to the way in which the grant system is distributed. The grant system is unfair because of the way in which the Minister and his colleagues in his Department distribute the grants.At that meeting with the Minister an effective and fair system was outlined, with the appropriate adjustments to meet the level of services as determined by the Home Office--not the Department of the Environment. The understanding between the Home Office, which determines the level of fire cover for an area, and the Department of the Environment, which decides the level of grant to provide that fire cover, is abysmal. Ratepayers in Yorkshire, especially in west Yorkshire, are again under attack by the Government because of this mismatch of rate support grant distribution.
The Minister was given a solution to the problem well before the 1989-90 settlement was decided. He has chosen, however, to ignore the proposals completely. Why does he not accept that there is a need to review the grant for the fire and civil defence authorities? Will he consider the situation and accept the suggestion that the total GRE for fire and civil defence authorities, as circulated in the main rate support grant report, should be redistributed in the current year among the authorities involved? I suggest to him that two thirds of the total should be allocated on the basis of the existing methodology and one third on the basis of the establishment levels. That is not a perfect solution, but it would be fairer and nearer to the needs element which is so sacred to the Minister.
My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) referred to the situation in the Wakefield area, especially that concerning highways and roads, which are included in the transport grant. It is classed as a supplementary grant and is restricted by the Secretary of State deciding what the programme of local authorities should be. In the main, the transport grant covers roads for longer distance traffic and circular and bypass roads, but people are concerned about other roads and streets. Local authorities urgently need to be able to tackle the ever- increasing problem of holes in the roads. Because of the limited expenditure imposed on authorities by the Government and the cuts in rate support grant, repair work on the holes cannot go ahead, so our urban and estate roads are generally deteriorating. I ask the Minister to look into the problems for local authorities of utilities opening up and reinstating road surfaces.
If there is no more money in the rate support grant for maintaining roads, there must be a change of legislation. I hope that the Minister will deal with that point. Failing a change of direction and application of the rate support grant for next year, I ask Conservative Members who have spoken against the Government's measure to join us in voting against it.
9.41 pm
The Parliamentary Under-Secretary of State for the Environment (Mrs. Virginia Bottomley) : This is the final speech in the last debate on the rate support grant system. Throughout the debate Opposition Members have sought to dig up the past. Being reluctant to consider next year's
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rate support grant settlement, they paraded a variety of figures on the rates of grant in past years, with which they unsuccessfully tried to discredit this settlement.The fact is that next year the grant for local authorities will be £13.575 billion, an increase of 9 per cent. That is £1.1 billion more than will be paid out this year. That is the money on the table, the increase in grant in the contribution from the taxpayer. It is the highest increase of any year in which this Government have been in office. The additional grant will enable authorities, if they spend sensibly, to budget for very low rate increases of about 2 per cent. on average.
In recent years there has been a preoccupation in local government finance with expenditure restraint, through grant adjustments, targets and rate limitation. Many of the speeches made today have shown the flaws in the present system. The Local Government Finance Act 1988 is a move towards establishing local accountability. It depends crucially on the relationship between paying for local services and voting in local elections. Of the 35 million local electors in England, only 18 million are liable to pay rates now. Many hon. Members have spoken about the importance of local government, about its value, about its role in serving local ratepayers and about it being able to be more autonomous so as to provide services efficiently and effectively. We believe that the new system of local government finance makes that possible. My right hon. Friend the Minister, in his role as the Minister for Local Government, has often spoken of his confidence in local government and of the importance of ensuring that it is accountable.
Our policy is to widen the liability for local taxation to almost all voters through a simple, clear community charge, and to help those who cannot pay it in full. That is a logical and essential step towards greater local authority freedom. The Government should be able to stand further back from local government because the electors will stand much closer. When everyone pays something towards the costs of local services, voters will be more conscious of the cost consequences of local decisions.
One of the complaints by the hon. Member for Hammersmith (Mr. Soley) about the present system was that there was no link between rate rises and increased spending. That is a ringing endorsement of our policies. The whole point of the community charge is to ensure that local people will feel the effect of local decisions. The hon. Member for Hammersmith tried to argue on the grounds of fairness. That rang rich. For a long time, many of my hon. Friends have failed to understand the fairness of the pensioner paying the same rates as the household next door with several earners. He compared the millionaire with the pensioner. I hope that he knows that the millionaire contributes 15 times as much towards local government expenditure as the single pensioner. Four out of five single pensioners and nine out of 10 one-parent households will pay less under the community charge, and 9.5 million people on low incomes will receive assistance.
When one looks at the injustice suffered by many people on low incomes in high rateable value areas who have to contribute to those on high incomes in low rateable value areas, one sees that questions of justice are especially
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important. People who are concerned about that should appreciate the opportunities offered by the community charge.Mr. Fatchett rose--
Mrs. Bottomley : I shall not give way because I want to make progress. The hon. Gentleman spoke about Leeds and will want to hear what I have to say.
The settlement provides £110 million for the extra current expenditure costs that authorities will incur in preparing for the community charge. This expenditure is financed by a specific grant of £55 million, with the other 50 per cent. being reflected in block grant. An extra capital allocation of £135 million will be made in 1989-90 in addition to the £25 million in 1988-89. The provision that we have announced is derived from the forecast by Price Waterhouse which made an independent study of the preparation costs. It strikes a balance between the Price Waterhouse estimate of the costs that authorities would incur if they used administrative procedures similar to those presently followed, and the amount needed if all authorities operated in the same way as the most efficient authorities.
Having lost the parliamentary battle on the merits of the community charge, it is inevitable that the opponents of the policy should now turn their energies to exaggerating the costs of implementation. The most recent estimates put forward by local authority associations are based on surveys that simply asked member authorities how much they thought they might spend if they were given a blank cheque. On the basis of the findings in the independent study carried out by Price Waterhouse, the Government are confident that the forecast is objective and is to be preferred to survey results. We think that we are providing sufficient resources to meet the reasonable costs of preparation by authorities.
Many hon. Members spoke about the change in grant levels. When Labour left office, the grant percentage was about 60 per cent. Restoring that would cost about £4 billion which is equivalent to 3p or 4p on the standard rate of income tax. The Opposition have not promised to restore the grant percentage to its previous level. They have said only that grants to local government will increase in line with the growth of the economy nationally. I doubt whether their plans for the economy would enable them to increase grant payments by 9 per cent. or £1.1 billion.
The hon. Members for Wolverhampton, South-East (Mr. Turner), for Hammersmith, for Leeds, Central (Mr. Fatchett), and for Truro (Mr. Taylor) spoke about inflation. The settlement allows authorities to increase spending broadly in line with inflation as measured by the gross domestic product deflator, which is generally accepted as the measure of inflation in the economy as a whole. The retail price index is an appropriate measure in many areas of Government activity and is used to uprate many of the social security benefits such as the state retirement pension, unemployment benefit, invalid care allowance and statutory sick pay. For local authority matters, the GDP deflator is a much more accurate measure.
The hon. Member for Hammersmith asked whether we would increase grant if inflation turns out to be higher than anticipated. We have already made generous provision for grant in the settlement. I remind him that it
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is being increased by £1.1 billion, an increase of 9 per cent. That is well above the rate of inflation and if authorities budget sensibly, they should be able to keep rate increases low.Mr. Soley : That is not the question that I asked. If the rate of inflation approaches 7 or 8 per cent., as even the Chancellor accepts that it may, will the Government increase the rate support grant to take that into account--yes or no?
Mrs. Bottomley : The hon. Gentleman should know that the rate support grant is already well above that figure. A 9 per cent. increase is being made available.
Reference to Schleswig-Holstein is an indispensable part of many debates on rate support grant. However, reference by my hon. Friend the Member for Eastleigh (Sir D. Price) to the city fathers of Florence, Euclid and Hamlet and the Prince of Denmark were novel developments. Eastleigh's situation may seem harsh. It is losing grant, although it is not an overspender, but it has relatively low needs and well above-average resources per head. In addition, its resources are rising faster than its needs. Its grant has been calculated on the same principles as apply to all authorities and I can assure my hon. Friend that it has not been selected for special treatment. In a system based on rateable values it is unlikely to do any better. Its low spending will be better reflected under the new system. When the system is fully operational, the charge payers will face lower bills than most of their neighbours in Hampshire, based on this year's figures. In the meantime, we have to operate the system as it is.
My hon. Friend the Member for Ealing, Acton (Sir G. Young), who had a long and distinguished period at the Department, spoke strongly about the effect of sharp rate increases in Ealing. It would have been difficult to spell out more clearly the importance of efficient and effective services in a London borough. Whether asking for building control, rate rebates or all the other services provided by local authorities, he made it clear that efficient and effective distribution of services is a prime requirement for helping those whom local authorities are there to assist. He asked what protection there would be for his constituents in future if Ealing continued to demand excessively high community charges. As he said, Ealing has slipped through the capping net for the coming year, but, if it persists with its plans for a 35 per cent. rate increase, that will show just how little regard it has for the interests of the people of Ealing.
The charge-capping powers that we have taken will enable us to deal with the situation that my hon. Friend fears, if it should arise. Charge capping is designed to enable chargepayers to be protected from the actions of an irrational and irresponsible council which, perhaps to prove some sort of distorted political point, decides on excessive spending policies.
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