Column 268crediting the 1986-87 and the 1987-88 road race accounts with a total of £1,050,000, and I should be grateful if you will confirm this point because I want to refer to it during the debate in the House of Commons on the Birmingham City Council (No. 2) Bill." The hon. Member for Northfield quoted from Price Waterhouse's reply, but he did not read the whole of it. He missed out the preceding paragraph which said :
"The statement set out in your letter is not correct."
I was asking Price Waterhouse whether it was responsible and it said that it was not. I wrote a long letter back in which I said : "I repeat that I have been told that a credit for promotional value was suggested by Price Waterhouse, and that the idea of a credit based on a preamble to the 1985 Act was not initiated by the city council."
Today I received a message which was taken down in shorthand from Mr. Walls of Price Waterhouse in which he said :
"On the matter of the road race there are several things that I might have said to Mr. Davis personally, but I do not have a lot to add to my letter of 12 April. Mr. Davis must understand that Price Waterhouse give advice to the city as well as audit the city as they do with all their clients. I am pretty certain that I did not suggest, as he has put several times in his letters, that the preamble of the 1985 Act should be used to justify this credit to the road race account."
The hon. Member for Northfield has just suggested that Price Waterhouse accepted responsibility. Mr. Walls of Price Waterhouse dictated that message today. He said :
"I am pretty certain that I did not suggest, as he has put several times in his letters, that the preamble of the 1985 Act should be used to justify this credit to the road race account."
Wherever the responsibility lies, the important thing is that the city solicitor then sought advice from Queen's counsel. I have looked at the instructions that were given to the Queen's counsel by the city solicitor. He left Queen's counsel in no doubt whatever about the purpose behind this suggestion of a credit to the road race account on the ground that the road race had promoted tourism on the basis of the preamble to the 1985 Act.
That was not the only suggestion. The city council also asked for the advice of Queen's council on the possibility of increasing the grant which the city council gives to the Birmingham convention and visitor bureau in the confident expectation--the bureau's chairman is a leading city councillor--that the bureau would then give a grant to the road race. If that is not creative accounting, I do not know what is. Even the city solicitor--especially the city solicitor--had some qualms about that.
The city solicitor makes it quite clear in his instructions to counsel that
"If such an arrangement were possible it would sidestep the thinking behind section 14 of the Act which was to prevent the council subsidising a loss- making motor race indefinitely." That was the motivation. It was to sidestep an Act of Parliament. That is what the council officers and senior members of the city council were doing. They knew that they had given an assurance that if the race made a loss, they would stop it after five years. They were looking for a way of sidestepping section 14--their own new clause, drafted, as my hon. Friend the Member for Ladywod has said, by their lawyers, not by us, and supposedly given in good faith to be honoured by the city council.
After all the discussions had taken place, the city council transferred £500,000 to the road race account for the 1986 race and £550,000 for the 1987 race.
It has been said that there is no difference between the city council choosing to spend money on the road race to promote tourism and choosing to spend it in some other
Column 269way to promote tourism. I understand that point. If the city council had decided to spend money on promoting tourism and believed that the road race was a good vehicle for doing so rather than books of matches, posters or newspaper advertisements, I might have had some sympathy with its point of view, but that was not what happened.
The city council had overspent on the promotion of tourism in the financial year 1986-87. It did not transfer money from the promotion of tourism account to the road race account ; it just reclassified the deficit. It simply said that instead of overspending by a few thousand pounds on the promotion of tourism, it would overspend by that, plus another £500,000. It was a fiddle. To my constituents it looks like cheating. It was not a case of using money ; the council just reclassified the loss in the accounts. It was a book-keeping manoeuvre, and it was not in the spirit of negotiations undertaken by Sir Reginald Eyre.
At that stage, the city council had not done its accounts for 1987-88. When they were published, we found that it had overspent in that year as well. Now we have the probable figures for promoting tourism for 1988-89 and we find that compared with its original estimate the council has overspent by £500,000. But it is worse than I thought because the council has transferred £600,000 to the road race account. For the current year 1989-90, the council has estimated for another subvention to the road race account of another £600,000. This is a bottomless pit. The council overspent on the promotion of tourism in 1986-87, 1987-88 and 1988-89 and it has now increased its estimate for 1989-90 in order to hide the subsidy.
To be fair, the city treasurer assures me that he will transfer some of the money back. He will transfer back not £600,000, but £550, 000, having ensured that the race makes a profit of that amount. He is hoping to do the same next year.
It is not only Socialists who have questioned the way that this is being done. At the statutory consultation meeting with
representatives of industrial and commercial ratepayers about this year's budget--in particular, representatives of the Birmingham chamber of commerce--they were told that the race was making a profit. I do not accept that.
My right hon. Friend the Member for Small Heath says that he is sure that it did, but on the basis of my discussions with the city treasurer I am convinced that, in the spirit of the undertaking given by Sir Reginald Eyre, the race has made a loss in excess of £1 million and there will be provision for further transfers in the current year.
It took the hon. Member for Northfield 54 minutes to get to that point, which he well knows is the objection that I and my hon. Friends have to the road race and the new Bill. The hon. Gentleman said that it was the proper thing to do. I do not agree. It is not proper to look for ways to sidestep an Act of Parliament when the city council is itself responsible for the wording of the Act of Parliament. The council could do it, but it did not have to do it. It was a policy decision to do it. It was legal, but it was not right, and it should not have done it.
It would not matter so much if the money put int,o the road race account had been surplus. It would not matter so much if Birmingham had no financial problems. But every Member of Parliament and city councillor from
Column 270Birmingham knows that Birmingham has tremendous financial problems as the result of the Government's financial policies. Council houses are not being repaired. Houses in my constituency stood empty throughout March because the local housing department did not have the money to repair them, and people could not move into them. Schools are waiting to be repaired. Roofs are leaking in nursery, infant, junior and secondary schools in my constituency. There is a shortage of occupational therapists. People with severe disabilities are classed by their doctors as in need of having their homes adapted. Such people are waiting not weeks but months to be visited by an occupational therapist, and even longer for the adaptations that are required.
In August last year the city council stopped issuing bus passes to people with disabilities because it had run out of money. In fact, the city council had not issued any bus passes to people with disabilities, who had been assessed from April 1988 as entitled to them. It had taken the council from April to August to deal with the backlog from the previous year because it had run out of money that year as well--when it was subsidising a motor race.
I challenge the order of priorities of the city council. I accept that a motor race creates jobs. The point is that all the other things that I mentioned would also create jobs. If money is spent on repairs to council houses, on occupational therapists, or on repairing the leaking roofs of schools, jobs are created. If bus passes are provided for people with disabilities, that provides jobs for bus drivers. The question is : what are the council's priorities?
It is significant that the 1985 Act was introduced by a Conservative Member of Parliament, and that this Bill has been introduced by another Conservative. The priorities are Conservative priorities ; they are not Socialist priorities. That is why I will vote against the Bill.
The Minister for Roads and Traffic (Mr. Peter Bottomley) : It may be helpful to the House if I intervene at this point to give a brief indication of the Government's view on the Bill. As the House knows, the Government traditionally stand neutral in relation to private Bills where no major matter of principle is involved. That was our position on the 1985 Act, which authorised motor racing on the streets of Birmingham for the first time.
The Bill now before the House proposes some significant amendments to the 1985 Act. These particularly concern the number of days on which motor racing can take place and the length of time for which streets can be closed to traffic each day. Understandably, the Bill has aroused opposition from those who fear an increase in the disruption that motor racing must inevitably cause to the normal pattern of daily life and movement in Birmingham. Questions have been raised about the way in which the city council has financed the races held so far.
We have considered whether these are major matters of principle on which it would be right for the Goverment to take a view. We have taken into account the fact that none of the roads directly affected by the Bill's proposals is a trunk road. Birmingham city council is itself the highway authority for all the roads concerned. Our conclusion is that the issues raised by the Bill are essentially of local concern and that it would not be right for the Government to intervene. In the light of that, we have no comment on the instruction.
Column 271Mr. Rooker rose--
Mr. Rooker rose--
Mr. Rooker : On a point of order, Mr. Deputy Speaker. on 1 April 1985 the Minister's predecessor, the right hon. Member for Wallasey (Mrs. Chalker), was more than generous in giving way to her colleagues in the House when she said :
"We have stated that we expect the project to be self-financing".--[ Official Report, 1 April 1985 ; vol. 76, c. 980.]
That is what she said on behalf of the Government. What about the Minister- -
There are now eight petitions remaining against the Bill which raise matters reflecting genuine and widespread local concern. The petitioners will have the opportunity to present their objections to the Select Committee, which will be in a better position than the House today to examine in detail the issues involved and will have the added advantage of hearing expert evidence. In the usual, conventional way, the Bill should be allowed to proceed to Committee for that detailed consideration.
Mr. Denis Howell (Birmingham, Small Heath) : I am an unashamedly enthusiastic supporter of municipal Socialism and I am in favour of municipal enterprise. I find it extremely ironic that my lifelong principles are being supported from the Government Benches and opposed from the Opposition Benches, but those of us who have served a long time in the House are never surprised at anything these days. I do not often fall out with my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis), but even if everything that has been said about the subsidy for the race were correct--in fact, it is wholly inaccurate--I should still think the road race worth while, and I am sorry that my hon. Friend seeks to oppose the strategy of Birmingham city council.
The Government's policies have brought enormous unemployment to Birmingham. I believe that my constituency has the third highest level of unemployment in the country--with long-term unemployment at 40 per cent., including much youth unemployment. It was for that reason that I decided, with the support of my hon. Friend the Member for Hodge Hill and others, to take on the job of promoting the Birmingham Olympic bid. Sir Reginald Eyre was also active in supporting that bid. The philosophy behind the bid was that because the Government would not solve the unemployment problems of Birmingham, we had better do something about them
Column 272ourselves. The only way to produce long-term economic benefits was to sell the wonderful city of Birmingham worldwide and to attract enormous worldwide investment.
That was nothing new. That logic started with the national exhibition centre. Some of the arguments that we have heard today from my hon. Friend the Member for Hodge Hill are an echo of the arguments about the establishment of the national exhibition centre. There was an all-party effort, supported by the chamber of commerce, to get the NEC built at Birmingham. Despite all the Jeremiahs telling us that the NEC would lose money, it is profitable. I believe that about £12 million of profit now goes directly to the rate fund each year. Of course, the NEC did not make a profit in the first year or two, but it gradually gathered support-- it has to be sold worldwide--and the profit that it makes now goes towards expenditure on all the things that my hon. Friend the Member for Hodge Hill rightly demands, such as education, housing and other services. That led us to thinking in other directions. Some hon. Members will remember the tremendous fight about the NEC. We had a great success against the London lobby. I remember going to see the Prime Minister with my hon. Friend's predecessor, who did one or two things of which I approve, although leaving the Labour party was not one of them. When he was a more senior Minister than I, we went to see the Prime Minister and told him that regional policy and the attraction of investment to the midlands would mean nothing if he did not agree to the NEC being put in Birmingham. It is to the credit of the Prime Minister of the time, now Lord Wilson, that in our presence he signed a piece of paper saying, "proceed."
The concept of the NEC came from the city council, and particularly from two late friends of ours, Sir Frank Griffin and Harry Watton. In spite of initial losses and quite a lot of risk, the NEC is producing a profit of about £12 million a year which subsidises the rates. That is why I support municipal Socialism. When I was a member of the city council I was the chairman of the civic catering committee. We had to compete with the catering trade on more than fair terms because we had to pay considerably more each week in wages. Nevertheless, we made a success of it.
I have always believed in municipal enterprise and I am saddened by the doubts that my hon. Friends have expressed about that concept. The great city of Birmingham has been built up on municipal enterprise. Chamberlain produced water, electricity and gas--yet the Conservatives first nationalised them and the present terrible Government are privatising them. All that enterprise came from Birmingham. Those are the ironies of history that we must remember. Birmingham is a city based on municipal enterprise. That is why the NEC has been successful. It is also why we are promoting the Olympic bid. We went all over the world and attracted great attention.
Mr. Howell : It did not fail. We just did not secure sufficient votes to get it on the last occasion. It is clear that my hon. Friend does not appreciate that the Olympic bid is responsible for massive investment in the city of Birmingham. There are people building hotels now in Birmingham and wanting to establish businesses there
Column 273who say frankly to me, "Until we saw you going round the world selling your city, we were unaware of the city's attractions." Efforts of that type are cumulative.
Mr. Bob Clay (Sunderland, North) : I was wondering whether the city had an economic development department. It seems odd that one has to have Olympic bids. After all, we cannot all do that. Perhaps Sunderland should have an Olympic bid if my right hon. Friend thinks that that is the only way to get investment.
Mr. Howell : I wish that we could have more intelligent interruptions. It should be obvious that our Olympic bid is just one of many ways to go about achieving the object that we had in mind. Other cities will adopt different methods. Sheffield is going for the world student games--and good luck to that city in its efforts.
Mr. Michael Jack (Fylde) : The right hon. Gentleman referred to municipal Socialism. Perhaps for the same virtues that he claimed for that argument, he will acknowledge that Budapest in Hungary and Moscow bid for grand prix to attract attention to their respective cities.
Mr. Howell : I am grateful to the hon. Gentleman for reminding me of that. Perhaps I should declare an interest in that I have been to the Budapest grand prix and seen the effect that it has had on that country. It has been enormously successful, and all credit to the organisers.
While on the subject of declaring interests, I have been to the Birmingham road race, but not as a guest of Birmingham city council. I hope that that satisfies my hon. Friend the Member for Perry Barr. I saw many of his councillors in the hospitality suite, but I am glad to say that I did not have a drink there. I do not think that my hon. Friend had a drink there either.
Mr. Rooker : By referring to it in a perjorative way-- [Interruption.] I am simply saying that we are making law. There are beneficial interests involved in the result of this legislation. They have been enjoyed by some hon. Members, who no doubt will enjoy them in the future. The point of my earlier argument was that we should make it clear to the ratepayers of Birmingham, who pay for the free tickets, that they should know that we know that, and that when we are making law we should say, "Thank you very much--the hospitality and free tickets are fine." There was nothing disparaging in what I said. I assure my right hon. Friend that the city councillors are a totally different kettle of fish.
Mr. Howell : I was simply drawing attention to the fact that people were enjoying hospitality. My hon. Friend interrupted me as I was about to say that there was nothing wrong with that. It is sensible and reasonable to do it, and it happens to all of us from time to time. I mentioned it only because my hon. Friend asked us all to declare our interests. I was declaring mine.
Ms. Short : As my right hon. Friend was chair of the Birmingham catering committee, he will be aware that that department is now going through a redundancy exercise. Is he further aware that that department contributed £28,000 to free hospitality--free booze and food--for VIPs? I thought that that was wrong. Did my right hon. Friend think that it was wrong?
Mr. Howell : I accept that my hon. Friend has the figures, but I do not know whether the catering department, of its own volition, was providing the hospitality or whether it was performing a service.
Mr. Howell : In that case, it was not providing it-- [Interruption.] It may have spent £28,000 on food, drink and so on, but it must have been doing it as part of a service that it was paid to provide. I assume that that was the position. Catering departments are paid to provide services as the basis of their existence, but I will gladly look at the figures that my hon. Friend says that she has.
Mr. Howell : Yes, the department gets an income, which derives from various sources. I would be ruled out of order if I were to reflect on where we got the income when I was chairman of the catering department. It came from a variety of sources. By law it must make a profit, and it always managed to do that when I was chairman.
Mr. Terry Davis : I am sure that my right hon. Friend is anxious to have the correct figures. My hon. Friend the Member for Birmingham, Ladywood (Ms. Short) may inadvertently have underestimated the amount charged for hospitality. Price Waterhouse insisted that the city council include in its road race account an amount for 1986 of £45, 515 for hospitality for guests, a sum that had previously been charged elsewhere in the council's accounts. In other words, the city treasurer wanted to charge it somewhere else and Price Waterhouse insisted that that would not be right.
Column 275from the attractions of the Olympic bid to the question of the national indoor stadium which we are about to build in Birmingham. I have not the slightest doubt at all that in the case of the national indoor stadium--this country does not have one--there will be a lot of objectors, but again, it is a piece of municipal enterprise which is in the interests of the nation. We hope that it will make a profit. Nobody can guarantee at the moment that it will, but it will do so if it is properly run, like the new national convention centre with 10 halls that we are also building, including hall number two--
Mr. Howell : It is a good thing. Does my hon. Friend the Member for Ladywood not want to attract people to Birmingham? Does she not want to get business into the city? Does she not want to do anything for the people of Birmingham?
Mr. Howell : It has everything to do with the road race. It is all part of the same strategy : that is my whole point. We are selling Birmingham worldwide by these wonderful concepts. I am sorry that my hon. Friends cannot be big enough, even if they disagree, to understand the underlying philosophy that is supported by the people of Birmingham. We have had figures to show whether the people were behind it. The city conducted another survey after two road races and there is still a majority in the area concerned in favour of the road race. That was shown by the public opinion exercise conducted this year.
This leads me to another point. I respect the right of all my hon. Friends to criticise the Bill, but I believe that the local electors are best left to choose local councillors to run the city. I am glad to say that, in the two years that the road race has been run, the electors of Birmingham have held faith with the Labour group in Birmingham. I am sorry that my hon. Friends are rather more contemptuous of that local democracy than I would wish.
Mr. Rooker : Of course there is a split. My right hon. Friend is quite right that local people are the people to elect the local authority, and the local authority is best placed in all circumstances to govern the area concerned from a strategic and technical point of view. But that does not give the local authority the right to come to Parliament and demand that we rubber-stamp its legislation. That is the point that my right hon. Friend has not taken on board. Nor has it a right to breach undertakings given in this place in good faith and accepted in good faith. No authority whether it be our local authority or any other, has the right to expect that of the House. If my right hon. Friend is not seized of that point he is not really entering into the debate that is going on here at the moment.
I was concluding my opening argument about the philosophy and strategy on which Birmingham's enterprise is based. I had conceded that my hon. Friend the member for Perry Barr and anybody else was entitled to
Column 276question the Bill, but I object to my hon. Friends objecting to the Bill in a way which suggests that their wisdom on these matters is superior to that of the elected representatives. That is what is happening--my hon. Friends are saying that, so far as the Bill is concerned, they know better than the Labour councillors in Birmingham.
Mr. Howell : They may be split. We are split, too. If I may say so with great respect, my hon. Friend must not talk of politics in those rather juvenile terms. We are always split. I am against uniformity. The council was split when I was on it. The Labour group was split then, and we are split here. The Labour party is split. If we were not, half my hon. Friends would not be sitting here.
We must have regard to the facts of life. Of course we have different points of view, but I am entitled to put my point of view, which is that I am very sorry that in opposing the Bill my hon. Friends are not doing so entirely on the principles of the Bill but rather in the belief that their wisdom is superior to that of the elected members of the city council.
Mr. Howell : I will move on to the accountancy matters that my hon. Friends want us to discuss. I hope that my hon. Friends will listen carefully as the first thing that I have to say to them is that if they kill the Bill tonight, as is their intention--