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Mr. Derek Conway (Shrewsbury and Atcham) : I am grateful to my right hon. Friend for giving way ; he has been especially generous to Opposition Members, who now dispute what he tells the House. Those in local government before 1979 will recall the action of the then Government when they introduced primary and secondary clawback. Perhaps there was less squealing then from Labour Members who were part of a Government who were trying to curb local government and who said that the party was over.
Mr. Patten : It is fair to say that, in the late 1970s, local authorities were predominantly controlled by Conservatives. When two successive Secretaries of State for the Environment tried to end the party, they were dealing with local authorities that accepted the role of central Government in establishing national economic priorities and implementing a national economic strategy. I should remind the House that the only cut in current local authority expenditure was made in 1976-77, when local authority expenditure fell by 6 per cent.
I do not believe that anyone on either side of the House has ever made the case, at least theoretically, that local authorities should be treated as independent fiefdoms whose actions and spending are of no concern to the House or central Government. Local authorities were created by Parliament and their powers and duties are laid down by it. We prescribe, for example, in detail how local authorities should regulate tattooing parlours. We prescribe in detail how local authorities monitor the operation of every ear-piercing establishment and the
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qualifications required for local authority meat inspectors. As we prescribe such detailed matters and many others, it would be illogical if we came to the conclusion that the amount of money that local authorities spend and the amount of taxes that they raise are of no concern to us.Ms. Armstrong : This House has also prescribed local authorities' duties in terms of education. There has been an increase in their duties as a result of the Education Reform Act 1988. The Secretary of State's actions are making it impossible for some local education authorities to carry out their statutory responsibilities.
Mr. Patten : Ninety education authorities which are not capped are carrying out their statutory responsibilities. I believe that that is an adequate answer to the hon. Lady's observation-- [Interruption.]
Mr. Paul Boateng (Brent, South) : Does the right hon. Gentleman appreciate that what is objected to is not just the simple fact of the cap, although it is bad enough, but the highly selective way in which it has been imposed? My local authority has spent only 4 per cent. over its target, which is closer to its target than 90 per cent. of all other local authorities, including Conservative ones, yet it is Labour authorities that we are discussing. That is not fair, and this action has brought his office into disrepute.
Mr. Patten : I must disagree with the hon. Gentleman by referring to the facts. His local authority is spending 16.1 per cent., or £178, per adult above its SSA. If he says, "The SSA is jolly unfair"--
Mr. Patten : Let me finish the point, because I am anxious to help the hon. Gentleman. It is spending 27.3 per cent. above its rescaled GRE. It is overspending more under the old grant formula than under the SSA. The hon. Gentleman's argument does not hold up.
Mr. Boateng : Let us consider the figures. Brent's notional poll tax target was £481. It set a poll tax of £498--4 per cent. higher. The reality is that the average for all councils is 31 per cent. over target, so Brent is closer to its target than 90 per cent. of all local authorities. That is the fact.
Mr. Patten : I think that the hon. Gentleman is referring to the assumed community charge, not the standard spending assessment. As he is a shadow Treasury spokesman, I am sure that, should he become the real thing in due course, he will want to know the difference between the assumed charge and the SSA.
Sir Peter Emery (Honiton) : Will my hon. Friend be kind enough to bear in mind that the spending of several Conservative councils has been 16 to 32 per cent. higher over the past two years? Many Conservative community charge payers wonder why those authorities have not been capped. Will he bear in mind in future the fact that increases in expenditure by local authorities, of whatever political complexion, should be subject to the same capping?
Mr. Patten : I shall come, with enthusiasm--at least on my part ; I do not know whether it will be matched on the part of others--to our ability in law to constrain year-on-year increases in spending.
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The total amount of local government expenditure, and therefore the amount spent by local authorities, which in aggregate makes up that total, is and must be a matter of concern to any Government who wish to manage the nation's economic affairs prudently. Equally, the total amount of local authority spending and the spending decisions made by local authorities are certainly of concern to this Government--I hope that they would be of concern to anyGovernment--because of their repercussions for local community charge payers. That is an important argument for the community charge, the principle of which is that virtually everyone should make some--I repeat, some--direct contribution to the cost of local government services, from which everyone benefits.
I have no doubt that the introduction of the community charge is already starting to have an effect on attitudes to local government spending and that the community charge will introduce a more direct translation mechanism between local authority spending and local electors. I very much hope that, as a result, in due course it will be unnecessary for the holder of my office to exercise powers under the Local Government Finance Act 1988 to constrain local authority spending. Unfortunately, that happy state of affairs has not yet arrived. I certainly do not think that it arrived this year, when several local authorities plainly increased spending thinking that they could blame the consequences on the introduction of the community charge.
I used my powers seriously--I did not take my decisions lightly--and I have no doubt that it was right and proper to use them.
Mr. Kenneth Hind (Lancashire, West) : Will my right hon. Friend give way?
Mr. Patten : Yes, but then I should like to make some progress.
Mr. Hind : My right hon. Friend will no doubt be aware, and the public must be made aware, that the community charge will be used as a political tool in the approach to a general election by parties that wish unscrupulously to advance their parliamentary representation. Therefore, I hope that he will carefully watch Labour-controlled Lancashire county council and other councils, which will have no hesitation in unnecessarily increasing the community charge for political gain during a general election campaign.
Mr. Patten : I can well understand my hon. Friend's concern. The whole House will want to be assured that, when I make a statement about the local government settlement for next year--I hope that it will be later this month--and about the outcome of our review of the community charge, I shall give the House my intentions in broad terms, about charge capping for the future. I hope that I shall be able to satisfy my hon. Friend on that occasion.
I repeat that this central issue--the relationship between this House, central Government's responsibility for managing the economy, and the totality of local authority spending--is one on which the Government have made their position plain, even if the Opposition do not like it. The Opposition's views on the matter are less than crystal clear.
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We begin with the attitude of the Opposition to the principle and practice of community charge capping. The hon. Member for Dagenham (Mr. Gould), the shadow Secretary of State for the Environment, was interviewed by John Humphrys on the "Today" programme on 27 March. The exchange went like this :Mr. Humphrys asked :
"But if councils are profligate with rate-payers or Charge-payers', money, then what is wrong with Charge capping?"
The hon. Member for Dagenham :
"Well of course there must always be in extremis that reserve power."
Mr. Humphrys :
"Would a Labour Government accept the principle--the very broad principle-- of rate-capping, Charge-capping, whatever you want to call it?"
The hon. Member for Dagenham :
"Well, as I have already said, in extremis, there must always be that reserve power, but the Government's going well beyond that reserve power."
Mr. Humphrys :
"You say a Labour Government would have to do it in extremis--any Government would have to do it in extremis--how would you describe in extremis' ?"
The hon. Member for Dagenham :
"Well, it's not our problem at the moment".
Mr. Humphrys--he did not give up--said :
"It's going to be, if you're in power".
The hon. Member for Dagenham :
"Well, yes, of course But it's really just a hypothetical question to ask us to define what would be extreme circumstances. What I am saying to you is--I am not ducking your question in any sense"--
I do not think that belief in that observation will outlast the end of the sentence--
"I am saying in extremis that reserve power would have to be reserved, but it's impossible to say in advance what those circumstances would be."
We have waited four months since the interview to hear a definition of what "in extremis" means, and of when the reserve powers that would be reserved would be used. We have had no clarification from the shadow Cabinet, or from the Leader of the Opposition or--I am working in ascending order--from Mr. Peter Mandelson. Nor have we had any clarification from the hon. Gentleman.
Ms. Harriet Harman (Peckham) rose --
Mr. Patten : We are waiting for that clarification to be given any second now. As I said when I last debated these matters, we know that the hon. Gentleman believes that such reserve powers should be used in extremis, but not in Lambeth or in Basildon.
Ms. Harman : The Secretary of State has been speaking for 30 minutes and he has not justified, or sought to justify, the poll tax capping which will have such a devastating effect on the services upon which our constituents depend. Will he address himself to the issues that concern people, instead of this disgraceful political knockabout, which is an insult to the services that we are discussing? It is shameful.
Mr. Patten : I hope that the hon. Lady will be able to make her own speech in her own time. One reason why I have spoken for such an inordinate time is that I have given way to a large number of hon. Members.
I want--I am sure that it is an important issue for both sides of the House --to deal with the principle behind charge capping and the extent to which the Government should try to constrain the totality of local authority
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spending and individual spending decisions by local authorities. That must be an issue of great significance and importance to the shadow Chancellor and to his Gladstonian team of shadow Treasury Ministers, one of whom I see on the Back Benches. When I look at what Labour spokesmen have said on the issue, I am aware once again, to quote from the nautical log books, that they are afloat on a high and confused sea.When we consider what Labour spokesmen have said, it is extremely difficult to find any observation on the matter from the hon. Member for Dagenham, but I have found what I guess is the kernel of the Opposition's case--put not by the hon. Gentleman but by his predecessor, the hon. Member for Copeland (Dr. Cunningham) in the rate limitation debate two years ago. I shall set out the views of the hon. Gentleman and the Opposition reasonably extensively.
Mr. Robert N. Wareing (Liverpool, West Derby) : What are the Secretary of State's views?
Mr. Patten : I shall come to my views.
I begin with my hon. Friend the Member for Nottingham, South (Mr. Brandon- Bravo), who is with us today. He is always an incisive and informed contributor to these debates. Intervening in a speech by the hon. Member for Copeland, my hon. Friend said :
"Nobody will dispute the needs of many London boroughs and inner cities throughout Britain, but the theme of the hon. Gentleman's speech so far seems to give a clear message from the Opposition Benches that local authority spending should not be restrained or limited. Is it the Labour party's policy that, in the totality of national spending, the one area which is not the business of the House and should in no way be constrained is local authority spending? That seems to have been the message for the past 10 minutes.
Dr. Cunningham : Of course that is not the message. The hon. Gentleman is a regular attender of these debates and often contributes. He knows very well that that is not Labour party policy, because I have had the opportunity to tell him so on several occasions. But since his memory seems to be as defective as his political reasoning, let me put it on the record again.
Dr. Cunningham : I took the trouble to re-read the previous two debates on this subject last year and the year before."
So did I. The hon. Member for Copeland continued :
"If the hon. Gentleman had taken the trouble to do that, he would have known the answer that I am about to give. It is simply that the Labour party's policy makes it clear that what the Government provide to local authorities would, of necessity, be controlled and limited--
Mr. Simon Coombs (Swindon) : How?
Dr. Cunningham : Because the Government and the Chancellor of the Exchequer would come to a decision. That is how, fathead. The difference between us and the Government is simply that we do not believe that local government's revenue-raising powers should be subject to Government control. Whatever revenue-raising powers local government has, it should be free to determine how to use them."-- [Official Report, 18 February 1988 ; Vol. 127, c. 1217-18.] Mr. Clive Soley (Hammersmith) rose--
Mr. John Evans rose--
Mr. Patten : Let me finish the point. Let me summarise for fatheads and non-fatheads the Labour party's position.
The Labour party's position is that it is appropriate for the House and central Government to take a view, to consider, and presumably to attempt to constrain the totality of local authority spending--
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Mr. Martin Redmond (Don Valley) : If the Secretary of State wants to discuss Labour party policy, the Government should call a general election and let the people decide.
Mr. Speaker : Order. Debates in the Chamber are about comparisons between policies.
Mr. Patten : The Opposition's position on this central point of principle is that it is reasonable for Parliament and central Government to have a view about the totality of local authority spending, and that to exercise that constraint they will determine--this is good news for all of us--what Government will provide for local authorities ; however, at the end of the day local authorities can raise whatever funds they want, and can spend whatever they want.
There is a flaw in that argument. Let me make the obvious point by means of a metaphor. If we are concerned about the level of water in the bath, we must take account of the fact that there are invariably two taps, and that it is not enough to control only one of them. Similarly, if we want to control local authority expenditure, it is important not only to constrain the amount of money that goes from central Government to local authorities, but, if necessary, to constrain the total amount that they raise themselves through rates or through the community charge.
Mr. Soley : I intervene reluctantly, Mr. Speaker, in view of your comments about time. However, the Secretary of State is abusing the House. The three orders laid by the Government are complex, and he should address them. So far he has given us a basic lecture on constitutional law that could only be described as a painful elaboration of the obvious. We then had a bit of political knockabout. The Secretary of State has not addressed the issues of why and what is involved.
The right hon. Gentleman should bear in mind that the cuts in Wandsworth-- according to an independent assessment report--led to the death of a child. That is not something to laugh about. What we are talking about today could lead to similar events in other areas : and that is what not only hon. Members but people outside want to know about. What effect, in the Government's view, will the charges have on services?
Mr. Patten : I have been attempting to deal with the principle that lies behind any attempt to constrain local authority expenditure. I have pointed out that the Labour party is passing muddled on the issue--
Mr. Ken Livingstone (Brent, East) : Will the Secretary of State give way?
Mr. Patten : I have already given way to the hon. Gentleman--and twice in an afternoon would be too much.
I do not think that anyone could say airily to local authorities, "Go for it : borrow what you can and tax what you can."
Mr. Tony Banks (Newham, North-West) : No one has said that.
Mr. Patten : I am afraid that the hon. Gentleman is not accurate. He should listen for a change. That was said not by me but by the hon. Member for Dagenham in an interview in Tribune . I am sorry that the hon. Gentleman
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no longer reads that publication. He makes comments, but he presents us with no arguments or proposals relating to how local authorities can be stopped from borrowing whatever they can and taxing whatever they can.Let me now deal with the application of the principle to the designated authorities. The Local Government Finance Act 1988 gives me power to cap authorities on two bases. First, it says that I am entitled to cap authorities on the basis of excessive spending. Secondly, it says that I am entitled to cap authorities if the increase in their spending from one year to the next is excessive. I mentioned that earlier. I have not been able to pursue that second approach in the first year of the community charge, mainly because so many other charges have been taking place in local authority expenditure. For example, the housing revenue account has been ring-fenced and changes have been made in the capital rules. If I had wished to use the second approach--capping on the basis of excessive increases from year to year--I would have had to construct for all local authorities a notional budget for 1989-90 in order to be able to compare like with like. The view that I was legally advised to take was that that would have led to far too imprecise a foundation for designation criteria this year. I based my criteria on the first approach, and those criteria were debated when I made my statement a few weeks ago. They have also been widely discussed outside the House and in the courts.
Mr. Patrick Thompson (Norwich, North) : My right hon. Friend is talking about the criteria by which he selects authorities for capping. Many authorities have set the charge too high, and even though the majority of our constituents accept the principle of the community charge, they cannot take any action against the amount of the charge if expenditure by the authority is below a certain limit, which from memory is about £15 million. Will my right hon. Friend comment on the excessive charges that my constituents and others have to pay because of that limitation?
Mr. Patten : As I said in my statement on the local government financial settlement for next year, I hope to be able to make clear in outline my views on charge capping should it be necessary in future. It should be possible to take either of the two approaches that I have mentioned in relation to excessive spending or in relation to excessive increases year on year.
As I have said, we have discussed the criteria in the House and outside. Camden was one of the designated authorities. It concluded that it could accept the cap even though it disagreed with it and I issued a statutory notice for Camden on 26 April. Three authorities--Basildon, Bristol and Doncaster--did not respond to my designation by putting forward an alternative within the statutory 28 days. I assume that if they had thought that my proposals were unachievable they would have responded and put forward other proposals. I would be astonished if any local authority which thought that my proposals were unachievable failed to respond.
Mr. Michael Stern (Bristol, North-West) : Does my right hon. Friend agree that one of the reasons, or perhaps
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the main reason, for Bristol not responding to the order was that it was scared stiff that if his Department had a look at Bristol's books it would have imposed a larger cap?Mr. Patten : I understand why many of my hon. Friend's constituents and others in Bristol take that view. Bristol's spending record of 96.3 per cent. over standard spending assessment, or £108 per adult, speaks volumes.
After dealing with Camden and the three authorities which did not respond, we were left with 17. I shall deal with Hillingdon, which is one of the 17, in a moment. Representatives from the other 16 authorities were seen by my hon. Friends in the Department. As a result of those representations, we adjusted the caps on Brent, Southwark and Wigan, and I have confirmed the cap for the other 13 authorities.
Our proposed budgets are achievable and reasonable. If the House approves the order, it will be for the authorities to decide how to reduce their budgets to conform with the caps. It is for those authorities to set their own spending priorities within those caps ; it is not for me.
Mr. Livingstone : Will the right hon. Gentleman give way?
Mr. Patten : No. I have given way already to the hon. Gentleman.
Mr. Livingstone : The Secretary of State is giving way to his hon. Friends.
Mr. Patten : I have three points to make about the application of this principle and these criteria to those local authorities. First, year after year, we have had debates on rate limitation. In all those debates there has been a lot of theoretical argument about whether the Secretary of State for the Environment is behaving in a reasonable and appropriate way. There have been assertions and counter-assertions. This year, we have something more substantial--we have direct evidence to hand, in the case of Hillingdon.
Hillingdon was one of the local authorities that I designated for capping. It had set a budget of £151 million--20 per cent. above the SSA, or £143 per adult. That led to a community charge of £367. I proposed a cap on Hillingdon, in early April, of £141.7. Hillingdon responded at the end of the month by saying that that budget was inadequate to meet its needs. It said that it needed £151 million and not a penny less.
Three days later, the political control of Hillingdon changed. The new council proposed a new budget, below the level of my cap, which implied a community charge of £290--£77 below the community charge that had been set by its predecessor and £25 below the community charge that would have resulted from my cap. It has set a budget below the level of the cap that still allows for an increase in expenditure on schools. After all the assertions and
counter-assertions, it is not unreasonable for me to say that, if it is possible for Hillingdon, it should be possible for others.
Mr. Bernie Grant : What services did Hillingdon cut?
Mr. Patten : I can tell the hon. Gentleman.
Mr. Michael Shersby (Uxbridge) : I hope that, if I am successful in catching your eye, Mr. Speaker, I shall be able to tell the House exactly how the new Hillingdon council achieved those cuts.
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Mr. Patten : I am sure that, as Labour Members are only too keen to take the good news back to their local authorities, they will be all ears when my hon. Friend speaks.Mr. Simon Hughes (Southwark and Bermondsey) : The Secretary of State is aware that this is a key issue. Is he saying that the new Conservative administration in Hillingdon has cut no services in any department as a result of its new budget? If not, he is conceding the point that capping means cutting. That is the simple implication.
Mr. Patten : My hon. Friend the Member for Uxbridge (Mr. Shersby) will, I hope, shortly be able to tell the House in detail where Hillingdon is making the cuts. It will be making cuts in administration--for example, in the number of people who administer rather than teach in schools. I will leave the details to my hon. Friend.
Secondly, throughout these debates in the past there has been a roll call of horror stories. Disaster has been advertised as just around the corner. Disaster is about to arrive on the next train, but the next train has drawn into the station and disaster has failed to disembark. That point got through to Opposition Front Bench spokesmen, so that four years ago--
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